2026 Outlook: The Trends Reshaping Commercial Real Estate

It’s been a busy start to 2026! With capital markets shifting, regulation evolving, and climate risk showing up more clearly in valuations, sustainability is no longer a side conversation, it’s becoming a core part of how decisions get made. Here are a few predictions on what we expect to shape real estate, infrastructure, and the energy transition this year.

Sustainability Becomes a Capital Strategy

Embedding sustainability into financing structures is no longer optional; it’s a strategic tool. Capital is flowing, but only toward strategies that deliver both impact and returns. With $2.4 trillion in commercial property debt maturing between 2026 and 2027, higher rates and tightening refinancing conditions will put mid-market owners under real pressure.

The advantage will go to owners who use sustainability to reshape their cost of capital: unlocking green loans, lowering debt costs, tightening exit cap rates, and protecting long-term value. Retrofit financing will become a lifeline. Investors have moved past paying a “green premium”; climate-smart solutions win only when they’re better and cheaper. Meanwhile, the “brown discount” is here and already reshaping valuations worldwide.

Demand Shifts Across Asset Classes

Demographics and technology will define 2026’s winners and losers.

• Senior housing will expand as Baby Boomers approach 80.
• Data centers will accelerate on the back of AI’s exponential growth, especially for high-intensity and edge data centers.
• Office will remain soft, but high-quality Class A buildings with walkability, efficiency, and the ability to support tech and edge-computing needs will see renewed competitiveness. Expect rising power constraints and grid challenges to influence development choices and pricing.

Regulation Tightens Even as Some States Pull Back

Global policy is aligning around disclosure and transparency. Despite California’s retreat from SB261 and SB253, many U.S. states and cities are advancing benchmarking and building-performance standards with firm 2030 deadlines. Europe and Asia-Pacific continue to push forward with some form of regulation as well. While retreats may occur in the short term, the forward trajectory is clear: compliance costs will rise, and reactive strategies will no longer cut it. For financial institutions, proactive compliance becomes a core investment priority in 2026.

Insurance: A Temporary Dip, Then Reality Sets In

Insurance costs may ease slightly after a relatively stable 2025. But this is a short-term reprieve. Climate and transition risks are increasingly embedded into underwriting, and insurers are being pulled earlier into transactions. They are emerging as key stakeholders who must be aligned from day one.

From Climate Rhetoric to Pragmatic Execution

The conversation around efficiency and resilience is shifting, but the biggest shift is in how we talk about action. Investors now better understand what Net Zero requires, and verbal over-commitments are giving way to practical projects with clear ROI, risk reduction, and value creation. Public sector ESPC activity is growing for the same reason.

We’re also seeing a more honest acknowledgment of externalities—the costs that historically sat outside a pro forma but now directly affect performance. Grid instability, extreme weather, water constraints, and even community expectations are no longer “someone else’s problem”; they’re operational risks with financial consequences. Owners who proactively address these externalities through efficiency, resilience, and better communication are preserving value and gaining competitive advantage.

Equally important: language. A broader mix of stakeholders, from lenders to residents, are involved in resilience decisions. Talking about droughts, storms, and blackouts resonates far more than abstract climate terminology. The world is moving from lofty commitments to pragmatic execution, and communication is now part of the work.