2026 Top 10 Issues Affecting Commercial Real Estate: What Developers and Investors Need to Know

Each year, America’s Commercial Real Estate Show delivers deep market intelligence that helps investors, developers, lenders, and advisors navigate an ever-changing landscape. Hosted by Commercial Broker Michael Bull, CCIM, the show recently welcomed John Hentschel, CRE, Global Chair of the Counselors of Real Estate (CRE®), to discuss the 2026 Top 10 Issues Affecting Real Estate—one of the most respected outlooks in the industry.

Produced by nearly 900 elite real estate advisors worldwide, this annual report reflects the collective insight of leading economists, institutional investors, appraisers, and consultants. For 2026, the Counselors of Real Estate are also introducing a new solutions initiative, moving beyond identifying challenges to outlining actionable pathways forward.

Below is a breakdown of the key themes shaping commercial real estate in 2026.

 

How the Top 10 Issues Are Developed

The Counselors of Real Estate conduct an annual survey of their global membership, asking one core question:
What are the most critical issues impacting real estate practice and performance today?

A dedicated Top 10 Issues Committee—made up of industry leaders such as Maureen Ehrenberg, Jim Costello (MSCI), and Doug Poutasse (formerly AEW Capital)—analyzes the results, supported by CRE’s Economic Advisory Council. The outcome is a data-driven, practitioner-focused ranking of the most influential forces affecting property values, investment decisions, and market behavior.

 

#10: The Flow of People

Real estate demand ultimately follows people, and the flow of people is slowing.

Three major factors are driving this trend:

• Household formation has declined sharply, falling from nearly 2 million new households per year (2019–2022) to roughly 1.26 million today. Millennials are aging out of peak household formation, while Gen Z has not yet filled the gap.
• Domestic migration is constrained by “rate lock.” Millions of homeowners with 2–3% mortgages are reluctant to move into a 6–7% interest rate environment, freezing housing turnover at historic lows.
• International immigration, which accounted for nearly 50% of U.S. population growth over the past decade, has slowed due to shifting immigration policies.

Together, these trends affect not only housing and apartments, but also retail, office, and industrial demand.

 

#9: Pricing Risk

Pricing risk stems from the persistent disconnect between buyers and sellers.

Higher interest rates have raised the cost of capital, pushing cap rates higher and values lower. Yet many sellers continue to anchor to pre-pandemic pricing. At the same time, lenders have relied on “extend and pretend” strategies to delay recognizing losses.

Now, a wall of maturing debt—much of it originated at 4–5% interest rates—is coming due in 2026 and 2027. As refinancing becomes more difficult, pricing pressure is forcing the bid-ask gap to narrow, unlocking transactions but increasing risk across asset classes, not just office.

 

#8: Housing Attainability

Housing affordability remains one of the most persistent challenges in real estate.

Key contributors include:

• Elevated home prices due to constrained supply
• Higher interest rates
• Rising construction and labor costs
• Tariff uncertainty impacting building materials
• Lengthy zoning, permitting, and entitlement processes

Well-intended regulations—such as energy mandates—can also add millions in costs to multifamily properties, ultimately passed on to renters. The report emphasizes that supply-side solutions, including streamlined approvals and faster permitting, are essential to improving attainability over the long term.

 

#7: Crisis of Confidence and Uncertainty

Uncertainty has become a defining feature of the current market.

Developers and investors face unpredictability around:

• Interest rates
• Inflation and tariffs
• Construction costs
• Rent growth
• Capital availability

In real estate, uncertainty increases perceived risk—and risk demands a premium. This dynamic puts upward pressure on cap rates and downward pressure on values, delaying development and investment decisions.

 

#6: The Future of Real Estate Analysis

The future of real estate lies in data, analytics, and risk quantification.

The industry is moving beyond static valuation models toward dynamic, real-time analysis using advanced statistical techniques, including Bayesian modeling. Continuous data collection allows investors to better isolate, measure, and manage risk—fundamentally changing how properties are underwritten and managed.

 

#5: Transformation of Real Estate Through Technology

While historically slow to adopt technology, real estate is now rapidly evolving.

Artificial intelligence, smart building systems, and data integration are reshaping operations and revenue strategies. However, the biggest challenge isn’t technology itself—it’s data ownership and control. Building owners and managers must gain better command over energy usage, tenant behavior, access systems, and operational metrics to unlock AI’s full potential.

 

#4: Capital Sources and Flows

Capital markets remain in flux.

Large amounts of equity are sitting on the sidelines, waiting for clarity on pricing, interest rates, and distress opportunities. With transactions stalled by valuation gaps, capital deployment depends on improved price discovery and the resolution of maturing debt. As confidence returns, capital flows are expected to follow—but selectively.

 

#3: Climate Risk, Resilience, and ESG Pressures

Climate risk has moved from a long-term consideration to an immediate valuation and underwriting issue. Extreme weather events, rising insurance costs, and evolving environmental regulations are directly affecting property performance, capital availability, and asset liquidity.

Investors and lenders are increasingly evaluating exposure to flooding, heat, wildfire, and sea-level rise, particularly in coastal and Sun Belt markets. At the same time, ESG-related mandates—while well intentioned—often introduce significant capital requirements for building upgrades, energy conversion, and emissions compliance. These costs can materially impact net operating income and long-term returns.

The challenge for owners is balancing sustainability goals with financial feasibility. Properties that fail to adapt may experience accelerated obsolescence, while those that invest strategically in resilience and efficiency may preserve value and remain competitive in capital markets.

 

#2: Political, Regulatory, and Policy Risk

Public policy is playing a larger role in real estate outcomes than at any point in recent decades.

From zoning restrictions and rent regulations to tax policy, tariffs, and infrastructure funding, government action—or inaction—has become a primary risk variable. Changes in leadership at the federal, state, or local level can quickly alter development feasibility, operating costs, and investor sentiment.

Uncertainty around property taxes, housing regulation, environmental mandates, and financial oversight has made long-term planning more difficult. For commercial real estate stakeholders, the ability to anticipate policy shifts and adapt quickly is now a core competency rather than a secondary concern.

Markets with predictable, transparent, and business-friendly regulatory environments are increasingly favored, while jurisdictions with inconsistent or adversarial policies may see capital migrate elsewhere.

 

#1: Geopolitics and Global Economic Fragmentation

Topping the 2026 list is geopolitical risk, reflecting the growing interconnectedness between global events and local real estate markets.

Trade tensions, armed conflicts, supply chain disruptions, and shifting international alliances are influencing everything from construction costs to capital flows. Tariffs affect material pricing, global instability impacts investor confidence, and foreign capital allocations can change rapidly in response to political developments.

Commercial real estate no longer operates in isolation from global forces. Even assets that appear purely domestic are exposed through interest rates, energy markets, labor availability, and capital sourcing. As global economic fragmentation increases, volatility becomes a structural feature rather than a temporary phase.

For investors and operators, success in this environment requires scenario planning, diversified exposure, and disciplined risk management.

 

Closing Perspective

The 2026 Top 10 Issues Affecting Commercial Real Estate underscore a market defined by transition rather than stability. Demographics, debt, technology, housing constraints, public policy, and geopolitics are converging to reshape how real estate is valued, financed, and used.

While uncertainty remains elevated, informed decision-making, adaptive strategies, and a clear understanding of these core issues can position market participants to navigate disruption—and identify opportunity—well ahead of the curve.