The 2026 economy is being shaped less by a single shock and more by the stacking of smaller uncertainties: interest-rate paths that are “higher for longer” than the 2010s, tariffs and trade restrictions that keep shifting, and geopolitical fragmentation that raises the cost of doing business. The combined effect is straightforward: higher required returns + harder forecasting = slower capex, slower hiring, and softer demand growth, even if headline GDP stays positive.

The macro backdrop in numbers (why “okay growth” can still feel weak)

• Global growth is expected to slow in 2026, but not collapse.

  • IMF projects 3.1% global GDP growth in 2026.

  • OECD is more cautious: 2.9% global GDP growth in 2026, explicitly citing higher tariffs and policy uncertainty weighing on investment and trade.

• Trade is the pressure point. WTO economists projected world merchandise trade volume growth of just 0.5% in 2026 (while services trade volumes are expected to grow faster).

• Rates are no longer a tailwind.

  • The U.S. Fed’s median projection for the federal funds rate is 3.4% at end-2026 (midpoint/target level concept).

  • The ECB’s deposit facility rate is 2.00% (latest posted policy rate set).

Why this matters: even if central banks cut a bit, the discount rate used for investment decisions can stay elevated because long-term yields and risk premia don’t necessarily fall in sync—especially under tariff/geopolitical uncertainty.

The mechanics: how uncertainty suppresses investment and demand

1) The “hurdle rate” effect (capex gets postponed)

When uncertainty rises, firms raise the return required to greenlight projects. That shows up as:

• fewer multi-year expansion projects,

• more “wait-and-see” behavior,

• more focus on efficiency and cash flow.

OECD’s 2026 outlook explicitly links policy uncertainty and tariffs to slower investment and trade.

2) The “inventory and supply-chain” effect (more buffers, less productivity)

Tariffs and restrictions encourage duplication (multiple suppliers, regionalized manufacturing, higher inventories). Resilience improves, but it’s usually more expensive, and that cost drag lowers demand elsewhere.

UNCTAD flags continued use of tariffs in 2026 and rising trade uncertainty, especially after a sharp increase in tariff use in 2025.

3) The “confidence” effect (households and corporates buy less optional stuff)

When growth is modest and policy is unpredictable, consumers and businesses both become selective—hurting rate-sensitive sectors (housing turnover, big-ticket durables, discretionary capex).

So what happens to real estate in 2026?

The real estate story for 2026 is a gradual recovery, but with a different engine than the last cycle: income and scarcity, not cheap leverage.

1) Capital markets: recovery, but not a snapback

• United States: CBRE expects commercial real estate investment activity to rise 16% in 2026 to $562B, with cap rates compressing ~5–15 bps for most property types—suggesting stabilization and modest re-risking rather than a full “boom.”

• Europe: CBRE describes the recovery as early and gradual, with deal volumes ~40–45% below peak levels. It emphasizes that returns are likely to be primarily income-driven because long-term rates stay elevated (limiting broad yield compression).

What to expect: more transactions than 2024–2025, but price discovery remains conservative; lenders are active, yet underwriting stays tighter than the 2010s.

2) The “Living” sector stays structurally supported

Both CBRE (Europe) and JLL highlight housing/living as a major demand story:

• Europe: CBRE expects a persistent supply–demand imbalance that supports rent growth, even with more development in select markets.

• JLL: Living remains the world’s largest investment sector, with expanding investor interest across forms of housing.

Bottom line: in an uncertain macro environment, investors pay up for durable cash flows—multifamily and related living subsectors fit that bill.

3) Logistics and “good industrial” normalize—but supply is falling

JLL projects that industrial & logistics deliveries in 2026 will be ~42% below the 2023 peak, which can tighten vacancy if leasing demand holds.
CBRE Europe expects logistics take-up to improve moderately, but notes occupiers are often upgrading rather than expanding—rent growth slows as cost sensitivity rises.

What to watch: locations tied to reshoring/nearshoring and critical infrastructure can outperform, but tariff-driven cost inflation can cap tenant willingness to pay.

4) Offices: bifurcation deepens (scarcity of “A”, obsolescence risk for the rest)

JLL points to a dramatic supply dynamic:

• U.S. office completions set to fall ~75% in 2026, and much of the remaining pipeline is pre-leased.

This supports prime rents in top nodes, while older stock faces rising retrofit/reposition pressure.

What to expect: “flight to quality” continues, but the investable opportunity is increasingly value creation (conversion, retrofit, reposition) rather than broad-based office appreciation.

5) Data centers: the AI-driven outlier

Demand is being pulled by AI and power constraints:

• JLL forecasts data center capacity +19% in 2026, while also describing power and energy solutions as a defining constraint/driver.

• CBRE Europe expects vacancy to compress to very low levels even amid record new supply (AI strain on capacity).

Implication: in 2026, “real estate” performance increasingly depends on infrastructure realities (grid access, permitting, power pricing), not just location.

A practical 2026 outlook: what to expect, summarized

Base case (most likely):

• GDP growth: modest (roughly ~3% global, lower in many developed markets).

• Trade: weak volume growth (~0.5% merchandise trade).

• Rates: somewhat lower than peaks, but still high enough that income matters more than multiple expansion.

• Real estate: transaction volumes expand from depressed levels; pricing improves selectively; living + data centers lead.

Upside scenario:

• Policy clarity improves and tariff pressure eases; CBRE Europe frames an upside where the effective tariff rate falls to ~8% by H2 2026, boosting confidence and investment.

Downside scenario:

• More aggressive retaliatory tariffs re-emerge, pushing inflation/bond yields higher and slowing real estate recovery.