Global Real Estate Outlook

JLL’s 2026 outlook projects a stabilizing global real estate market characterized by improving economic fundamentals and lower interest rates despite persistent cost pressures. The industry is entering a transformative phase driven by severe supply shortages in top-tier spaces and a strategic shift toward operational efficiency and AI integration. These dynamics are expected to boost transaction volumes and rental rates, particularly in the office, industrial, and living sectors as the investment cycle gains momentum.

The global real estate capital markets showed notable strength in the second half of 2025, setting the stage for increased transaction volumes and competitive investor bidding throughout 2026. JLL anticipates that debt markets will remain active with broadening lender appetite across various property types, including a surge in data center demand driven by the AI infrastructure boom. The Living sector is projected to maintain its status as the world’s largest investment category, with significant activity expected in markets ranging from the U.S. and UK to India, Australia, and Spain.

A critical challenge for 2026 is the intensifying shortage of high-quality space, particularly in the office and industrial sectors where new construction has reached historic lows. In the United States, office completions are forecast to plummet by 75% in 2026, with three-quarters of the remaining pipeline already pre-leased, while European construction starts have hit their lowest levels since 2010. This scarcity is most acute in major hubs like Tokyo, New York, and London, where occupiers seeking large-block, modern spaces will face significantly higher rental rates and fewer options, forcing demand to broaden beyond the top end of the market.

Organizations are navigating a high-cost environment where 72% of corporate real estate leaders now rank budget efficiency as their top priority. Construction and fit-out costs remain elevated, with 2026 inflation estimates ranging from 2.7-3% in the UK and Germany to as high as 6% in Australia and Singapore, while the U.S. expects costs to rise by 3.5-4%. To combat these pressures, firms are focusing on asset optimization, space utilization, and the adoption of automation and digital solutions for facilities management to maintain service quality while reducing operational expenses.