News / From the associates

CBRE’s mid-year review outlook highlights how the first half of 2026—marked by the conflict between the United States and Iran—has altered the outlook for the European commercial real estate market for the current year. First, the macroeconomic environment has changed: driven by rising energy prices, inflation in the Eurozone exceeded 3% in May, prompting the ECB to raise the deposit rate to 2.25% in June—a reversal of expectations from the start of the year. CBRE does not foresee further hikes in 2026, but expects long-term rates to remain high. Despite the more challenging environment, most European economies continued to grow, albeit moderately. In the real estate market, income continued to be the main driver of returns. Rent growth supported the values of prime assets, while in some sectors and markets, yields expanded, limiting the potential for yield compression.

In the capital markets, European real estate investments rose by 10% in the first half of the year compared to the same period in 2025, with the residential sector reaching €29.9 billion (+17%), accounting for 26% of the total, and growing interest in alternative segments such as healthcare and data centers. Office real estate also saw a recovery, with €22.6 billion in investments (+13%). Access to financing remains solid, and lender interest remains high: 72% of market participants expect to increase lending in 2026. Although the overall cost of debt rose in the first half of the year, CBRE forecasts a decline in the second half, supporting a recovery in transactions and bringing annual volumes to a level between stable and moderately higher than that of 2025.

In the occupier markets, residential and data centers remain the segments most supported by structural imbalances between supply and demand. For multifamily, CBRE forecasts a 3.9% increase in rents in 2026, while in the PBSA sector, the structural supply shortage continues to support demand and investment. In logistics, take-up grew by 15% in the first half of the year, but net absorption (the change in occupied stock) is expected to recover only starting in 2027, as occupiers prioritize moving to higher-quality spaces rather than expanding their floor space. New demand for space is also coming from Chinese operators and increased European defense spending. For offices, demand is expected to strengthen in the second half of the year, while the scarcity of space in new or renovated buildings and the adoption of AI are driving up demand for higher-quality properties. In the retail sector, weak consumer spending coexists with still-robust demand for prime locations, while hotel performance is expected to moderate following strong growth in the first half of the year. Finally, in the data center sector, rising AI-related demand continues to put pressure on available capacity, with energy and the power grid among the main constraints; meanwhile, on the sustainability front, regulatory developments and growing attention to resilience against climate risks will continue to influence investment decisions and CapEx planning.