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Neither office nor industrial real estate is a clear-cut winner in 2026. In the U.S. outlooks available through August 2026, industrial has broader demand drivers and remains a preferred property type for investors, but it is still absorbing supply from the pandemic-era construction boom. Office is recovering unevenly: modern, well-located buildings have a stronger leasing and supply outlook than older, less competitive properties. The better investment depends on the specific asset, market, lease, price and financing—not just the sector.
What the 2026 outlook says—and what it does not
The most comparable forecasts in this article concern U.S. commercial real estate. JLL’s global delivery forecast is identified separately and should not be read as a forecast for every U.S. market or for any other country. The figures below are forecasts or reported market conditions at the stated dates, not confirmed full-year 2026 results.
CBRE’s January 2026 annual outlook forecast $562 billion in U.S. commercial property investment volume, up 16% year over year. That measures expected transaction activity across commercial property, not returns for office or industrial assets. CBRE also described the expected returns as income-driven, putting the emphasis on rental income, asset selection and management.
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#1 Best Overall
Why office could work in 2026
The recovery is concentrated in better space
CBRE’s August 2026 midyear update forecast U.S. office vacancy of 18% at year-end and expected the vacancy gap between prime and nonprime buildings to widen. Its January annual outlook likewise anticipated further scarcity of prime space, while older secondary properties remained more exposed. These forecasts point to a divided market, not a broad-based recovery in every office building.
Some leasing indicators were encouraging. CBRE reported that tech tenants accounted for 21% of U.S. office leasing activity in the first half of 2026. In CBRE’s 2026 Americas Office Occupier Sentiment Survey, 64% of tech companies said they planned to expand their office portfolios that year. CBRE also reported that downtown office leasing rose 24% year over year in the first half and anticipated downtown vacancy falling below suburban vacancy in 2027. These are CBRE-reported activity and survey figures, not guarantees of occupancy or rent growth for a particular building.
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Limited construction could help, but demand remains a constraint
JLL Research’s December 2025 global outlook projected that U.S. office completions in 2026 would be 75% below the 2021–25 peak it cited; it reported that three-quarters of the remaining pipeline was pre-leased. Separately, JLL Americas Research reported 19 million square feet of U.S. office product under development at the observation date of its 2025 report, more than 20% below the previous low in its series, recorded in 2011. Less new supply may support competitive existing buildings, but it does not make obsolete space attractive if tenants do not want it or renovation costs do not pencil out.
JLL Americas Research forecast 30–40 million square feet of positive U.S. office net absorption in 2026 and an approximately 70-basis-point decline in overall vacancy. Its report also warned that stagnant office-using job growth could limit expansion; it described 2025 demand as supported by post-pandemic rightsizing and return-to-office realignment. Those figures are JLL forecasts, not observed year-end outcomes, and the report noted that uncertainty and constrained supply could affect occupier behavior.
Office investment read-through
A modern, well-located office building with credible tenant demand may benefit from limited new construction and improving leasing. The case is weaker where a building is functionally obsolete or where local demand and building economics do not justify renovation. CBRE’s January outlook described lagging markets such as Chicago and Los Angeles as bottoming out, and expected Boston, Seattle and Denver to follow by year-end 2026; those were forecasts, not confirmed outcomes. Even a favorable market-level outlook cannot establish that a specific asset is fairly priced or leaseable.
Why industrial could work in 2026
Demand drivers remain broad
CBRE’s January 2026 outlook cited manufacturing reshoring and third-party logistics providers (3PLs) as supports for industrial leasing, and described industrial as a preferred property type among investors. Its August 2026 update raised its forecast for annual industrial leasing activity growth from 5% to 10%, citing first-half activity, 3PLs, onshoring and advanced manufacturing, and data-center construction. CBRE also described the market as running at a record-year pace of approximately 1 billion square feet. These are forecasts and activity measures—not rent-growth estimates or investor-return forecasts.
Supply is still a key risk
Industrial is not insulated from oversupply. CBRE said the sector was working through excess supply from the pandemic-era construction boom. Its January outlook expected modern assets in key metros with population growth and transport hubs to outperform, reflecting a flight to quality among occupiers. A national increase in leasing activity does not ensure that a particular submarket has absorbed recent deliveries.
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JLL Research’s December 2025 global outlook projected industrial and logistics deliveries in 2026 to be 42% below the 2023 peak. It attributed the reduction to less speculative construction and competition for land from data centers and manufacturing. That is a global forecast with a different geography and comparison period from JLL’s U.S. office-completions figure; the two percentages should not be compared as though they measure the same market. Lower future deliveries could help vacancy and absorption if demand holds, but the global figure does not prove that every U.S. metro is tight.
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Industrial investment read-through
Industrial’s demand drivers are comparatively broad, but underwriting still needs to account for the local supply pipeline, vacancy, tenant concentration, building functionality, transport access and rent expectations. Markets with substantial recent deliveries may remain oversupplied even as new construction declines.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to compare a specific office or industrial property
Use local evidence and the property’s projected cash flows rather than relying on sector averages. The questions below are underwriting prompts, not a substitute for a property-specific model.
| Underwriting factor | Office | Industrial |
|---|---|---|
| Local demand and vacancy | Is demand concentrated among a few employers or submarkets? How do prime and nonprime vacancy differ? | Is vacancy elevated because of recent deliveries? Which 3PL, manufacturing or distribution users are active? |
| Building quality and function | Can the building meet tenant expectations in its location? What retrofit or conversion work is needed? | Can it serve current logistics or manufacturing uses? How well does it connect to labor, population and transport? |
| Leases and tenants | How much space expires soon, and what tenant-improvement allowances, free rent or renewal concessions may be needed? | How concentrated are tenants, how much space rolls, and do existing rents fit replacement or market economics? |
| Competing supply | What is under construction, being converted or being removed from inventory? | What recently delivered or planned space competes for the same tenants? |
| Income and capital needs | What is stabilized net operating income after leasing costs and capital expenditures? | What is stabilized net operating income after downtime, tenant improvements and maintenance? |
| Financing and exit | Can debt service remain supportable if leasing is slower or cap rates are higher? | Does the purchase price still work under slower absorption, rent resets or continued supply pressure? |
For either sector, the key is whether realistic net operating income after leasing costs and capital needs supports the purchase price and debt under plausible downside conditions. A building’s location, quality, tenant credit, lease rollover, capital needs, financing and competing local supply can outweigh its sector label. The cited outlooks do not establish one universal comparison metric or provide a property-specific underwriting model.
Which sector fits which investment thesis?
- Consider office selectively if the asset is competitive, well located and supported by identifiable tenant demand, and the price reflects lease-up and capital requirements. Treat a general recovery forecast as insufficient evidence for an older or functionally obsolete building.
- Consider industrial selectively if the building fits active local users and the market’s recent and planned supply is manageable. Do not assume national leasing growth eliminates local oversupply or makes an aggressive rent assumption safe.
- Compare the deals, not just the labels. Test lease rollover, downtime, tenant improvements, capital expenditures, debt service and exit assumptions for each property. A stronger sector outlook cannot rescue a deal bought at a price its income cannot support.
This comparison concerns property-sector fundamentals. Those forecasts do not establish which publicly traded real estate security, fund or direct-ownership investment will perform best; each has its own pricing, fees, leverage and risks.
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