REcap: Q1 2026

The stability that we highlighted last quarter gave way to volatility in the first quarter of 2026 as the Iran conflict roiled global equity markets and delivered a shock to energy markets. The long-term implications of the conflict on energy prices remain to be seen, but concerns around inflation and what that potentially means for borrowing rates have been exacerbated.

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Key takeaways:

Multifamily housing: The multifamily sector is moving from correction toward stabilization, but not yet into a broad-based upswing. Demand appears normal by historical standards rather than unusually strong, vacancy has largely leveled off nationally and the development cycle is clearly retreating. Overall, the market looks more predictable than it did a year ago, but fundamentals still favor disciplined underwriting, careful submarket selection and balance-sheet flexibility over broad macro bets.
Office: First-quarter transaction activity suggests that the office recovery remains highly selective rather than broad-based. Buyers continue to favor well-located, institutional-quality Class A assets, particularly in markets with strong tenant demand, limited new supply and clearer long-term leasing prospects. Overall, the market appears to be strengthening at the top end, though persistent stress in lower-quality buildings and ongoing capital markets pressure will likely keep the recovery uneven through the balance of 2026.
Retail: The U.S. retail sector continues to demonstrate resilience, supported by tight supply conditions, stable consumer spending and sustained demand for necessity-based and service-oriented retail formats. This supply-constrained environment has kept availability low across high-quality assets. The sector remains fundamentally stable at the national level, though performance dispersion across asset quality, tenant mix and geography continues to widen as the market moves further into a demand-driven, efficiency-focused leasing cycle.
Industrial: Overall, the U.S. industrial market in the first quarter of 2026 is characterized by stabilization rather than contraction. While the sector is no longer experiencing the extraordinary growth of the pandemic era, its underlying fundamentals remain sound. The combination of structural demand drivers, a moderating development pipeline and continued investor interest positions the sector for steady, albeit more measured, performance in the near to medium term.
Capital markets: The overall trend of the capital markets sector is upward, but cautious, with geo-political risk being added to the generally tepid debt market environment. Fundamentally, the industrial and multifamily are stabilizing and have likely hit or passed troughs in terms of cyclical vacancy and rent compression. This should create a fruitful environment for deal making if some combination of economic and capital markets improvement takes place, however even if conditions remain largely stable, we anticipate a more active year than 2025 as market participants have demonstrated an increasing level of comfort in transacting under current conditions.