Global Real Estate Perspective, August 2026

• Economic outlook continues to be volatile. The conflict in Iran dominated the global economic narrative through the second quarter. The situation is still dynamic and disruption will take time to unwind, although impacts have been relatively limited so far and stronger growth is expected next year.
• Global real estate demand remains resilient. Global office leasing rose further to a new post-pandemic high, with the U.S. leading activity. Industrial take-up increased in most major markets, while retailer expansions are outweighing limited supply in prime locations.
• Capital markets robust through Q2. Exceptionally strong debt markets, ample capital available to deploy into commercial real estate and supportive property fundamentals are contributing to strong growth in transactions. Asset pricing remains broadly stable across geographies even as bond yields generally rose in the second quarter.

The economic and fiscal outlook continue to be subject to volatility stemming from the conflict in Iran and the closure of the Strait of Hormuz. Markets are still optimistic that a lasting deal will be reached soon, but even after the situation stabilizes it will take a number of months for global trade disruption to unwind and supply chains to normalize. GDP growth forecasts have been revised down somewhat but are far from recessionary, with stable or stronger growth expected next year in most countries.

Occupier demand continues to be resilient and growing in many major markets. Industrial and logistics tenants are increasingly acting on requirements, leading to rising take-up across regions. Office leasing set a new post-pandemic high over the first half of the year with growth led by the United States, retailer expansions continue in prime destinations, while data center demand is at record levels.

Global capital markets activity rose further in the second quarter, driven in part by a continued uptick in transactions of scale. Investment growth was positive compared to the previous year across property sectors, with retail, industrial and logistics and hotels posting the strongest improvement. Although geopolitical conflict and the potential for higher interest rates remain on investors’ minds, they are not impairing capital markets’ activity levels or functionality as investors increasingly view volatility as structural rather than episodic.

Global direct investment carried strong momentum into the second quarter with volumes rising by 28% year-over-year. Activity in the Americas increased by 26%, with the U.S. performing strongly and Canada emerging as the second most liquid market globally. In EMEA transaction volumes were 27% higher, with Germany and France posting strong growth. Asia Pacific posted its most active second quarter in five years, with investment up by 38% as Japan and Australia led liquidity and Singapore recorded exceptional growth.

Offices: U.S. leads leasing activity higher to new post-pandemic peak

Global office leasing activity rose by 2% year-over-year in Q2, with growth in the U.S. and Europe offsetting declines in Canada and Asia Pacific. Volumes over the first half of the year increased by 1% on H1 2025 to a new post-pandemic high.

The global vacancy rate declined further during the quarter to 16.5%. New deliveries remain near record lows in the U.S., with completions set to fall by 60% this year. In Europe, new supply is expected to be at the lowest level since 2011, while Japan, Singapore and South Korea in Asia Pacific are also seeing tightening conditions. As rents and fit-out costs rise, tenants in markets with the most limited new supply are increasingly looking to adjacent submarkets as well as renewals, extensions and flex solutions.

Future trends: Focus on high-quality workplaces and flexible portfolio management
 

Short-term: The evolving economic outlook is leading to longer decision-making in some markets, while limited availability is constraining some expansionary demand in locations with reduced new supply. But growth from expanding industries and pent-up renewal activity is expected to support a continued moderate increase in global leasing through the end of the year.

Long-term: Most organizations are anticipating net headcount expansion over the next five years, according to JLL’s Future of Work 2026. With cost pressures intensifying and declining availability of new construction, there will be a heightened emphasis on organizational agility, tracking labor force transformation trends and flexible portfolio management.

Logistics: Third party logistics and e-commerce companies driving robust activity across regions

Occupiers in major markets are increasingly accepting uncertainty as the new normal and acting on requirements. North America continued to outperform in the second quarter; take-up rose by 46% year-over-year with broad-based expansion most evident in big-box space. In Europe, new requirements that entered the market in late 2025 are starting to convert into signed deals, helping to push leasing up by 20% over the year. Demand in Asia Pacific stayed healthy across most major markets with absorption rising by 4% year-over-year in Q2, supported by 3PL, e-commerce and manufacturing tenants.

Future trends: Supply chain shifts and automation contributing to future demand
 

Short-term: Despite a complex macroeconomic and geopolitical backdrop the industrial sector enters the second half of 2026 with improving fundamentals as companies move ahead with strategic requirements. Persistent external pressures are contributing to structural shifts in supply chain strategy and growing demand, including from the build-out of logistics infrastructure to support the nearshoring and onshoring of production and the increasing integration of technology-driven supply chain solutions.

Long-term: Technology and automation are reshaping industrial real estate in meaningful ways. Data center-related industrial requirements continue to expand in markets adjacent to hyperscale build-outs, generating incremental warehouse and staging needs. 3PL and e-commerce leasing are both expanding, with many companies prioritizing buildings that can accommodate higher energy use, advanced automation systems and robotics.

Retail: Leasing demand outweighing limited supply

Retail leasing activity remains strong in prime locations and top-quality assets globally, while years of minimal construction activity have left vacancy at near-record lows in mature markets. However, demand across the broader market is polarized as properties in weaker locations face longer transaction times and softer rents. The U.S. recorded solid net absorption during the second quarter, prime European locations continue to thrive, and activity in dominant areas is healthy across many Asia Pacific markets.

Future trends: Structural market shifts reinforce retail fundamentals

Short-term: Retailers continue to assess the impact of higher occupancy costs and cautious consumer sentiment, with food and beverage, experiential and value retailers remaining the most active. With construction near historic lows in many markets physical retail sales growth will outpace new supply, supporting sales densities and competition for newer, well-located space.

Long-term: Physical stores are increasingly being reimagined as strategic assets, with retailers introducing measures to grow revenue, increase customer interaction and gather new insights. Rising online fulfilment costs are making shop-based fulfilment more attractive for margin optimisation, while companies are integrating services, customer data and retail media platforms to drive new revenue streams. A growing bifurcation in spending patterns will contribute to pressure on mid-market retailers and reinforce outperformance of premium and experiential space as well as essentials.

Living: Institutional capital increasingly targeting specialised formats and scalable platforms

Global living investment in the first half of 2026 rose by around 9% compared to H1 2025, with gains across the Americas, EMEA and Asia Pacific. Institutional investment continues to mature globally as capital increasingly targets specialized formats and platform scalability. On top of the over $114 billion in direct investment in the sector, several billion dollars were also deployed into entity-level deals.

Future trends: Living becoming a core strategic allocation within diversified real estate portfolios
 

Short-term: Normalizing supply dynamics, resilient occupancy levels and yield stabilization in major markets are expected to support further growth in living investment volumes. Institutional capital formation - particularly in build-to-rent and student housing - signals continued conviction in the sector's structural growth drivers, though deployment may remain selective as investors prioritize operational quality and established platforms over opportunistic acquisitions.

Long-term: The living sector is poised for geographic expansion and format diversification as institutional allocations deepen beyond the current core markets. Emerging markets including India, South Korea, Vietnam and Poland will attract meaningful cross-border capital, propelled by demographic tailwinds and undersupplied specialized formats such as coliving, senior housing and workforce accommodation.

Hotels: Resilient performance supports growing liquidity

Global hotel performance continues to be resilient with limited new supply supporting pricing power, albeit regional divergences are widening. Europe is leading RevPAR growth so far in 2026, followed by Asia Pacific. Growth is still positive but more moderate across the Americas, while the Middle East has seen softer performance. Hotel transaction activity rose by 29% year-over-year in Q2 with investor conviction in the sector remaining strong as many adopt a longer-term horizon despite near-term market volatility.

Future trends: Quality assets benefit from structural shifts despite short-term disruption

Short-term: Geopolitical uncertainty continues to shorten booking windows and soften parts of the longer-haul travel market, particularly on routes linked to or transiting through the Middle East. At the same time, structural demand for travel and experiences remains resilient, supporting domestic and regional leisure demand. In the short to medium term, agility, operational flexibility and disciplined cost management are becoming increasingly important for owners and operators navigating a more volatile environment.

Long-term: The hotel sector is entering a period where long-term performance will increasingly be shaped by adaptability rather than pure market growth. In a more complex operating environment, flexibility in pricing, cost management, customer acquisition and operations are becoming key differentiators. At the same time, hotels are becoming more widely recognized as operationally dynamic and cash flow-responsive operational assets.