U.S. trade policy appears to have reached a state of temporary stability, at least with respect to most country tariffs. As tariff concerns have eased, fiscal sustainability risks have risen, driving up global bond yields. Most major markets are expected to see continued economic expansions this year and the outlook for 2026 is more positive, supported by lower average interest rates and a more predictable global trading environment.

Occupier activity was mixed across markets and property types during the quarter but remained resilient. Despite ongoing supply chain uncertainty, sentiment is improving in industrial markets as pent-up demand returns. Retailers continue to expand in core locations, while global office leasing over the first nine months of the year rose further to its highest level since 2019.

Global capital markets performed strongly in the third quarter as trade policy uncertainty reduced and major central banks continued to loosen monetary policy. Direct investment volumes rose further, with stable property fundamentals and highly liquid debt markets acting as catalysts for increased transaction activity. Fundraising marked a significant rebound after several challenging years, driven in part by strong performance in debt strategies and growing investor interest in secondary funds.

Direct investment activity reached US$213 billion in the third quarter of 2025, –an increase of 17% year-over-year. Year-to-date transaction volumes have now increased by 21% compared to 2024. The Americas posted particularly strong gains as transaction activity rose 26% in the third quarter led by the United States. EMEA investment volumes were 19% higher than last year in Q3, with the UK and Germany the two most liquid markets while Spain, Sweden and Belgium all posted robust growth. Trends were more nuanced in Asia Pacific where direct investment declined by 8% year-over-year. Activity in Japan remained strong despite the normalization of borrowing rates, with volumes rising by 16% year-over-year.

Cross-border investment has continued to recover in spite of geopolitical pressures, with third quarter growth of 7% year-over-year and year-to-date volumes 26% higher. The share of cross-border flows into each of the regions has remained relatively steady so far in 2025.

The global vacancy rate fell during the quarter, with decreasing availability of prime, central space. Groundbreakings have fallen to a new record low in the U.S. with three quarters of the remaining pipeline already pre-leased, while new construction starts are at the lowest level in over a decade in Europe. Occupiers with large requirements will need to explore options earlier as competition for the best space intensifies. 

Future trends: Focus shifting from workplace planning to implementation

Short-term: Although portfolio optimization remains a priority for many companies, higher utilization targets, reduced downsizing rates and centralization as tenants upgrade into higher-quality space are expected to support continued growth in leasing through year-end 2025 and into 2026.

Long-term: Affordability and availability will be increasingly in focus for occupiers as available new space in prime central submarkets remains limited. Companies will need to start searches earlier and maintain flexibility; renewals and extensions will account for a larger share of activity, while leasing in refurbished projects and core-adjacent submarkets is likely to increase.

Logistics leasing activity improved in North America and Europe during Q3, although greater occupier caution was evident in some Asia Pacific markets. New supply has fallen significantly from peak levels and will continue to decline through 2026. Vacancy is already contracting in Asia Pacific, while availability is likely to peak and start declining in both North America and Europe over the next 12 months.

Consumer sentiment has become increasingly mixed across markets, creating a multi-speed retail environment as high-income consumers drive spending growth. Retail fundamentals continue to be resilient across regions; U.S. absorption rebounded in Q3, with store openings now outpacing closures for the year. In Europe and higher-growth or tourism-oriented economies in Asia Pacific, retailer demand remains healthy for premium central space amid limited availability. 

Future trends: Stable fundamentals as expansionary demand tempered by limited supply

Short-term: Resilient market performance is likely to be sustained through 2026 as retailers continue to expand despite subdued consumer sentiment and labor markets. The impacts of trade policy on prices are expected to feed through gradually, with inflation set to rise moderately in the United States but decline elsewhere. Limited new supply will support fundamentals but hold back expansionary demand as retailers remain selective on location and quality.

Long-term: Dining, essential goods and experiential retailers are set to continue expanding. Elevated living costs following several years of high inflation are boosting demand for value, while higher-income consumers drive a greater share of spending growth. Rents are likely to remain on a gradual recovery path in most mature markets but remain below replacement costs, which will keep new construction subdued.

The living sector is on track for a strong 2025, with investment volumes on course to reach pre-Covid averages. The U.S. is leading the way with the third quarter notching the highest deal activity of the year. Volumes have also risen strongly in Europe and Asia Pacific , where strong demand for purpose-built student accommodation (PBSA) assets has been evident.

Following the elevated growth seen in 2022 and 2023, global revenue per available room (RevPAR) trends are normalizing further. Europe is leading RevPAR growth, followed by Asia Pacific, with the pace of growth moderating in the Americas. Global urban markets should continue to see further increases, pushed by lower new supply and expanding group and corporate travel. 

Future trends: Global hotel brands prioritize unit growth over management contracts 

Short-term: With slowing new supply, hotel brands are using their balance sheets to boost unit growth via M&A, strategic partnerships and conversions. The global portion of franchised hotels (i.e., those managed by third parties) is expected to increase further, creating opportunities in the highly fragmented third-party management space with new players, increased partnerships and M&A likely to emerge. 

Long-term: The global travel landscape is undergoing a significant transformation with markets like India and Saudi Arabia poised to play increasingly significant roles in shaping future travel patterns, driven by shifts in demographics, economic power, and consumer preferences. As consumers increasingly focus on experiences, traditional hospitality brands are expanding their offerings to new verticals, boosting the growth of lifestyle hotels. 

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