Report
2026 Transatlantic Market Outlook
Key trends shaping commercial real estate capital markets across the US and UK - and where we see opportunity for investors and borrowers in the year ahead.
Executive Summary
The big picture.
The transatlantic CRE market enters 2026 with renewed momentum as monetary easing in both the US and UK unlocks pent-up transaction volume and recalibrates asset valuations after two years of price discovery.
Flight to quality remains the dominant theme across office markets on both sides of the Atlantic, with trophy and Class A assets commanding premium rents while obsolete stock faces accelerating obsolescence and conversion pressure.
Multifamily and build-to-rent sectors continue to attract outsized institutional capital, driven by structural housing undersupply, favorable demographics, and a maturing operational platform in the UK market.
Cross-border capital flows are accelerating as US investors seek relative value in UK assets trading at wider yield spreads, while European and Middle Eastern sovereign wealth funds increase allocations to US gateway markets.
United States
US market overview.
Sector-by-sector analysis of the key dynamics shaping US commercial real estate in 2026.
Office
Flight to quality, suburban resurgence
Class A trophy assets in gateway cities are achieving record rents as tenants consolidate into higher-quality space, driving a "flight to quality" that has widened the performance gap between best-in-class and commodity office product to historic levels.
Suburban office markets -particularly those in Sunbelt metros with strong population growth -are outperforming urban CBD markets for the first time in decades, as hybrid work patterns reshape demand geography.
Conversion of obsolete office buildings to residential, life sciences, and mixed-use continues to accelerate, supported by municipal incentive programs and growing lender appetite for well-structured conversion projects.
Key Metrics
12 – 14%
Class A Vacancy
22 – 28%
Class B/C Vacancy
5.0 – 5.5%
Trophy Cap Rates
Multifamily
Strong fundamentals, supply moderation
After two years of elevated deliveries that tempered rent growth in many markets, new supply is moderating sharply as construction starts that were deferred during the 2023-2024 rate shock work through the pipeline. This supply deceleration sets up favorable conditions for rent growth through 2027.
Demographic tailwinds remain firmly in place -the largest generation in US history is in its prime renting years, household formation continues to outpace new unit delivery, and homeownership affordability constraints are keeping more renters in the market for longer.
Lender appetite for multifamily debt remains robust across the capital spectrum, with agency lenders (Fannie Mae and Freddie Mac) maintaining competitive execution and balance sheet lenders actively competing for stabilized and value-add opportunities.
Key Metrics
3.5 – 4.5%
Avg. Rent Growth
5.5 – 6.5%
Vacancy Rate
4.5 – 5.5%
Cap Rates
Industrial
E-commerce tailwinds, nearshoring demand
The industrial sector continues to benefit from secular demand drivers including e-commerce penetration (now exceeding 22% of total retail sales), supply chain nearshoring and reshoring trends, and the buildout of domestic manufacturing capacity driven by the CHIPS Act and Inflation Reduction Act.
After a brief period of supply-demand recalibration in 2024-2025, net absorption has reaccelerated as tenants resume expansion plans. Markets with proximity to major population centers, intermodal transportation infrastructure, and available labor pools are seeing the strongest demand.
Institutional capital continues to flow into the sector, with industrial REIT valuations recovering and private equity platforms actively pursuing both core and development strategies. Lenders view industrial as one of the most favorable asset classes for deployment.
Key Metrics
5.0 – 6.0%
Vacancy Rate
4.0 – 6.0%
Rent Growth
4.5 – 5.5%
Cap Rates
United Kingdom
UK market overview.
Sector-by-sector analysis of the key dynamics shaping UK commercial real estate in 2026.
Office
Central London demand, regional city growth
Central London office take-up has recovered to near pre-pandemic levels, driven overwhelmingly by demand for best-in-class, amenity-rich buildings with strong ESG credentials. The West End continues to command the tightest supply and highest rents in Europe, with prime rents exceeding GBP 140 per square foot.
Regional UK cities -Manchester, Birmingham, Edinburgh, and Leeds -are experiencing a structural upgrade in tenant demand as major corporations establish or expand regional headquarters, drawn by lower occupancy costs and strong talent pools.
Energy Performance Certificate (EPC) regulations are reshaping the market, with the UK government targeting a minimum EPC B rating for commercial leases by 2030. This creates both risk (for owners of non-compliant stock) and opportunity (for investors willing to fund green refurbishment programs).
Key Metrics
GBP 140+ /sq ft
West End Prime Rent
GBP 75 – 80 /sq ft
City Prime Rent
3.75 – 4.25%
Prime Cap Rates
Build-to-Rent (BTR)
Institutional capital flowing in
The UK build-to-rent sector has emerged as one of the most compelling institutional investment themes, with the total pipeline exceeding 240,000 units and institutional investors deploying record capital into the sector. The structural undersupply of quality rental housing in the UK -particularly outside London -provides a durable demand foundation.
Operational platforms are maturing rapidly, with the leading BTR operators achieving occupancy rates above 95% and demonstrating the ability to deliver consistent rental growth, lower tenant turnover, and operating margins that compare favorably to US multifamily benchmarks.
Lending appetite for BTR has expanded significantly, with clearing banks, challenger banks, and debt funds all actively competing for BTR investment and development financing. The sector benefits from favorable regulatory treatment and growing political support for institutional rental housing as part of the solution to the UK housing crisis.
Key Metrics
240,000+ units
Pipeline
95%+
Avg. Occupancy
5 – 7%
Rental Growth
Industrial & Logistics
Last-mile demand, supply chain reshoring
UK industrial and logistics real estate continues to benefit from the structural shift toward e-commerce, with online retail penetration in the UK at approximately 27% -among the highest globally. Last-mile delivery facilities in urban and near-urban locations are seeing the strongest demand and rental growth.
Supply chain resilience has become a boardroom priority following the disruptions of recent years, driving demand for larger, strategically located distribution centres. The "Golden Triangle" (the Midlands logistics corridor between Northampton, Leicester, and Rugby) remains the primary hub for national distribution, while port-centric locations near Felixstowe, Southampton, and London Gateway are attracting significant investment.
Development activity is being constrained by limited land availability and planning challenges in key locations, which is supporting rental growth for existing well-located stock. Lenders are actively competing for logistics financing, viewing the sector as one of the most resilient segments of the UK CRE market.
Key Metrics
3.5 – 5.0%
Vacancy Rate
4.0 – 6.0%
Prime Rent Growth
4.0 – 5.0%
Cap Rates
Capital Flows
Cross-border capital flows.
Cross-border investment into commercial real estate is accelerating in 2026 as investors seek to diversify geographically and capitalize on relative value opportunities created by the recent period of price correction. The transatlantic corridor - capital flowing between the US and UK/Europe - is among the most active globally.
US investors are finding compelling opportunities in the UK market, where prime commercial assets are trading at yield spreads of 100 to 200 basis points above comparable US properties. The combination of an attractive entry point, potential for sterling appreciation, and the depth and transparency of the UK institutional market is drawing increased allocation from US pension funds, sovereign wealth funds, and private equity platforms. Sectors of particular interest include build-to-rent, logistics, and prime London office.
In the other direction, UK and European institutional investors - including insurance companies, pension funds, and sovereign wealth funds from the Middle East and Asia-Pacific - continue to view US gateway markets as essential components of a diversified global real estate portfolio. These investors are drawn to the scale, liquidity, and growth dynamics of US markets, with particular focus on multifamily, industrial, and life sciences sectors.
For borrowers executing cross-border transactions, having an advisor with established relationships on both sides of the Atlantic is critical. Financing structures must navigate different legal frameworks, tax regimes, currency exposures, and lender markets - complexity that requires specialist expertise to manage effectively.
Rate Environment
Interest rate outlook.
The monetary policy environment is a critical backdrop for CRE capital markets in both the US and UK.
United States
Federal Funds Rate: 3.75 – 4.00%
The Federal Reserve has delivered 200 basis points of rate cuts from the cycle peak, bringing the federal funds rate to 3.75–4.00% as of early 2026. Markets are pricing an additional 50 to 75 basis points of easing over the remainder of the year, contingent on continued progress toward the Fed's 2% inflation target.
The 10-year Treasury yield has settled in the 3.75–4.25% range, providing a more favorable backdrop for property valuations than the 5%+ levels seen in late 2023. CRE lending spreads have tightened modestly as bank balance sheets have stabilized and competition from debt funds has intensified. All-in borrowing costs for stabilized institutional-quality assets are now in the 5.5–6.5% range, down meaningfully from the 7%+ levels of 2023–2024.
United Kingdom
Bank of England Base Rate: 3.50 – 3.75%
The Bank of England has followed a more cautious easing path than the Fed, with the base rate at 3.50–3.75% after cumulative cuts of 175 basis points. UK inflation has proved more persistent than in the US, driven by services inflation and wage growth, leading the MPC to maintain a measured pace of policy normalization.
UK gilt yields have traded in a 3.50–4.00% range for the 10-year benchmark, creating a more favorable environment for property valuations relative to the sharp repricing of 2022–2023. SONIA-based floating rate lending spreads remain competitive, with clearing banks offering margins of 150–250 basis points for investment-grade borrowers. All-in senior debt costs for prime UK CRE are in the 5.25–6.25% range, with insurance company fixed-rate lending available at 4.75–5.50% for the strongest credits.
Outlook
Where we see opportunity.
As we look across the transatlantic CRE landscape in 2026, several themes stand out as defining the opportunity set for active investors and well-capitalized borrowers.
Value-add multifamily in US secondary markets. The combination of moderating new supply, strong demographic demand, and the repricing of assets acquired at peak valuations creates a compelling entry point for sponsors with strong operating platforms. Markets such as Raleigh, Nashville, Tampa, and Austin offer attractive risk-adjusted returns for well-capitalized buyers.
UK build-to-rent development and investment. The structural undersupply of institutional-quality rental housing in the UK, combined with growing operational sophistication and deepening lender appetite, makes BTR one of the most attractive risk-adjusted opportunities in European real estate.
Office repositioning and conversion. In both the US and UK, the bifurcation between trophy and commodity office space creates opportunity for investors willing to acquire well-located but underperforming buildings and invest in repositioning or conversion to alternative uses. Lenders are increasingly supportive of credible business plans backed by experienced sponsors.
Logistics and industrial in supply-constrained markets. In both the US and UK, the combination of persistent demand from e-commerce and supply chain optimization, limited new land availability in key locations, and favorable lending conditions supports continued outperformance of the logistics sector.
Cross-border arbitrage. The yield differential between US and UK assets, combined with potential currency tailwinds, creates opportunities for investors who can underwrite across jurisdictions and access competitive financing in both markets.
Let's Talk
Discuss these trends with our team.
Our advisors are actively monitoring these market dynamics and helping clients position their portfolios for the opportunities ahead. We welcome the opportunity to share our perspective on your specific situation.