Building for 2026: Risk, Resilience, and Return in Commercial Real Estate

After several turbulent years, 2026 could offer both relief and reckoning for commercial real estate (CRE). The Federal Reserve’s rate-cut cycle—anticipated to continue through year-end—may finally unlock refinancing for the $1.8 trillion in CRE debt maturing in 2026, giving owners long-awaited room to reinvest and reposition portfolios. With inflation staying in check for the most part, insurers seem to have relaxed their push for higher valuations of properties that contributed to higher premiums over the last seven years.

But the reprieve comes with conditions. Labor shortages remain acute, construction and operating costs are stubbornly high, and legal and cyber risks are evolving faster than many owners can adapt. Even with property insurance premiums expected to decline on average 15%-25% for risk-mature portfolios, volatility remains the industry’s baseline. 

The year ahead will reward leaders who move beyond short-term fixes to long-term resilience. Managing exposure—not just assets—has become the real test of performance. Those who can anticipate where risk intersects with opportunity will define the next phase of CRE growth. It starts with four forces: profitability, people, protection, and preparedness.

1. Profitability

For many owners, 2026 may bring long-awaited breathing room. Lower borrowing costs and improving liquidity could stabilize portfolios and open the door to refinancing projects that stalled during the rate spike of the last few years. Yet profitability will remain uneven, divided sharply by property type and geography.

Office remains the laggard. Class A space continues to attract tenants, but older assets in secondary markets face stubborn vacancies. Industrial properties are still in demand but increasingly exposed to tariff volatility and global supply chain costs. Multifamily housing, by contrast, has maintained steady occupancy, though high construction costs have tempered new development. Across all sectors, one theme stands out: efficiency is replacing expansion as the key performance driver. 

How to Stay Ahead: Owners looking to sustain returns should focus on optimizing—not just growing—their portfolios. Diversify holdings by repurposing underperforming office or retail properties into mixed-use or residential developments that generate steady cash flow. In many markets, property insurance now consumes up to 30% of operating budgets, making it a direct profitability factor. Treat coverage strategy as part of financial management, not a fixed expense. Demonstrating strong loss control, accurate valuations, and overall risk maturity can materially reduce premiums and improve net operating income.

2. People

Labor shortages remain one of the most persistent challenges for property owners. Facility management, maintenance, and operations roles are still difficult to fill, with national vacancy rates expected to remain high through 2023. The shortfall extends across tenant industries as well, creating ripple effects that influence rent stability and occupancy rates. 

These workforce gaps are reshaping building operations. Staffing shortages lead to deferred maintenance, longer repair timelines, and inconsistent tenant service—all of which can erode asset performance over time. Even technology can’t fully close the gap; automation and AI tools help streamline processes, but they still depend on skilled workers to operate effectively.

How to Stay Ahead: Treat workforce stability as a core risk factor. Investing in people—through retention programs, clear career pathways, and targeted training—protects asset performance as much as a capital improvement would. For example, 73% of employees say a comprehensive, personalized benefits program would make them more likely to stay with an employer. For owners, that kind of retention translates directly to stronger operations, higher tenant satisfaction, and lower long-term costs. 

Evaluate tenants through the same lens: a company’s ability to attract and retain workers is now a leading indicator of lease reliability. Use technology strategically to augment staff capacity, not replace it. Predictive maintenance tools, smart-building platforms, and AI scheduling can improve productivity and reduce downtime. The buildings that perform best in 2026 will be those where people and technology work together as an integrated system of operational resilience. Group insurance products are available for tenants—reducing their costs, easing owner’s administrative burdens, and creating a revenue stream for owners.

3. Protection

After several years of sharp increases, property insurance rates are finally softening. Many portfolios are seeing reductions between 10% and 25%, with the most significant relief going to well-maintained, low-loss properties. But the improvement is uneven. Catastrophic weather losses, crime exposure, and escalating jury verdicts—many exceeding $10 million—continue to drive caution among underwriters.

In higher-risk markets, insurers are lowering limits, tightening sublimits for crime and assault, and in some cases, exiting classes of business entirely. That means owners who cannot demonstrate control over risk will continue to face pricing pressure or restricted capacity, even as the broader market improves.

How to Stay Ahead: Treat insurance performance as a business metric that can be influenced, not an outcome to be accepted. Start with the fundamentals: ensure property valuations are current, safety systems are documented, and maintenance records are transparent. Presenting underwriters with clear data and evidence of loss prevention strengthens negotiating leverage at renewal.

Also look for opportunities to differentiate. Installing advanced security, investing in water detection or fire prevention systems, and tracking near-miss incidents can all signal maturity to carriers. The owners who earn the best terms in 2026 will be those who make risk visibility and accountability a core part of portfolio management. 

4. Preparedness

Owners today face exposures that extend far beyond property damage—ranging from accessibility lawsuits and third-party litigation funding to cybercrime schemes that can drain escrow accounts or interrupt tenant operations overnight. Among CRE organizations affected by cyberattacks, 40% say revenue loss is the most significant business impact. These threats rarely occur in isolation. A single phishing incident can trigger financial loss, reputational damage, and even regulatory scrutiny, underscoring how quickly digital risk can cascade across operations.

How to Stay Ahead: Preparedness in 2026 is less about prediction and more about design. The strongest organizations are rethinking how they share information and make decisions when something unexpected happens. In practice, that might look like giving risk and finance teams access to the same live data or ensuring that a cyber event triggers an operational response within minutes. The goal isn’t to expand bureaucracy but to tighten reflexes.

Leading Through the Next Market Cycle

The commercial real estate market may finally be stabilizing, but stability shouldn’t be mistaken for certainty. The forces shaping 2026—profitability, people, protection, and preparedness—are deeply connected. A financing decision can alter insurance capacity. Workforce shortages can erode maintenance quality and tenant performance. A single lapse in data security can trigger both financial and reputational loss.

Owners who view these forces as parts of one ecosystem—not four separate challenges—will find opportunity where others see risk. The portfolios that perform best in 2026 will use data, discipline, and partnership to align risk management with business strategy, improving efficiency, earning stronger insurance terms, and sustaining tenant confidence even as conditions shift.