Commercial real estate in 2026: How the market is taking shape
As the new year begins, the commercial real estate sector is continuing to take shape amid shifting economic conditions and evolving business needs. The commercial real estate market is showing signs of stabilization and a renewed emphasis on fundamentals. Owners, developers, and lenders are entering this next phase with greater clarity around demand, pricing, and long-term strategy.
Lending conditions and capital availability
Entering the year, commercial real estate lending is operating in a more defined interest rate environment than in recent cycles. While borrowing costs remain above historic lows, improved rate visibility is allowing for more consistent planning and underwriting. Financial institutions continue to emphasize strong sponsorship, realistic cash flow expectations, and conservative leverage. Relationship-driven banking remains critical, as experienced lenders work closely with clients to structure financing solutions that support long-term property performance.
Office, industrial and retail performance
Office real estate remains a central focus as companies finalize space needs tied to hybrid and flexible work models. Demand is increasingly concentrated in high-quality buildings with strong locations, efficient layouts, and amenities that support productivity and workforce retention. Industrial real estate continues to perform well, supported by logistics, warehousing, and domestic supply chain activity. Retail commercial real estate is also demonstrating stability, particularly neighborhood centers anchored by service-based, medical, and necessity-oriented tenants.
Development, redevelopment and adaptive reuse
Commercial development activity is proceeding at a measured pace, with increased attention on pre-leasing, construction costs, and project feasibility. Redevelopment and adaptive reuse continue to gain momentum as owners reposition existing assets to meet current tenant demand. Strategic upgrades and thoughtful repurposing of older commercial properties are helping extend asset life while aligning with changing market conditions.
The role of banking partnerships moving forward
As commercial real estate continues to evolve, experienced banking partners remain essential in helping clients navigate both opportunity and risk. Banks that combine disciplined credit practices with a relationship-based approach are well positioned to support commercial real estate owners and operators across market cycles. A deep understanding of local markets, asset performance, and client objectives allows lenders to deliver financing solutions that align with both present conditions and future plans.
Republic Bank serves as that partner for commercial real estate clients, providing consistency, experience, and local market expertise. Through disciplined underwriting, responsive communication, and a long-term relationship focus, Republic Bank works alongside borrowers as the commercial real estate market continues to take shape in the years ahead.
• Jac Currie is executive vice president/director of commercial real estate lending for Republic Bank of Chicago, a member FDIC. To learn more about how Republic Bank can help support your goals, call Currie at (630) 299-8640 or jcurrie@republicebank.com.