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Outbyte Driver Updater FREEFix the driver behind crashes, sound loss and screen glitchesFind Drivers →Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Neither office nor industrial is the better investment in every case. For 2026, the stronger choice depends on the individual building, its market, tenants, lease terms, capital needs and purchase price—not just its sector. In the U.S. outlooks available through August 2026, industrial has broad demand drivers but is still absorbing excess supply; office is recovering unevenly, with the clearest improvement in well-located, modern buildings.
The figures below describe U.S. conditions unless noted otherwise. They are forecasts or observations from the cited reports, not proof of realized year-end performance. This comparison addresses property-sector fundamentals; buying a building directly and investing through publicly traded real estate securities are different decisions.
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What the 2026 forecasts say—and what they do not
CBRE’s January 2026 annual outlook forecast $562 billion in U.S. commercial real estate investment activity, a 16% increase from the prior year. It expected returns to be income-driven and highlighted asset selection and management. The $562 billion figure is a forecast of investment volume, not a return forecast for office or industrial property.
CBRE’s August 2026 midyear update revised the rate outlook: rather than its January forecast of 5–15 basis points of cap-rate compression for most property types, it expected rates to hold steady for the rest of 2026, with incremental compression in 2027. Neither outlook establishes a precise office-versus-industrial cap-rate spread or predicts a guaranteed winner.
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CBRE’s August update also projected investment volume to grow 16% for office and 15% for industrial and logistics. Those are forecasts for transaction activity, not total returns. More transactions in one sector do not, by themselves, show that its properties will deliver better income or appreciation.
Office in 2026: recovery depends on quality and location
Demand is improving, but not uniformly
CBRE’s August 2026 update forecast U.S. office vacancy of 18% at year-end and expected the gap between prime and nonprime vacancy to widen. In its January outlook, CBRE anticipated further scarcity of prime space even as older secondary buildings remained more exposed. The implication for an investor is that the label “office” is too broad to establish whether a particular building has a sound leasing outlook.
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CBRE reported that tech companies accounted for 21% of U.S. leasing activity in the first half of 2026. Its 2026 Americas Office Occupier Sentiment Survey, as reported in the August update, found that 64% of surveyed tech companies planned to expand their office portfolios that year. CBRE also reported that downtown office leasing rose 24% year over year in the first half and anticipated downtown vacancy falling below suburban vacancy in 2027. The expansion figure is survey intent, and the vacancy comparison is a forecast—not a confirmed result.
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New construction is limited, but existing space still matters
JLL Research’s December 2025 global outlook projected U.S. office completions in 2026 to be 75% below the cited 2021–25 peak; it said three-quarters of the remaining U.S. office development pipeline was pre-leased. Separately, JLL Americas Research reported 19 million square feet of U.S. office product under development in its 2025 report, more than 20% below the previous low in its series, set in 2011.
In that 2025 report, JLL forecast 30–40 million square feet of positive U.S. office net absorption in 2026 and an approximately 70-basis-point decline in overall vacancy. It also cautioned that stagnant office-using job growth could limit expansion, and that uncertainty and constrained new supply could affect occupier behavior. These are JLL forecasts based on the report’s assumptions, not observed year-end outcomes. CBRE’s January outlook also described Chicago and Los Angeles as lagging markets it expected to be bottoming out, and anticipated Boston, Seattle and Denver would follow by year-end 2026; those, too, were expectations rather than confirmed outcomes.
What that means for an office deal
A modern, well-located building with evidence of tenant demand may benefit from limited new supply and improving leasing. That thesis is weaker for functionally obsolete space or a location where demand and building economics do not justify renovation. Before treating a low purchase price as an opportunity, account for the work and leasing concessions needed to make the property competitive.
Industrial in 2026: durable demand drivers meet a supply hangover
Leasing activity is forecast to rise
CBRE’s January 2026 outlook said industrial occupiers would continue a flight to quality and forecast a slight improvement in annual leasing volume, supported in part by manufacturing reshoring and third-party logistics providers (3PLs). Its August update raised its forecast for U.S. industrial leasing activity growth from 5% to 10%, citing first-half activity, 3PLs, onshoring and advanced manufacturing, and data-center buildout. CBRE described the pace as approximately 1 billion square feet for the year. These are leasing-activity measures and forecasts, not rent-growth or investor-return estimates.
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Supply remains a local risk
CBRE said industrial was still working through excess supply created by the pandemic-era construction boom. It expected modern assets in key metros with population growth and transport hubs to outperform. JLL Research’s December 2025 global outlook projected industrial and logistics deliveries in 2026 to be 42% below the 2023 peak, citing reduced speculative construction and competition for land from data centers and manufacturing.
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The JLL delivery forecast is global, while many of CBRE’s leasing and investment figures are U.S.-focused; the measures also use different baselines. A decline in future deliveries may support occupancy if demand holds, but it does not establish that every U.S. metro—or every submarket—has tight conditions. A market with many recent completions can remain oversupplied while the construction pipeline contracts.
What that means for an industrial deal
Industrial demand has several supports, but investors still need to test local vacancy and competing supply, tenant concentration, building functionality, transport access and rent assumptions. A building’s suitability for current logistics or manufacturing uses matters as much as the broader sector outlook.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Compare the property, not just the sector
| Underwriting question | Office | Industrial |
|---|---|---|
| Local demand and vacancy | Is demand concentrated in a few employers or submarkets? How do prime and nonprime vacancy compare? | Is vacancy elevated after recent deliveries? Which 3PL, manufacturing or distribution users are active? |
| Building quality and obsolescence | Is the building modern, well-located and competitive for tenant expectations? What retrofit or conversion work is needed? | Can the building serve current logistics or manufacturing uses? Does its location connect to labor, population and transport? |
| Lease and tenant risk | How much space expires soon? What tenant-improvement allowances, free rent or renewal concessions may be required? | How concentrated are the tenants, how much space rolls, and do rents fit market and replacement economics? |
| Supply and competition | What space is under construction, being converted or removed from inventory? | What recently delivered or planned space competes for the same tenants? |
| Income and capital needs | What is stabilized net operating income after leasing costs and capital expenditures? | What is stabilized net operating income after downtime, tenant improvements and maintenance? |
| Financing and exit | Can debt service be supported if leasing is slower or cap rates are higher than expected? | Does the purchase price still work with slower absorption, rent resets or continued supply pressure? |
These are underwriting prompts, not a model that produces a universal sector ranking. The cited outlooks emphasize income, asset selection, leasing conditions, quality and supply, but do not supply a property-specific underwriting model or a single metric that settles the comparison.
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- Define the investment. Decide whether you are assessing direct ownership of a property or a publicly traded real estate investment. The sector forecasts above concern property-market fundamentals and do not establish the relative merits or returns of a particular security.
- Start with the local market. Review vacancy, tenant demand, new deliveries and competing space in the specific submarket. Do not substitute a national or global construction trend for local evidence.
- Stress-test the building and leases. Assess functionality, tenant credit and concentration, upcoming expirations, downtime, concessions and the capital required to attract or retain tenants.
- Underwrite income after costs. Estimate stabilized net operating income after leasing costs and capital expenditures, rather than relying on headline rent or sector-wide leasing growth.
- Test the purchase and financing terms. Check whether the deal remains supportable if leasing takes longer, rents reset, supply stays elevated or financing and exit assumptions are less favorable.
Use the outlooks as context for those checks, not as substitutes for them. CBRE’s forecasts point to an industrial leasing rebound alongside a supply adjustment, and to an office recovery that favors prime space; neither forecast can determine the value of an individual asset.
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