U.S. Real Estate: Building on Resilience

U.S. real estate should remain resilient because economic strength and constrained supply support rental growth, although higher-for-longer rates limit capital appreciation.

• U.S. GDP grew at a 2.2% annualized rate in Q2 2026, the composite PMI reached 58.4 in September, and Oxford Economics forecasts 2.5% GDP growth in 2027; however, headline inflation rose to 3.7% and the federal funds rate reached 3.75–4.0%.
• The RCA CPPI was almost flat over the past year at +0.1%, while transaction volumes rose 50% year over year through August, driven mainly by M&A and portfolio deals; single-asset transactions recovered by only 12%, and national cap rates averaged 6.75–7%.
• Office leasing is 15–20% above its five-year average and roughly 90% of pre-pandemic levels, but vacancy remains above 20%; development is economically viable in only 5% of U.S. cities, supporting rents for prime assets.
• Retail demand is strongest in Sunbelt and Southwestern markets, while national rental growth slowed to 1.7% annually; value-oriented and grocery-anchored retail are favored because new supply is limited and grocery remains relatively resilient to e-commerce.
• Industrial leasing rose almost 50% over the past year, big-box space of at least 500,000 square feet reached a record share of activity, new development remained 40% below the 2023–2024 peak, and asking rents increased by 1–2% annually.
• Housing affordability remains strained by mortgage rates above 7%, but multifamily vacancy fell to 4.3%, rental demand exceeds construction in most tracked markets, and self-storage is beginning to recover despite weak housing turnover.

Takeaway: Investors should rely primarily on rental growth rather than cap-rate compression, favoring modern logistics in migration-led markets, value and grocery-anchored retail, selected Class A offices, and residential assets while remaining cautious about financing costs and local-market differences.