Osprey Commercial Real Estate

August Market Update

August 2026

Summary

The U.S. commercial real estate market continued to stabilize in July despite slower hiring and persistently elevated borrowing costs. Inflation moderated, private demand remained resilient, and improving supply-demand balances supported better fundamentals across several property sectors.

Sector Performance Overview

Office

This sector remained in a gradual recovery, posting 11.3 million square feet of positive 12-month net absorption. Vacancy remained elevated at 13.9% and rent growth held at 1.7%, with demand still concentrated in Class A properties.

Multifamily

Demand remained solid with 472,200 units absorbed over the past year. For the first time in nearly five years, absorption exceeded deliveries, helping vacancy decline to 8.0% and rent growth strengthen to 1.1%.

Retail

Fundamentals remained comparatively strong, with 25 million square feet of annual net absorption, 4.3% vacancy, 1.8% rent growth, and a 7.4% cap rate. General retail led demand, while Neighborhood and Power Centers recorded the strongest format-level rent growth at 2.5% and 2.6%, respectively.

Industrial

The market continued to rebalance as annual absorption more than doubled year over year to 184.4 million SF. Vacancy stabilized at 7.5% and rent growth remained modest at 1.3%, with logistics accounting for most demand.

Hospitality

Operating performance remained broadly stable. Occupancy was 62.8%, ADR reached $164, and RevPAR was $103. Hotel transaction volume improved to $27.9 billion over the trailing 12 months, although high financing costs continued to constrain investment activity.

Key Takeaways

  • Retail remains the the most resilient CRE sector
  • Multifamily has benefitted from a slowdown in new supply
  • A sustained decline in long-term interest rates remains the key catalyst for a broader recovery in transaction activity
  • CRE loan delinquencies held at 1.58% across Q1 2026
  • Unemployment eased to 4.1% alongside moderated inflation to 3.4%

To read the full report please follow link below. Data courtesy of NAR.

NAR August Market UpdateDownload