The 2026 midterm elections are unlikely to derail the U.S. commercial real estate market, with Cushman & Wakefield expecting economic growth and improving property fundamentals to outweigh any impact from a divided Congress.
Democrats won control of both chambers, setting up a divided government in January 2027. However, the election results do not materially change the firm’s economic outlook — which expects GDP growth of slightly more than 2% in both 2026 and 2027, alongside gradual improvement in commercial property demand.
CRE Performance Depends More On The Economy
Historical data suggests congressional control has little direct influence on commercial real estate returns. Private CRE returns averaged 8.8% under unified government and 8.6% under divided government across 47 comparable periods.
Property fundamentals were already improving before the election. Third-quarter industrial net absorption reached its highest level since early 2023, multifamily vacancy fell to 8.6%, office absorption remained positive for a fifth consecutive quarter, and retail vacancy stood at 5.9%.
With construction slowing across most property types, Cushman & Wakefield expects even modest demand growth to support occupancy and rent increases, particularly for higher-quality properties.
Interest Rates Remain The Bigger Concern
Debt-limit negotiations, government shutdowns and trade policy could create political and market volatility. However, the firm expects their effects on CRE to come mainly through inflation, interest rates and borrowing costs.
The Iran conflict poses a more immediate economic risk because disruptions to energy supplies have pushed oil prices higher. Cushman & Wakefield expects the 10-year Treasury yield to remain between 4.5% and 5% through 2027 as inflation gradually cools.
For investors, returns are expected to depend more on property income growth, financing conditions and market fundamentals than on the election outcome. Data center development may face additional scrutiny around AI regulation and energy use, but demand for AI and cloud computing is expected to remain the sector’s primary growth driver.
Overall, the firm expects commercial real estate fundamentals to continue improving, with constrained new supply and economic growth providing support despite ongoing political and geopolitical uncertainty.
