Looking ahead, our outlook is cautiously positive for industrial and logistics and multifamily; neutral for retail; and negative for office.

“Commercial real estate will continue to stabilise in 2026 as improving financing conditions combined with strong fundamentals and increased liquidity will improve access to capital for sectors away from office, where refinancing risk will remain elevated,” said Benjamin Bouchet, director in Scope’s structured finance team.

“Indeed, refinancing risk for existing securitised loans appears limited to just the office sector, where we expect a quarter of all loans by number to face high or very high refinancing risk.” Borrowers will have to adjust their expectations with regard to certain struggling assets and inject equity in order to refinance.

Office

The office market is expected to remain under pressure, with structural challenges persisting despite some stabilisation in prime segments. “Demand will continue to focus on high-quality, sustainable, and flexible spaces, leaving older, non-compliant buildings exposed to rising vacancy and mounting obsolescence risk. We anticipate elevated capex requirements for landlords seeking to meet ESG and regulatory standards, while tenant incentives remain high to secure occupancy,” said Shan Jiang, director in Scope’s structured finance team.

Industrial and logistics

The logistics sector is expected to remain one of the most resilient performers, supported by strong structural drivers such as e-commerce penetration, supply-chain reconfiguration, and near-shoring trends. Vacancy rates should stay historically low, while inflation-linked rental agreements will continue to provide a hedge against cost pressures and support stable income streams. “We are cautiously optimistic, noting that while yield expansion may persist in some sub-markets due to higher financing costs, robust occupier demand and limited new supply will help preserve valuations,” Jiang said.

Residential

“We expect the residential sector to remain fundamentally strong, underpinned by persistent housing under-supply and demographics, which will continue to drive rental demand. Meanwhile, development activity will stay muted due to high construction costs and tighter financing conditions,” said Jiang.

Retail

The retail sector continues to show signs of resilience and growth, with all the loans improving on at least one metric since December 2024. “The bricks-and-mortar retail market is expected to remain resilient but uneven, with performance increasingly polarised between prime, experience-driven locations and secondary assets,” Jiang noted. “Turnover-linked rents and disciplined cost management should continue to support net operating income for well-located properties, while structural headwinds persist from e-commerce growth and evolving consumer habits.”

Alternatives

We have a positive outlook for data centres, are cautiously positive on student housing, neutral on hospitality and cautiously negative on life sciences.

• Data centres and digital infrastructure transactions benefit from strong fundamentals aided by a lack of supply (both on the property front but also on the power grid), long leases with generally high-quality tenants. “Digital transformation combined with AI and increased data protection in the EU mean that the demand is poised for growth,” Bouchet said.

• The student housing sector is expected to remain structurally resilient, supported by sustained university enrolment and strong international student demand, particularly in major academic hubs.

• The hospitality sector is expected to maintain steady performance, supported by resilient leisure and business travel demand, particularly in major urban and tourist destinations.

• The life-sciences sector is expected to stabilise gradually following the turbulence of recent years.

Download the European CRE/CMBS outlook.