The Seven Key Influences Guiding Occupiers’ 2026 Office Leasing Decisions

In 2026, real estate leaders will work to balance greater clarity around new working patterns with political and economic dynamics. From rethinking space utilization and boosting capital efficiency to building resilience and flexibility for evolving workforces and workplace strategies, a broader set of factors are increasingly shaping decisions. Occupiers are seeking office environments that attract talent, foster productivity and adapt to both near-term priorities and long-term business needs. Below are seven data-backed considerations shaping 2026 leasing decisions, providing market insights to inform stakeholder discussions and guide strategic decisions that align with your company’s goals. 

1. Rising Construction and Fit-Out Costs 

Rising construction and fit-out costs remain a key challenge, staying well above pre-pandemic levels due to high interest rates, tariffs, supply chain disruptions and varying degrees of labor constraints by market. While the rapid run-up of 2021-2023 has eased, costs are still trending upward. Newmark projects an additional 3 to 7% increase in 2026, varying by market. 

With capital budgets tight, many occupiers are opting to renew when existing locations meet their needs. ​Landlords are countering with concessions and tenant improvement allowances (TIAs) to entice relocations and secure long-term leases, but these incentives are already starting to decrease in the most sought-after, top-tier buildings due to tightening availability. Despite generous TIAs, buildout costs are typically greater than in previous years, and most tenants must make up that difference in cost out-of-pocket (see figure 1). As a result, flexible, furnished, plug-and-play offices are gaining appeal.

2. Political and Trade Environment 

Ongoing dynamics in U.S. policy and global trade relations will continue to elevate uncertainty and shape near-term leasing decisions. Persistent trade tensions, rapidly changing U.S. tariff rates, evolving fiscal policies and shifting interest rates are influencing business operations, expansion plans and real estate decisions.  

Amid continual policy shifts, the U.S. economy presents mixed signals heading into 2026. Resilience in healthcare and education and strong AI-related investment are offset by slowing office-using job growth, restrained consumer spending and enduring inflation. This climate, combined with slower hiring, may lead some organizations to delay expansions as they wait for more economic clarity. The anticipated Federal Reserve rate cuts in 2026 could lower borrowing costs and stimulate growth. In this context, ongoing caution will likely persist as firms weigh opportunities against risks in an unpredictable business environment.  

3. AI and Workforce Transformation 

Artificial intelligence is widely regarded as the top disruptor in commercial real estate. In 2026, more organizations are expected to shift from early experimentation with AI to real-world implementation, prompting CRE leaders to assess impacts on labor, headcount and job functions and the resulting demand for office space.  

"Until the AI adoption cycle has fully played out, the potential labor market disruption—including which jobs are likely to be displaced by generative AI—will remain an open question.” 

-Goldman Sachs^[1]

CRE leaders face a shifting planning environment: they must make long-term lease commitments today, while AI’s impact on headcount and space requirements remains highly debated. Effects will vary by function and team activities, but in the near term, AI is likely to dampen overall space demand. In a global McKinsey survey of organizations that regularly use AI in at least one business function, about 33% of respondents expect their organization’s workforce to shrink by 3% or more in 2026, 43% expect little or no change and 13% expect headcount growth.² Respondents from larger organizations were more likely to expect AI to drive workforce reductions across the enterprise, versus those at smaller companies. Over time, as businesses deploy AI to enhance productivity, uncover new market opportunities and generate innovative revenue sources, headcount and space demands could rebound. Office-based roles that involve repetitive administrative or basic analytical tasks may be transformed more rapidly by AI in the short to medium term, while others requiring complex judgment or high-touch client interaction will experience slower change. This divergence could lead to significant differences in how much office space organizations require across their portfolios. 

"AI is associated with gentler growth – but not sharp declines - in job numbers. Like electricity, AI has the potential to create more jobs than it displaces if it is used to pioneer new forms of economic activity.”

-PWC^[3]

4. Measuring and Understanding Space Utilization 

Occupiers will likely place greater emphasis on measuring and understanding unique space utilization across portfolios. As advanced tools and analytics become more accessible, organizations will enhance their ability to understand precisely how, when and which spaces in their offices are being used, and harness those insights to inform more strategic real estate decisions. The next generation of occupancy sensors, smart booking systems and AI-driven dashboards will deliver richer real-time data on employee behavior and space performance. This will enable occupiers to design and manage workplaces around measurable outcomes that match their prioritization of cost containment, operational efficiency and experience quality. 

Occupancy analytics will move more organizations from reactive space measurement to proactive strategy. With average weekly office utilization in major markets at 60-68% and peak attendance at nearly 80%, occupiers can use these analytical insights to create more adaptable and efficient workplaces. Sophisticated occupiers now integrate real-time data into portfolio planning, making dynamic changes as usage evolves. They drive specific behaviors that impact the bottom line, like targeted collaboration around organizational change. Flexible lease options, such as rights of first offer, extension clauses, early termination and subleasing, provide additional agility, while modular furniture and layouts enable quick adaptation to shifting requirements, even when traditional leases are in place. 

5. Financial Market Conditions 

Interest rates and inflation remain among the most influential variables shaping leasing strategy in 2026. Newmark Research forecasts three to four more rate cuts between now and year-end 2026. Many occupiers remain cautious due to higher buildout costs and general economic uncertainty, favoring flexible leases and risk management, while less price-sensitive occupiers continue to pursue prime buildings in top locations. Occupiers are also committing to long-term leases in exchange for higher concessions from landlords.  

Capital discipline is front and center. Companies are carefully weighing location upgrades against total occupancy cost, including taxes and amenities. Lease negotiations increasingly hinge on rent abatements, TI allowances, landlord provided amenities and early renewal incentives – all tools that allow occupiers to hedge financial risk while securing value in a competitive market.​ 

6. Availability of Quality Space 

Competition for modern, well-located office space is heating up, even as the broader market continues to experience historically high vacancies. Demand for trophy and Class A buildings in central, transit-accessible areas remains strong, but new supply lags. As of Q3 2025, only 22 million square feet of new office space was under construction, well below the 2018–2019 average of 101 million square feet. Completions will total just under 25 million square feet in 2025 and about 10 million next year, leaving tenants vying for a shrinking pool of top-tier options. Midtown Manhattan illustrates this shift, with overall office availability at 14.9% and trophy space availability dipping below 5%, highlighting the widening gap between supply and demand. 

Increasing scarcity of trophy space is reshaping tenant strategies. Occupiers seeking large, contiguous blocks of premium space should plan for flexibility, whether on location or building class, or else consider renewing in place. Starting the search early is critical to secure the right space, avoid competition-driven delays and lock in favorable rental rates before pricing pressure intensifies. 

7. Corporate Capital Reallocation 

Corporate investment priorities are shifting rapidly, driven by evolving market demands and technological advancements. Increasingly, organizations are redirecting capital away from traditional expenditures such as talent acquisition and real estate and instead channeling funds into research and development (R&D), automation and digital infrastructure. This reallocation aims to foster innovation, enhance operational efficiency and boost long-term competitiveness in an increasingly technology-driven business environment. As a result, CRE leaders are facing heightened pressure to extract more value from smaller portfolios, prioritizing consolidation and smart space and capital utilization.​ 

As operating budgets tighten, stakeholders are increasingly scrutinizing real estate decisions through the lens of financial return on investment (ROI) and shareholder value metrics. Accordingly, the role of corporate real estate is evolving from space provider to strategic enabler, focusing on productivity return rather than square-foot expansion. This evolution requires CRE leaders to integrate data analytics, flexible workspace models and operational efficiency in their portfolio management. Alternative space models, efficient facility use and strategic portfolio optimization are increasingly critical factors as firms prioritize capital allocation towards high-growth initiatives in innovation and digital transformation. 

These seven factors are tightly interconnected, underscoring the complexity corporate occupiers must contend with going into 2026. The real estate function is evolving beyond cost management to serve as a strategic lever for workforce engagement, financial resilience and organizational agility in a dynamic market environment. 

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^[1] Goldman Sachs. (August, 2025). "How Will AI Affect the Global Workforce?" 
https://www.goldmansachs.com/insights/articles/how-will-ai-affect-the-global-workforce
^[2] McKinsey & Company. (July, 2025). “The State of AI: Global Survey 2025.” 
https://www.mckinsey.com/capabilities/quantumblack/our-insights/the-state-of-ai
^[3] PwC. (2025). The Fearless Future: 2025 Global AI Jobs Barometer – US Analysis. 
https://www.pwc.com/gx/en/services/ai/ai-jobs-barometer.html