Colliers “Outlook 2026”: A Year of Opportunities in an Early-Cycle Environment
- Report analyses the state of the German real estate market in the current cycle
- Structural changes – from demographics and globalization to ESG – shape this cycle
- Revitalization expected across all sectors
Frankfurt/Main, December 17, 2025 – In 2026, the German real estate industry faces a year of opportunities in an early-cycle environment. The economy is slowly recovering, and the property market shows initial signs of stabilization. In this phase, private and international investors dominate transactions, while institutional investors act selectively. Prime rents continue to rise in several sectors, new construction activity declines across almost all sectors, and office vacancy rates in the Top 7 cities reach a new peak. At the same time, growth segments such as residential, industrial & logistics, hotels, and specialized sectors like life sciences and data centres gain importance. These insights come from Colliers’ latest report “German Real Estate Market Outlook 2026”.
Felix von Saucken, Colliers’ CEO in Germany: “The German real estate industry is undergoing a phase of reorganization – shaped by geopolitical tensions, higher financing costs, and demanding regulatory frameworks. At the same time, the early-cycle market phase offers diverse opportunities for investors who act flexibly and focus on quality.”
Investor Behaviour: Private Capital Dominates – International Interest Rising
Investor sentiment is cautiously optimistic. Private investors and family offices remain key players, leveraging price discounts in core and core-plus segments. Institutional investors act more cautiously, while international capital flows – especially from Anglo-Saxon countries, France, Asia, and the Middle East – are picking up again. Alternative financing models such as private debt continue to grow.
Francesca Boucard, Head of Market Intelligence & Foresight in Germany: “2026 will be a year in which investors not only react to market movements but actively shape the transformation of the real estate market. Private investors and family offices use the early-cycle phase to acquire high-quality assets at attractive conditions. Institutional investors remain selective, increasing the supply of value-add products and creating new opportunities for professional asset management strategies.”
Boucard adds: “Economic and real estate cycles do not run in perfect sync but are closely intertwined. While the overall economy is characterized by slow recovery, the real estate market also shows initial signs of stabilization. A key difference lies in reaction speed: the economy responds more quickly to external shocks and political measures, while the property market follows with a delay due to longer planning and investment cycles. Both are in a transformation phase in which resilience, efficiency, and future viability become guiding principles shaping market dynamics.”
The macroeconomic classification is based on a forecast of moderate economic growth of around 1.1 % for 2026, falling inflation and a stable employment situation.
Office: Vacancy Peaks in 2026 – Competition for ESG-Compliant Space Intensifies
Demand stabilizes, especially from large occupiers, while new construction activity declines significantly from 2026 onward. The office market shows a clear split: prime rents in central locations continue to rise, driven by strong demand for high-quality, ESG-compliant space. Peripheral locations see mostly flat rents, widening the rent gap and limiting opportunities for value-add strategies. Initial yields in the Top 7 cities are expected to range between 4.25% and 5.00%. Investors increasingly focus on central locations and ESG-compliant, future-proof properties.
Francesca Boucard comments: “The investment market is finding new momentum under more realistic conditions and has the potential to mark the beginning of a new cycle. 2026 will be the last year with a high project development pipeline before availability drops significantly from 2027 onward.”
Residential: Demand Keeps Rising – Rents Up at Least 5%
The housing market remains characterized by a persistent supply shortage. Despite political measures (e.g., €4 billion for social housing and a “construction turbo”), completions are projected at 175,000 units, far below demand. Household numbers continue to grow, widening the structural housing gap. Rents in major cities are expected to rise by at least 5%.
Felix von Saucken says: “In 2026, rising housing demand meets a shrinking supply. New construction remains at a low, the construction turbo has yet to take effect, and rents continue to climb. Only the investment market shows noticeable revitalization, with a growing focus on younger properties and slight yield compression in some submarkets.”
Retail & Logistics: Consolidation Meets New Demand Drivers
Retail remains shaped by consolidation and changing consumer behaviour. Winners include retail parks, grocery stores, and non-food discounters – especially those with innovative, future-proof concepts. City centres increasingly rely on mixed-use, services, and digital formats. Investors focus on grocery-anchored concepts and revitalizable shopping centres.
Logistics faces a turning point. E-commerce (expected space need: 650,000 sqm) and defence drive demand, while consolidation in industrial and contract logistics requires differentiated strategies. Strategic locations, complex specialized properties, and flexible existing assets gain importance.
Hotels & Special Segments: Growth Through Conversions and Future Uses
The hotel market benefits from rising domestic and international demand and office-to-hotel conversions, as traditional new builds remain rare. International brands and serviced apartment providers drive activity, with transaction volumes expected at €1.9–2.2 billion. These deals create benchmarks to stimulate the market. Special segments develop dynamically: life sciences see growing demand for lab and research space, especially in clusters like Munich, Berlin, and Rhine-Neckar. Data centers benefit from high computing and infrastructure needs and political support, making them key growth drivers in 2026.
Outlook 2026
“The real estate market is in transition: 2026 will be a year of market reorganization and shifting demand profiles. At the same time, opportunities open up for investors and market participants who act flexibly and focus early on growth segments. In this environment, resilience, efficiency, and future viability will be decisive for sustainable success in the German real estate market,” concludes Felix von Saucken.
The report is available for download here: https://www.colliers.de/outlook
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