Why 2026 Will be a Balancing Act for Corporate Real Estate

According to Knight Frank’s latest outlook, Balancing Acts: Corporate Real Estate in 2026, the forces shaping occupier strategy will not simplify or stabilise. They will collide.

Cost pressures will intensify just as transformation becomes unavoidable. AI will accelerate as workforce anxiety peaks. Global supply chains will fragment by design, not by accident. And energy — once a background factor — will become the decisive determinant of where companies invest next.

For CRE leaders, 2026 won’t just be another challenging year. It will be the year the function proves its relevance. Here are some highlights from the report:

The Paradox Year: Cost vs. Transformation

Boards will demand sharper cost discipline amid tariff-driven inflation, volatile energy prices, and uncertain markets. Many occupiers will respond by trimming portfolios, consolidating under-used offices and rethinking capital-heavy fit-outs. Yet transformation cannot be paused. The shift to enterprise-level AI, the drive toward net-zero, demographic pressures, and diversification strategies all require new types of space, new skills, and new investment.

The danger? Paralysis. Cut too deeply and organisations lose the capabilities required for reinvention. Invest too heavily, and capital evaporates. In 2026, efficiency must become the fuel for transformation, not its enemy.

AI Enters Its First Enterprise Year

2026 will mark AI’s transition from pilot to enterprise system. But this shift won’t be smooth or uniform. Adoption will be selective, strategic, and constrained by cost, energy availability, and workforce unease. Offices will begin their evolution into “growth platforms,” factories will pilot AI-driven hybrids, and data centres will expand rapidly — yet true ubiquity remains years away.

The biggest constraint? Power. AI’s energy appetite will pull corporate location strategy toward regions with abundant, resilient, increasingly renewable energy. For the first time, the grid — not rent — will drive site selection.

Resilient Supply Chains Replace Efficient Ones

2026 won’t witness the collapse of globalisation, but it will mark a structural pivot. Tariffs introduced in 2025 will be treated as semi-permanent. Companies will adopt “just-in-case” strategies, building redundancy and distributing operations across multiple regions.

Portfolios will become more modular and multipolar as occupiers accept higher costs as the price of continuity. Supply chains will be redesigned around a new principle: assume the shock, prepare for the fracture.

FOBO: The Workforce Fear That Will Define 2026

The “Fear of Becoming Obsolete” will reshape the workforce more profoundly than flexibility debates ever did. Employees will worry less about visibility and more about relevance. The office will shift from a place of presence to a place of progression — where skills are built, learning is embedded, and employability is sustained.

Leading organisations are already reimagining offices as development hubs with classrooms, digital learning studios, auditoria, and multi-purpose collaboration spaces. In 2026, this will begin to move from early adopter behaviour to mainstream expectation.

Energy Becomes the New CRE Currency

AI, defence, and green industry are converging to drive unprecedented demand for power — and CRE must respond. The premium for energy-secure sites will rise. New builds will incorporate on-site generation and storage. Location strategies will prioritise power resilience above proximity, cost, or even talent in some cases.

2026 will be remembered as the year energy moved from input to constraint — and from constraint to competitive differentiator.

CRE’s Own FOBO Moment

Under cost pressure and with automation advancing, CRE functions that remain transactional risk being sidelined. Those that move upstream — shaping enterprise strategy, modelling risk, and proving the resilience premium — will become indispensable. Relevance will be the new performance metric.

Read the full report to understand why 2026 is not the year transformation finishes — but the year it truly begins.