_In 2026, the test will be balance in corporate real estate

By Knight Frank Global Head of Occupier Research Dr Lee Elliott

2026 will continue to be a year of paradox, not resolution. The four forces dominating occupier thinking, cost, volatility, workstyles, and geopolitics, will converge. So too will AI and energy, whose interdependence may prove the most powerful disruptor of all. CRE leaders will be asked to cut costs while enabling transformation, mitigating volatility, and preparing for growth. Balance will be essential. But bravery will be decisive.

Every era poses its own test. For corporate real estate (CRE), the early 2020s were defined by survival: keeping workplaces open through a pandemic and navigating the sudden experiment of remote first operations. By 2025, the focus had shifted to recalibration, as firms sought stability in the face of tariffs, inflation, and capital constraints.

In 2026, the test will be balance.

The New Pressures

Cost discipline will be relentless. Tariffs and political shocks will continue to undermine predictability. Artificial intelligence is shifting from pilots to enterprise systems, fuelling both optimism and unease. FOBO - the fear of becoming obsolete - will become a lived experience as labour markets adjust. Energy will emerge as the constraint that no strategy can ignore. Above all, AI and energy will be inseparable.

Scaling intelligent systems will depend directly on access to resilient, sustainable power. For CRE leaders, this is not theory but a daily concern shaping location, workplace design, and the credibility of transformation itself. These forces will not resolve in 2026. They will only begin. That is why balance will matter so much.

The Shape of Balance

The balancing act will play out on two fronts:

• A trade-off between the cost now and the investment tomorrow. Boards will demand leaner portfolios and transformative spaces at the same time. What once seemed contradictory will become the new normal.
• The tension between relevance and cost. Reskilling is essential, but capital is scarce. Workplaces will need to serve dual purposes - efficient platforms and centres for learning. The organisations that succeed will be those that stop framing these imperatives as opposites and learn to deliver them together.

For CRE, this means a change of identity. The role must shift from steward of cost to steward of balance: reducing without hollowing, investing without overreaching, and shaping portfolios that are lean yet resilient.

Balance as Discipline

Some may argue balance is too cautious a word for an age of disruption. But in today’s climate, boldness without balance will not last. Companies that overcommit will strain reserves and test shareholder patience. Those who under commit will risk irrelevance. Balance is not the enemy of ambition; it is its condition.

That is why 2026 will not be the year transformation is completed, but the year transformation begins - a year of sequencing, deliberate trade-offs, and portfolios designed to withstand shocks while edging towards renewal.

CRE’s Dual Role

CRE will be both a participant and a platform for this balancing act. As participant, real estate teams face their own FOBO moment, proving their place upstream in strategy rather than downstream in execution. As a platform, the space companies occupy will either enable or hinder balance.

An office designed for presence alone will feel like a relic. An office designed for reskilling and progression will look like a lifeline. A factory optimised only for cost will appear fragile; one intended for adaptability will seem farsighted. A data centre powered by fossil dependency will be seen as a liability; one embedded in renewable corridors will be recognised as a foundation for growth.

In this sense, CRE portfolios will become physical expressions of strategy - visible proof of how seriously organisations take resilience, how credibly they support employees, and how ready they are for shocks.

The Cost of Getting Balance Wrong

The danger in 2026 will not be doing too little or too much but leaning too far one way. Some companies will cut ruthlessly, saving in the short term but eroding their ability to transform. Others will overbuild or overspend, burning through capital and courting revolt. Both paths will fail. The winners will be those who walk the tightrope – constantly adjusting, never static, never falling.

Balance as Strategy, Not Compromise

The central insight is that balance must not be mistaken for compromise. To balance is to recognise paradox and act anyway: to accept that cost and investment, resilience and efficiency, presence and progression can co-exist if designed with foresight.

Looking Ahead

The balancing act of 2026 will shape the remainder of the decade. By 2028, AI will be embedded at scale, FOBO will have reshaped careers, and resilience will be priced into portfolios. By 2030, the energy transition will be further advanced and net-zero deadlines will test every enterprise. The companies that learn balance in 2026 will still have choices left. Those who do not will find their options increasingly closed.

This article is from Knight Frank’s The Tenant View publication. To download the report, click here.