Forward-thinking real estate investors and owners have opportunities to build risk-mature portfolios that exceed expectations.
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What to Expect in 2026
Economic uncertainty will pressure real estate profits in 2026, though ongoing interest rate cuts could unlock refinance opportunities and improve market liquidity. Although liability coverage remains challenging with nuclear verdicts and crime-related claims, declining property insurance rates are likely to provide much-needed relief. Real estate investors and owners who adapt and respond to persistent risk — those with portfolios that are risk mature — will be rewarded with improved performance.
Profitability
Vitality
Resiliency
Preparedness
Profitability
Despite economic uncertainty and rising construction costs, the likelihood of lower interest rates and insurance premiums will stabilize or even improve profitability in 2026.
The picture by sector remains mixed. Office buildings as a class are struggling with high vacancies,1 although Class A office demand remains strong. The industrial sector is under pressure, in part due to tariff uncertainty,2 but multifamily vacancies have remained steady in the past year.3
Nearly $960 billion of all outstanding commercial real estate mortgages were set to mature in 2025,4 and $1.8 trillion will mature in 2026,5 pressuring profits. The Federal Reserve Board in September and October 2025 announced two separate quarter-percentage point rate cuts in its overnight lending rate.6
Those cuts are likely to boost profits and facilitate refinancing at lower interest rates, though they may not immediately affect real estate investors’ portfolio strategies.
Interest rate cuts will also allow owners to invest in property improvements that have been deferred. However, construction labor shortages and tariffs could further complicate construction costs. Higher expenses for cross-border material flows, particularly lumber from Canada, will remain a persistent issue.7
According to HUB International’s 2026 Profitability & Resiliency Executive Survey,8 91% of respondents in an industry category that includes real estate said rising operating and labor costs will be the biggest threat to profits in 2026.
Portfolio diversification — both geographically and in property types — will be key to profitability in 2026. Real estate owners should consider if they can convert underperforming assets like shopping malls and older office buildings into profitable mixed-use properties that incorporate residential, retail and public space.
Regional market dynamics and portfolio diversification will be key to maintaining profits.
Developers are also building mixed-use properties from the ground up, with retail on ground floors and residential spaces above. These projects offer the benefits of a diversified portfolio within a single property while leveraging available tax incentives that local governments create to stimulate the housing supply.
Investors must factor in regional insurance cost variations into their profitability projections, as they can vary widely. Even as rates will drop overall, some markets are less fortunate, with property and casualty insurance consuming 30% of budgets, compared with the traditional standard of 18%.
Still, in general, the insurance premium cuts of 2025 will continue for the next 12 months and possibly beyond. Underwriters will favor real estate owners and investors who have well-maintained properties, closely evaluated risk exposures and demonstrated their portfolios are risk mature.
Real estate investors and owners can also take advantage of niche and alternative insurance solutions like tenant default captives to boost profits. Doing so requires the help of a broker well-versed in the real estate industry to find the right coverage at an affordable rate.
Portfolio diversification — both geographically and in property types — will be key to profitability in 2026.
Like in most other industries, labor shortages continue to weigh on real estate. Property and facility management roles are under particular strain: By 2030, as many as 160,000 facility management jobs are expected to go unfilled.9
Tenants in hospitality, including hotels and restaurants, remain understaffed,10 while retail and customer service positions remain vacant.11 Labor shortages in industrial mean many warehouses are not at full capacity.12 These shortages can compromise tenants’ ability to stay viable long term.
Technology and artificial intelligence (AI) are improving efficiency for both property management and commercial tenants, but they can’t solve the mounting labor challenge alone. The shift to hybrid work further complicates the picture for office landlords,13 who are often forced to adopt “office hoteling” models that reduce per-tenant space needs and drive down rents.
To help increase occupancy rates, real estate industry players are repositioning their properties with enhanced amenities and lifestyle features like concierge services, fitness facilities and rooftop spaces. However, owners and investors will struggle to find construction workers who can make these improvements or simply maintain buildings.
As a result of these trends, property owners are carefully assessing potential tenants’ industry outlook and ability to attract and keep workers.
Real estate investors and owners have tools at their disposal to stem labor shortages — improved training, stronger compensation packages and career pathing will help employee recruiting and retention. Workers can then envision a fully realized career in property management.
Personalized benefits help differentiate employers in the eyes of current and potential employees. Tools like HUB’s Workforce Persona Analysis™ can help deliver personalized benefits that can boost recruiting and retention through data and analytics.
Personalization is especially powerful when it speaks to employees’ most pressing concerns. HUB's 2025 U.S. Workforce Vitality Gap Index found that financial stress is the number one challenge today’s workers face. By offering tailored financial wellbeing platforms such as HUB FinPath, employers can directly address that need and strengthen both recruiting and retention.
Creative benefits solutions will help meet labor challenges for both real estate companies and their tenants.
Vitality
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Download our 2026 Real Estate Outlook and Insurance Market Rate Report to see what to expect in the coming year.
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Real estate owners and investors are likely to see further insurance rate relief in 2026, coming on the heels of rate reductions throughout 2025. Owners and investors with risk-mature portfolios will be far better positioned to benefit from the reductions.
Greater competition and excess capacity will continue, bringing commercial property rates down by as much as 15% after similar decreases in 2025. Rates for residential properties could fall as much as 25%, largely due to new underwriters entering the market.
And risks with strong loss prevention and minimal catastrophe exposure are seeing rate reductions up to 50%, depending on geographic location and loss history.
Even premiums for catastrophic (CAT) perils, which have been high for years, are likely to fall 10% to 20%, particularly for insureds who had significant premium hikes in the past.
Rate relief is not universal, however. Climate change is increasing weather-disaster frequency and intensity, and aggressive litigation and crime threaten to claw back some of the gains the industry has seen with lower property insurance premiums. A property’s location is likely to be the deciding factor in determining rate reductions.
For instance, properties in CAT-prone areas may not see rate reductions as weather disasters proliferate. In the first half of 2025, 15 weather-related catastrophes caused $1 billion or more in damage, totaling a record $81 million in insured losses.14 The continuing pace of unpredictable weather underscores the importance of geographic pricing differences and underwriting scrutiny.
And general liability insurance will remain difficult. Underwriters have reduced limits due to losses from litigation, crime and other liabilities. Large jury verdicts have affected coverage. As a result, carriers are implementing sublimits for assault and battery, firearm incidents and abuse or molestation claims while actively avoiding properties in higher-crime areas.
Insurance carriers will continue to demand updated replacement valuations. Higher expenses for building materials and labor will result in elevated repair costs for damaged properties, increasing claims costs for insurers.
But a resilient real estate portfolio will mean more than properties in safe markets. Savvy investors are digging deeper into property data before committing money, often leveraging AI to identify assets that can withstand both physical and financial shocks.
Underwriters will look favorably on properties with updated valuations, accurate cost projections and demonstrated risk maturity. The key will be the degree of competition from underwriters in local markets and understanding which class of real estate they are targeting. Consulting with a broker with localized carrier relationships in regional markets can help deliver optimal results in 2026.
Further insurance rate cuts await investors and owners with strategically managed portfolios.
Resiliency
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Preparing for weather disasters, minimizing legal exposure and improving cybersecurity will underpin the real estate industry’s efforts to stave off losses from risks that are difficult to predict and quantify. These enterprise-wide efforts will accelerate a portfolio’s risk maturity and help prepare it for 2026.
Two-thirds of all “Built Environment and Infrastructure” enterprises (which include real estate operations) say they are confident in tackling regulatory and legal challenges in 2026, according to HUB International’s 2026 Profitability & Resiliency Executive Survey. That confidence will be tested, however.
The ever-increasing number of lawsuits and amount of jury awards that have plagued real estate owners are of particular concern. The number of nuclear verdicts — jury awards exceeding $10 million — rose 52% across industries in 2024, and “thermonuclear” verdicts, which exceed $100 million, rose 81%.15 The rise of third-party litigation funding has significantly exacerbated the problem. Real estate owners and investors can be targets when actionable incidents happen on their properties.
Just as problematic are nuisance lawsuits, which often involve violations of the Americans with Disability Act (ADA). These suits, typically settled out of court for $5,000 to $20,000, usually come without warning. Settling a single dispute can make a property a litigation target for other violations.
Legislation in California to address ADA claims16 may have the unintended effect of encouraging more lawsuits. The cost of audits to pre-emptively identify every possible violation can cost owners massive upfront capital expenses.
Cyber exposures also present a major unpredictable risk, as real estate companies are prime targets for business email compromise17 and wire fraud schemes, with one owner-manager losing $19 million in a single phishing incident.18
AI has made it even more difficult to combat, particularly for social engineering schemes in which fake but hyper-realistic documents, videos and even video calls have resulted in escrow funds being stolen, directed to accounts from fake investors.
Properties reliant on automated systems face further vulnerabilities, where an attack can halt operations or compromise tenant data.19 As smart buildings and AI-driven monitoring become more common, proper cyber defenses will become paramount in managing risk.
In an ever-evolving risk environment with legal and cyber threats, real estate owners and investors need to be cognizant of the interrelated nature of different risks and take a broader view of preparedness, improving risk maturity within their portfolios. A strategy based on enterprise risk management (ERM) provides a framework to address this wider risk landscape.
By working with brokers to integrate litigation risk assessments, cyber incident response plans and rigorous cybersecurity and cyber insurance into an overall ERM program, real estate owners and investors can prepare for emerging risks.
Advanced risk maturity will help protect against emerging and unpredictable risks.
Preparedness
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HUB real estate insurance, risk management and employee benefits specialists will work with you to develop a tailored strategy that will protect the bottom line, support the vitality of your workforce and build resiliency for 2026. Here are some important considerations:
Moving Your Organization Forward
An uncertain economic environment, a greater number and intensity of catastrophes and nuclear verdicts have increased risk for real estate owners and investors. A higher deductible reduces premiums and improves experience rating, while alternative risk transfer vehicles can lower costs. Discuss with your broker what kind of insurance strategy meets your risk profile and budget.
Accelerate your risk maturity.
Nuclear verdicts against real estate companies have become common. Make safety a foundation of the organization, with extra training and risk management practices like increased security for all properties and to-the-letter compliance with regulations. A focus on prevention can save you millions.
Make safety a tenet of the organization.
Understand the root causes of large losses and explain to carriers what you’re doing to prevent future claims. Develop a strategy with HUB to determine the best time and frequency to review alternative markets.
Analyze loss trends.
Real estate entities have had difficulty attracting and retaining employees, but those with a benefits strategy based on personalization and fostering a quality employee experience (QEX) will boost engagement, have an advantage in recruitment and retention and lower risk as well. Work with your benefits advisor to identify the right data for a personalized benefits strategy.
Increase workforce engagement through benefits.
Download our 2026 Real Estate Outlook and Insurance Market Rate Report to see what to expect in the coming year.
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When you partner with us, you’re at the center of a vast network of experts who will help you reach your goals. For more information on how to manage your insurance costs, reduce your risk and take care of your employees, talk to a HUB real estate insurance specialist.
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Regional market dynamics and portfolio diversification will be key to maintaining profits.
Creative benefits solutions will help meet labor challenges for both real estate companies and their tenants.
Further insurance rate cuts await investors and owners with strategically managed portfolios.
Advanced risk maturity will help protect against emerging and unpredictable risks.
Download Report
3. National Association of Realtors, “July 2025 Commercial Real Estate Market Insights,” accessed September 5, 2025.
4. Mortgage Bankers Association, “20 Percent of Commercial and Multifamily Mortgage Balances Mature in 2025,” February 10, 2025.
1. Moody’s, “The Office Sector’s Double Whammy,” July 8, 2025.
2. Newmark, “2025 North American Industrial Outlook,” accessed September 5, 2025.
5. NAIOP, “Ten Challenges Facing Commercial Real Estate in 2025,” accessed September 5, 2025.
6. CNBC, “Fed cuts rates again, but Powell raises doubts about easing at next meeting,” October 29, 2025.
7. National Association of Home Builders, “How Tariffs Impact the Home Building Industry,” accessed September 5, 2025.
8. The HUB International 2026 Profitability & Resiliency Executive Survey polled 350 industry leaders and executives across North America on the issues facing them on profitability and resilience.
9. Propmodo, “Amid Labor Shortages and Aging Workforce the Property Industry Turns to Tech,” April 2, 2025.
10. Room 1903, “The Talent Challenge: Understanding the Labor Shortage,” July 2, 2025.
11. CX Dive, “Customer service worker shortage grew in Q1, despite wage increases,” April 28, 2025.
12. Supply Chain Brain, “Coping With the Labor Shortage Crisis in the Supply Chain Industry,” May 7, 2025.
13. WFH Research, “SWAA July 2025 Updates,” August 2, 2025.
14. Yale Climate Connections, “U.S. socked with 15 billion-dollar weather disasters during the 1st half of 2025,” July 16, 2025.
15. Marathon Strategies, “Corporate Verdicts Go Thermonuclear, 2025 Edition,” accessed September 5, 2025.
16. Olgetree Deakins, “California Senate Passes Nation’s First Bill for Accessibility Violation Cure Period,” June 17, 2025.
17. Stewart, “How Business Email Compromise Attacks Real Estate Transactions,” April 28, 2025.
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Training, strong compensation packages and career pathing will help real estate investors and owners improve employee recruiting and retention.
Premiums for catastrophic (CAT) perils, which have been high for years, are likely to fall 10% to 20%, particularly for insureds who had significant premium hikes in the past.
Cyber exposures also present a major unpredictable risk, as real estate companies are prime targets for business email compromise and wire fraud schemes.
18. The Broadsheet, “Phishing Expedition: Hackers Scam Millions from Company Managing Battery Park City Condos,” accessed September 10, 2025.
19. Facilities Manager Advisor, “The Not-So-Hidden Cyber Risks in Commercial Real Estate,” May 8, 2025.
Let your insurance broker know what changes you’ve made to the business, so there are no surprises at renewal. Review exposures and insurance needs at least 90 days prior to policy renewal, so your broker can identify the best options.
Be transparent with your broker.
Resiliency
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Download our 2026 Real Estate Outlook and Insurance Market Rate Report to see what to expect in the coming year.
Download Report
Download our 2026 Real Estate Outlook and Insurance Market Rate Report to see what to expect in the coming year.
Download Report
Download our 2026 Real Estate Outlook and Insurance Market Rate Report to see what to expect in the coming year.
Real estate entities have had difficulty attracting and retaining employees, but those with a benefits strategy based on personalization and fostering a quality employee experience (QEX) will boost engagement, have an advantage in recruitment and retention and lower risk as well. Work with your benefits advisor to identify the right data for a personalized benefits strategy.
Increase workforce engagement through benefits.