Lessors of Nonresidential Buildings NAICS 531120

Jan 17, 2026 - Surge in M&A Activity to Shake up Nonresidential Market

• A predicted surge of mergers and acquisitions in 2026 is poised to reshape nonresidential real estate as newly combined companies race to consolidate footprints, merge headquarters, and dispose of excess space, according to Bisnow. Owners of office, retail, and logistics properties face both risk and opportunity as megadeals accelerate under lighter regulation, abundant private equity capital, and tax-driven corporate liquidity. Brokers say rightsizing decisions must be completed within 18 months of a merger, creating rapid cycles of leasing, sales, and repositioning that directly affect asset values. AI is expected to intensify post-merger space consolidation, though its impact on total square footage remains uncertain. Rising occupancy, along with higher construction costs, is pushing firms to optimize existing space rather than build new. For landlords, the M&A boom could drive heightened turnover, shifting demand, and increased reliance on advisory services.
• An influx of industrial property that came online in the first four years of the decade continues to elevate vacancy rates and suppress rent growth, according to a December report by Yardi Matrix. Between 2020 and 2024, the US added more than 2.5 billion square feet of industrial property space. In response, new industrial construction activity slowed in 2024 and 2025. Uncertainty stemming from US trade policy has prompted firms to pause leasing decisions and reevaluate their supply chain strategies. In November 2025, the US average in-place rents for industrial space were flat compared to October but increased 5.7% year-over-year. The national industrial vacancy rate was 9.7% in November, up 10 basis points from the previous month and 220 basis points from November 2024.

• The AI boom is reshaping commercial real estate as investors pour unprecedented capital into data centers, a sector now on track to surpass office construction, according to The Wall Street Journal. Property owners are benefiting from soaring demand as hyperscalers such as Meta, Amazon, and Oracle increasingly lease rather than build facilities, driving long-term commitments and a projected $1 trillion construction pipeline through 2030. But this shift also concentrates risk. Data centers rely on a narrow set of tech tenants, face strict performance and power availability requirements, and carry lease termination clauses that can result in significant losses if developers miss deadlines. As traditional office and retail assets lag, REITs and private funds are reallocating heavily toward AI infrastructure, tying commercial real estate more closely than ever to the fortunes, and potential volatility, of the tech sector.
• The US office market’s recovery remains uneven amid high vacancy rates and declining property values in some markets, according to The Wall Street Journal. While districts like New York’s Park Avenue and San Francisco’s South of Market show signs of strength, most markets struggle with empty space due to structural shifts from remote and hybrid work. Companies are downsizing footprints, leaving landlords, lenders, and local governments under pressure as office-related tax collections fall. Some investors remain cautious, with office property sales far below pre-pandemic levels, though conversions to housing and limited new supply are tightening prime space in select areas. With AI-driven job cuts adding uncertainty, analysts warn the slump may not mirror past cycles, raising questions about the long-term viability of traditional office demand.