What I’m Watching at MIPIM 2026: Themes Shaping European CRE

I always look forward to MIPIM. It is a unique forum to engage with a wide range of market participants, test assumptions, and gather perspectives that challenge – and refine – our own view of the market.

This year feels particularly significant. After several turbulent years marked by rising interest rates and geopolitical uncertainty – now firmly part of the “new normal” – the European commercial real estate (CRE) market is showing early signs of renewed momentum. Inflation appears to be under control, at least for now, and central banks are signalling a pause in rate hikes. As a result, investor sentiment is cautiously optimistic, particularly across the UK and Western Europe.

That optimism, however, is not without its complexities. Renewed confidence is already driving significant competition in parts of the credit markets. Lenders are seeking to protect margins by moving up the risk curve, and this shift is reshaping how capital is deployed. In this environment, execution risk matters as much as pricing, and deep asset level understanding is increasingly a competitive advantage rather than a hygiene factor.

A More Stable Macroeconomic Backdrop

The European Central Bank is expected to hold its policy rate steady at around 2% throughout the year, while the Bank of England may implement a modest rate cut. Longterm bond yields remain elevated but relatively stable, providing a more predictable backdrop for underwriting and financing decisions. This stability is proving important: it is encouraging institutional capital to re-enter the market, with transaction volumes expected to rise as confidence improves.

From our vantage point as Europe’s largest third-party servicer for commercial real estate, the picture across Western Europe is increasingly differentiated. Core markets such as London and Madrid continue to attract capital due to their liquidity, robust legal frameworks, and economic resilience. Both Spain and the UK ended 2025 strongly, while Germany – although lagging slightly – appears poised for a faster recovery as investor confidence rebuilds.

A similar pattern is emerging in construction finance. Development activity is picking up in the UK, Spain, and Italy, with early indications that Germany may follow. This reflects both improving sentiment and a growing willingness among lenders to engage in more complex risk profiles.

A Cycle Defined by Selectivity

What distinguishes this recovery from previous cycles is that the return of capital does not equate to a return of simplicity. This is not a broad-based rebound. Instead, it is a highly selective market, where capital is flowing decisively toward assets, sponsors, and jurisdictions with clear income durability, liquidity, and long-term relevance.

As a result, the margin for error is narrower. Asset quality, structure, and execution capability are under far greater scrutiny than in the past. This theme – selective optimism underpinned by discipline – is likely to dominate many of the conversations at MIPIM this year.

The Ongoing Transformation of the Office Sector

Nowhere is this selectivity more visible than in the office sector. Once the cornerstone of CRE investment, offices continue to undergo a profound transformation driven by hybrid working patterns and evolving occupier expectations.

Demand has effectively trifurcated into three distinct categories.

• Prime offices in central business districts are commanding premium rents and maintaining low vacancy rates, supported by strong occupier demand for high quality, sustainable, and well-located space.
• Value-add opportunities- typically assets in good locations that are outdated and in need of refurbishment- are offering attractive returns for investors willing to deploy capital and expertise.
• Secondary stock – often poorly located, energy inefficient, and functionally obsolete – is facing structural decline, for these assets even a significant CAPEX spend is unlikely to save them. While this presents challenges for owners and lenders, it is also creating opportunities for alternative use cases, particularly where planning regimes are supportive. These dynamics are already driving a strong pipeline of office to hotel and office to residential conversions, supported by legislative changes and investor appetite for adaptive reuse. In parallel, cities such as Berlin and Paris are seeing increased interest in value-add strategies, where underperforming assets are acquired and repositioned to meet modern occupier requirements.

AI, Occupiers, and the Future Workplace

An additional—and much debated—unknown is how advances in artificial intelligence will influence office demand over the medium term. While AI driven automation may reduce the need for certain roles, it is also fuelling demand for collaborative, innovation focused workspaces and has the potential to materially improve occupier productivity and profitability.

For real estate, this reinforces the importance of flexibility, design quality, and adaptability. The offices that perform best are likely to be those that enable collaboration and creativity, rather than simply maximising desk density.

Looking Ahead

The outlook for commercial real estate in Western Europe is one of selective optimism. Investors remain focused on income generating assets, particularly in sectors with structural demand
drivers such as logistics, data centres, and living. Offices continue to play a central role, but success increasingly depends on asset quality, location, and the ability to adapt to new
working patterns.

The credit markets reflect this same dynamic. Lenders are returning, but the lower risk positions are being taken quickly by cheaper capital. For others, moving up the risk curve is not optional – it is required. This shift is manifesting in different ways: expansion into new jurisdictions, movement from investment to development finance, looser covenants, higher loan to value ratios, and the widespread use of back leverage.

The implication is clear. Many lenders are now operating in territory that they have not occupied for at least half a decade. Navigating this environment successfully will require careful structuring, disciplined underwriting, and a deep understanding of both assets and sponsors.

As the market settles into a new cycle defined by higher financing costs and evolving occupier expectations, those who can anticipate and respond to macroeconomic and technological
change will be best placed to succeed. These are the themes I expect to dominate MIPIM this year – and the ones that will shape capital allocation decisions well beyond Cannes.