Real Estate at an Inflection Point

Commercial real estate is emerging from a stagnant 2025 into a more constructive conjuncture, with lower rates, improved policy visibility, and motivated buyers and sellers setting the stage for a cyclical recovery in 2026. Yet this upturn is unfolding against a backdrop of slower but divergent global growth, persistent inflation in some markets, and rising geopolitical risk that keeps volatility elevated and rewards selectivity. The most compelling opportunities are appearing where values have reset 20–25% below peak, replacement costs constrain new supply, and structural demand drivers—such as onshoring, AI adoption, demographic shifts, and urbanization—support durable cash flow growth.

Performance is expected to bifurcate sharply across sectors and geographies: industrial tied to technology and defense ecosystems; residential in supply-constrained urban markets; high-quality office in true “have” locations; resilient retail formats; select hospitality hubs; senior housing and medical office within healthcare; mission-critical net lease assets; and power-ready logistics or data center–adjacent locations. In this environment of elevated geopolitical tension but easing macro uncertainty, investors will need highly targeted strategies at the asset level—prioritizing income growth over cap-rate compression—to capture the next leg of the real estate cycle while managing downside risk.