Key Takeaways
- • CBRE expects commercial real estate investment activity to rise approximately 16% in 2026, according to the article, signaling investors are re-engaging with the sector after a post-2022 downturn.
- • Kyle Jeffers, CIO of Acore Capital, argues the market is only in the early years of a new cycle, comparing a 14-year pre-2022 run-up to a recovery now in its second or third year.
- • Data centers are the standout sector, with CBRE noting power availability, not tenant demand, is the primary growth constraint; large industrial gas turbines now face five-to-seven-year delivery timelines.
- • Jeff McDonnell of Partners Capital cites data center development yields of 9% to 12% on cost, with stabilized assets trading at roughly 5% to 6%.
- • Managers are shifting toward CRE debt, with Jeffers citing 65% loan-to-cost and 35% subordination on reset values as a source of downside protection.
Summary
Institutional real estate remains in an uneven post-COVID recovery, according to the article. Property values have fallen significantly from their highs since 2022, following a decade-long pre-COVID bull market driven by low interest rates. Even so, transaction activity is returning, and a growing number of managers argue the asset class is entering a new investment cycle. CBRE projects commercial real estate investment activity will rise approximately 16% in 2026.
Kyle Jeffers, CIO of real estate credit manager Acore Capital, characterizes the market as early in a long recovery. He notes that the market bottomed in 2023 and 2024 amid uncertainty over values and rates, and that transaction activity returned in 2025 and 2026. Comparing the prior cycle, which he says ran roughly 14 years from 2008 to 2022, he argues the current cycle has a long way to run, citing solid demand fundamentals, limited new supply, and declining construction starts.
Todd Stender, managing director at LNL Capital, says the 2022-23 rate spike reset valuations and that institutional capital is shifting toward contractual cash flows, particularly net lease investing. He said investors are prioritizing income over expectations of cap rate compression, and that lenders to sponsors are seeing increased capital deployment into net lease opportunities.
The article identifies data centers as the most prominent growth segment, driven by AI infrastructure demand. According to CBRE, power availability has become the primary constraint on growth rather than tenant demand, and delivery timelines for large industrial gas turbines now run five to seven years. JPMorgan Asset Management's Jared Gross said he sees no political headwinds diverting capital from the sector despite data center construction becoming a central issue in the 2026 midterm elections. Jeff McDonnell of Partners Capital said developers are achieving yields on cost of 9% to 12%, with stabilized assets trading at roughly 5% to 6%.
McDonnell also said real estate has not functioned as an inflation hedge over the past five years, but industrial and multifamily assets in core markets should maintain relatively lower correlation to other portfolio drivers. Jeffers said investors who previously favored commercial real estate equities lost money in the downcycle, and that commercial real estate debt is now attracting capital for its risk-adjusted returns, with a 65% loan-to-cost structure and 35% subordination offering downside protection on reset values. He added that asset owners are increasing allocations to the sector.
Kyle Jeffers, CIO of real estate credit manager Acore Capital, characterizes the market as early in a long recovery. He notes that the market bottomed in 2023 and 2024 amid uncertainty over values and rates, and that transaction activity returned in 2025 and 2026. Comparing the prior cycle, which he says ran roughly 14 years from 2008 to 2022, he argues the current cycle has a long way to run, citing solid demand fundamentals, limited new supply, and declining construction starts.
Todd Stender, managing director at LNL Capital, says the 2022-23 rate spike reset valuations and that institutional capital is shifting toward contractual cash flows, particularly net lease investing. He said investors are prioritizing income over expectations of cap rate compression, and that lenders to sponsors are seeing increased capital deployment into net lease opportunities.
The article identifies data centers as the most prominent growth segment, driven by AI infrastructure demand. According to CBRE, power availability has become the primary constraint on growth rather than tenant demand, and delivery timelines for large industrial gas turbines now run five to seven years. JPMorgan Asset Management's Jared Gross said he sees no political headwinds diverting capital from the sector despite data center construction becoming a central issue in the 2026 midterm elections. Jeff McDonnell of Partners Capital said developers are achieving yields on cost of 9% to 12%, with stabilized assets trading at roughly 5% to 6%.
McDonnell also said real estate has not functioned as an inflation hedge over the past five years, but industrial and multifamily assets in core markets should maintain relatively lower correlation to other portfolio drivers. Jeffers said investors who previously favored commercial real estate equities lost money in the downcycle, and that commercial real estate debt is now attracting capital for its risk-adjusted returns, with a 65% loan-to-cost structure and 35% subordination offering downside protection on reset values. He added that asset owners are increasing allocations to the sector.
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