Chris Porter, senior vice president, research, for John Burns Research and Consulting; Hessam Nadji, president and CEO of Marcus & Millichap; Sara Queen, head of RE Equity for MetLife Investment Management; and moderator Andrew Alperstein, a partner with PwC’s U.S. real estate practic; speaking at the 2025 ULI Fall Meeting in San Francisco.
(ULI/Unfound Door)
PwC and ULI have released the 47th edition of the annual industry outlook, Emerging Trends in Real Estate® 2026, which analyzes how the real estate industry is responding to economic change, demographic shifts, and technological advances. Based on input from more than 1,700 leading industry professionals across the United States and Canada—including investors, developers, lenders, and advisers—the report highlights the critical opportunities, risks, and market trends that will influence real estate in the year ahead.
“The past few years have tested the industry’s ability to pivot,” said Andrew Alperstein, a partner with PwC’s U.S. real estate practice. “In today’s environment, we’re seeing a renewed focus on core fundamentals and deploying capital into high-growth areas. From the rapid evolution of AI infrastructure to the growing demand for senior housing, the opportunities in 2026 will favor those who combine speed, data-driven insight, and a long-term strategic vision.”
“Technology continues to play a significant role in driving the U.S. economy, and it’s exciting to see the real estate sector beginning to integrate those advances to harness that power more effectively,” said Angela Cain, ULI’s Global CEO. “We continue to see interest from high-growth asset classes, including data centers, senior housing, and self-storage. Combined with the expectation of additional interest rate cuts, there’s a cautious optimism in the industry as we head into 2026.”
Presenters at the ULI Fall Meeting’s panel on the report affirmed the Emerging Trends report’s overall theme: “Navigating the fog.” Fifty-five percent of the report’s survey respondents expect their firm’s profitability prospects to be good to excellent in the coming year, a decline from 65 percent in last year’s survey.
“We had our client conference yesterday in New York, [representing] the entirety of the housing industry, and we took a sentiment pulse at the very beginning,” said Chris Porter, senior vice president, research, for John Burns Research and Consulting and one of four panelists who discussed the report findings in San Francisco on November 5. “One third said it’s going to feel about the same over the next year as it is today, one third said they think it’s going to be better, and one third said it’s going to be a little bit worse. So, the theme of navigating the fog is right on.”
That fog includes uncertainty over tariffs, which increase the costs of goods, raise construction and operating costs, and curb consumer spending; uncertainty over migration, which reduces the working-age population, thus decreasing economic growth and real estate demand; and uncertainty over interest rates. Although the Federal Reserve has lowered rates since their peak in 2024, inflation caused by tariffs and labor supply problems could keep them from falling much further.
“Looking at the Emerging Trends report, I found it interesting . . . that what was most concerning to the industry was the economy and interest rates and the slowing down of job creation,” said Hessam Nadji, president and CEO of Marcus & Millichap. “Normally, if you get a job slow down, you get a little optimism on the Fed side of the equation. It’s interesting that these dynamics that normally trade off with each other are all being listed as a fairly highly [and] closely rated set of concerns. Yet the study also showed that the appetite for buying is at a 20-year high. So the optimism is there.”
Among the key trends highlighted in the report:
- Significant changes to U.S. fiscal, trade, and immigration policy have created uncertainty for capital markets
- Sectors identified as niche two decades ago are the new essential property types, opening the door to new options in the coming decades
- Detailed assessments of demand at the asset level, emphasizing the submarket and micro-location, are now driving asset selection
- Demographic changes—such as declining international migration, slower domestic migration, and lower population and economic growth—will define real estate demand
- The real estate industry is adopting AI in its operations, with most real estate firms exploring potential uses for the technology
For the second year in a row, Dallas was the number-one market to watch, noted Alperstein, who moderated the panel. “We had four Northeast markets jump into the top 10: Brooklyn, Jersey City, Manhattan, and northern New Jersey, most likely a story around Manhattan bouncing back,” he said.
“I’m a huge New York fan,” said Sara Queen, head of RE Equity for MetLife Investment Management. “New York has a vibrancy that many of our large cities haven’t seen in a while. You can’t get a reservation. The streets are busy. People are in the office, maybe not five days a week, but certainly four. San Francisco is trying to follow that model. In New York City, what’s driving the office market is financial services and requirements to be in the office. But we also see a rise in tech. AI has forced everybody to come back into the office, and the tech firms are coming back.”
“The out-migration seems to be over, which is important for a lot of these urban markets,” Nadji said. “We suffered from unbelievable damage postpandemic.”
From niche to essential real estate
Once-niche assets are now occupying the spotlight, the report notes. Data centers dominate the property types to watch; senior housing has become a major property type category in the NCREIF database; self-storage holdings in the largest U.S. core funds exceed hotel market value; demand for medical offices has become more durable than that for traditional office; and student housing is a liquid, mature rental housing subsector.
“On the senior housing side, we have an exponentially growing 65-plus population in the United States,” Porter said. “As we’re living longer, I think we see that [demographic] continue to grow exponentially.” At the same time, birth rates in the United States spiked in 2007, reaching 4.3 million, he said: “Births in 2025 look like they’re going to be about 3.6 million.” This [reduction] will slow enrollments in colleges and universities. “[Unless] those birth numbers pick up . . . there may not be as much demand for student housing,” Porter concluded.
Affordability still shaping the housing market
The Emerging Trends report indicates that affordability concerns are driving key trends in the multifamily housing market. New construction is slowing as demand softens due to weaker job growth and reduced immigration, while the affordability crisis is pushing residents toward smaller, less expensive cities. Despite continued investor interest in multifamily properties, transaction activity is constrained by uncertainty over whether current low returns adequately reflect the asset class’ stability.
Despite the fog of uncertainty hovering over 2026, the panelists said that they still see signs of optimism for the coming year. Porter said there are signs that land prices are growing more slowly than they have for the last few years. Queen pointed to signs of life in the office and multifamily sectors: “We’ve been buying multifamily at a discount to replacement costs. I think that’s going to turn out to be a great investment for us and for our clients over the long term.”
“We are seeing the capital demand come back much stronger than suggested,” Nadji said. “The notion that cap rates would be flat in 2026 is maybe a little bit too pessimistic. I think cap rates are actually coming in, not across the board, but for the higher-quality assets.”
Explore the full 2026 report here.
