For real estate executives assessing where to focus next, three themes are defining how firms navigate the market in 2026:
Higher costs, tighter margins and mounting operational pressures in recent years pushed real estate investors and executives to reevaluate assumptions that had long guided their decisions. This re-evaluation means a renewed focus on fundamentals and a clearer need for resilience, not just growth.
Across the market, several property types that once sat on the “alternative” or “nice-to-have” side of the allocation mix are moving into core focus:
During the low-interest-rate years, many projects advanced even with thin financial projections. But as rates rose and financing tightened, that cushion disappeared. Owners and developers now must clearly show lenders and investors how each asset will perform and where returns will come from.
A major shift is the amount of usable data firms now have. In earlier market cycles, financial models were built once and rarely revisited. Today, real-time data lets owners examine leasing, expenses, maintenance and staffing to see precisely where money is being earned or lost.
Every function must be reviewed to identify what adds value and what adds cost — something that’s far easier with stronger analytics:
This isn’t a return to old habits; it’s the result of better tools, clearer visibility and a smarter mix of internal and outsourced support.
As with most industries, AI and automation now shape nearly every stage of the real estate lifecycle. Developers use analytical tools to understand demand, demographics and location patterns — work that once required extensive on-site scouting. Pre-development budgets now pull from real-time and historical cost data instead of spreadsheets, improving speed and accuracy.
Financial workflows are seeing similar gains. Construction finance draw packages that once took hours to prepare can now be generated automatically. Construction draws also move faster as field data flows directly into financial systems.
Once a property is operating, data warehouses give owners a single place to see financial, operational and market information. Teams no longer have to wait for monthly reports. They can track issues or ask natural-language questions directly to an AI-enabled data warehouse.
Property management is shifting too. Online platforms let tenants submit maintenance requests through an app. Then an automated process reviews the issue, schedules help, verifies the invoice and processes payment. This reduces staffing pressure, especially as many roles lost during the pandemic were never refilled.
Financially speaking, capital is still available, but the bar to qualify for it is higher. Deals can still be refinanced or restructured, but owners must now put in more of their own capital than they did during the low-rate years. The typical expectation of contributing 20% to 30% equity has returned after a long period when borrowing was unusually inexpensive.
Lenders also want a clear view of how property values have changed. For projects that involve converting an older building — such as turning an office into housing — they often require owners to set aside a large portion of the renovation money up front, so the entire upgrade is fully funded before new financing is approved.
Non-bank lenders and private funds are still active, though their financing tends to come at a higher cost. Despite the ongoing stress on older loans, year-end 2025 still saw an uptick in deal activity as pricing reset enough to create more workable paths for buyers and sellers.
Several markets are expected to stand out for growth in 2026 and beyond. The current “Markets to Watch” list includes Dallas–Fort Worth, Texas; Jersey City, New Jersey; Miami; Brooklyn; Houston; Nashville, Tennessee; Northern New Jersey; Tampa–St. Petersburg, Florida; Manhattan and Phoenix, Arizona — a mix of fast-growing cities, NYC-adjacent areas and regional business hubs. These markets share several themes:
Many of these areas are also seeing growth in data-center and AI-related infrastructure, which is strengthening local economies. Across all 10 locations, however, the drivers are consistent: rising populations, growing employment and space to build.
Opportunity Zones are another area of potential investment. An opportunity zone is a federally designated low-income area that offers tax incentives for investment in qualified local businesses and property.
Today, real estate firms face several risks, most tied to the pace of change and the need to automate, outsource and use AI more effectively. Unfortunately, we often see complacency — relying on assumptions that worked under low interest rates but no longer apply. Markets are less forgiving, and waiting too long to act can lead to losses.
Slow, manual operations are another risk. Outdated processes, scattered systems and slow information flows lead to slow decisions, and slow decisions hurt performance.
Underinvesting in technology is a third. Without strong, accessible data, firms lose visibility, miss early warning signs and struggle to understand where money is being made or lost. To help circumvent these risks, we recommend the following:
Firms that modernize technology, automate smartly and build strong data foundations will move faster, work smarter and operate with greater confidence, no matter how the market shifts.
It’s time to optimize for resilience. With Armanino’s real estate experts, you can automate, outsource and apply AI in ways that strengthen operations and position your firm to build anything with greater confidence and profitability in the years ahead.
Ready to outsmart the market? With expert support and AI-driven solutions, we make your portfolio work harder.
