Emerging Trends 2027: Get Ready to ‘Work for It’

Commercial real estate investment opportunities are expanding, but success won’t come easy. It will require precise investment decisions and skilled operational management.

That’s the overall message of the “Annual Emerging Trends in Real Estate Report 2027” released today by PwC and the Urban Land Institute, which is holding its fall conference this week in Miami.

Based on interviews with more than 1,700 CRE executives, this year’s “Emerging Trends”—themed “You Have to Work for It”—identifies eight drivers that will shape 2027 as well as 30 markets to watch.

The report describes a market where repricing has created enthusiastic buyers, but capital is more expensive, and there is less optimism about profitability. Tariffs, inflation and geopolitical tensions add additional pressures.

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But it also found that CRE executives are adapting by rethinking project feasibility, restructuring funds and focusing on value created through income growth and operations rather than exit cap rate assumptions.

This year’s eight trends are:

1. The fiscal reckoning: According to the report, CRE finds itself having to compete for capital with other investment alternatives, including Treasuries and real estate private credit. Distress is “situational” and will likely lead to opportunity through forced sales.

2. The expanding real estate universe: Commercial real estate portfolios increasingly include infrastructure, energy, cold storage and a variety of operating businesses. Specialized skills are required for selecting, underwriting and managing these assets.

3. Policy is the new geography: Understanding the regulatory landscape of a geography or a property type has become a key factor for determining the viability of an investment. Some policies make deals harder to pencil while others, like conversion incentives, create opportunity.

4. Demographics: the compounding variable: Shifts in household formation, aging, migration and “income stratification” are changing housing demand dynamics. In particular, Millennials are in their homebuying years. The first of the Baby Boomer generation turn 80 this year.

5. The great submarket sort: Investors are no longer making blanket statements about submarkets, recognizing individual performance can vary greatly. There’s a movement away from growth markets toward undersupplied markets.

6. The coming supply gap: Construction has slowed, and supply is being absorbed. But the cost of development will keep construction activity subdued and put greater emphasis on existing assets.

7. AI and the human premium: The adoption of AI in CRE has advanced from “experimentation” to “broad deployment,” with respondents reporting their top three uses as analysis and forecasting; administrative and professional tasks; and marketing and business.

8. Reimagining places: There is a rise in “district-scale developments” driven by stadiums, universities, innovation clusters and more. They present opportunity for CRE firms that can bring the right skills and relationships to the table.

Markets to watch

As for markets, the report found that energy and power grid constraints, insurance costs, the opening up of new manufacturing corridors and local governance are impacting location decisions the most. Dallas-Fort Worth was the No. 1 market to watch for overall real estate prospects for the third straight year. Rounding out the top 10 were Nashville, Miami, Raleigh-Durham, San Francisco, Houston, Manhattan, Jersey City, Tampa/St. Petersburg and Charlotte.

Property type outlooks

The investment prospects for property types came in very close to each other. Four infrastructure investments types were added to this year’s survey, and they ranked the highest, followed by industrial/distribution, multifamily, retail, single-family housing ownership, office and hotel.

This is the 48th edition of the report.