US commercial real estate investors are more optimistic than ever, but expect profitability to be more difficult to achieve. This is shown by the 48th edition of the report Emerging Trends in Real Estate 2027, prepared by PwC and Urban Land Institute.
The overall indicator of the sector's attitudes has reached a record level. At the same time, only 50.5% of respondents rate business conditions as good or excellent. A year earlier, this share was 55%, and two years earlier - 65%. Expectations for profitability are decreasing for the second year in a row.
The authors of the report attribute the discrepancy to two possible reasons - the belief that prices have already corrected sufficiently, and the pressure on funds to invest their capital before their maturities expire. According to some interviewees, the public optimism of buyers is stronger than their actual willingness to take on risk.
He says higher borrowing costs and greater differences between sectors and sub-regions are increasing the demands on performance. “In 2027, success will depend less on betting on a broad sector and more on choosing the right asset, in the right market, and with the right operating strategy,“ says Alperstein.
Infrastructure takes over traditional real estate
For the first time, participants ranked energy and renewables, transportation, digital infrastructure, water and utilities ahead of all traditional real estate types in terms of investment interest.
Mixed and alternative assets received a score of 3.76 on a five-point scale. Industrial properties followed at 3.73, multifamily at 3.56, retail at 3.54, single-family homes at 3.49, offices at 3.40 and hotels at 3.37.
Data centers, which have been at the top for the past three years, saw the biggest annual decline in ratings. The report attributes the change to power constraints, project execution difficulties and regulatory hurdles, rather than a decline in demand.
Insurance, Networks and Renovations
About 72% of respondents said that the cost and availability of insurance moderately or significantly influenced their decisions. Another 45% cited energy and grid constraints as the leading factor driving market change.
In Manhattan, office-to-residential conversions under way are expected to reach 5 million square feet in 2025, up from 1.6 million in 2023. The growth is driven by changes in zoning and tax regulations.
In the ranking of investment and development markets, Dallas-Fort Worth retains its top spot, followed by Nashville, Miami, Raleigh-Durham and San Francisco.
Angela Kane, global CEO of the Urban Land Institute, calls the report a beacon of the forces that are changing the sector. According to her, the market in 2027 will reward discipline, adaptability and in-depth knowledge of local conditions.
Detailed statistics on average property prices in Bulgaria by city and neighborhood can be seen at imot.bg