5 key real estate trends focus of Emerging Trends report

By Joel Nelson on February 2, 2026 in Matrix

Real estate industry experts across the U.S. and Canada, including Paul Fiorilla and Jeff Adler from Yardi Matrix, provided insights that are summarized in the 47th edition of Emerging Trends in Real Estate®.

This forecast publication, sponsored by PwC and the Urban Land Institute, dives into investment, finance, capital markets and other issues affecting real estate performance in the two countries.

Here’s a summary of the five top trends addressed in the latest volume.

1. Navigating the capital market fog

Respondents to the Emerging Trends survey cited interest rates, job/income growth and inflation as the top three economic and financial issues for real estate in 2026, with more than 80% expecting inflation to be stable or higher.

“Economic uncertainty looms large over the U.S. economy amid stark changes to fiscal, trade and immigration policy, generating a fog over the path forward,” the report notes.

Some commercial real estate investors will cheer the prospects of lower interest rates and abundant debt. Others will keep a wary eye on higher long-term rates, sidelined equity and less foreign investment.

2. Elevating from niche to essential

“What was once considered niche is now essential,” the report says, with senior living, self storage, medical office, student housing and data centers having matured to the extent that they often exceed traditional spaces in value, holdings in large core funds and demand durability.

Self storage, for example, is no longer regarded as an extension of residential, while strong current and projected fundamentals has made senior housing an investor favorite. Medical office has proven its durability over the business cycle.

And with data centers providing a “critical infrastructure for technological expansion,” survey respondents gave it the highest rating among all subsectors for investment and development.

3. Analytics & operations

With uncertainty about future costs looming, property owners and investors are focusing on micro-level prospects for demand using detailed assessments that focus on submarket and micro-location, including block-level analysis.

Micro-level analysis of a small town with a large public university, for example, may drive student housing investment. Meanwhile, commercial sector investors will consider consumer spending, employment and the industry concentration in the local area along with demographic factors.

“Operational excellence and granular asset selection criteria central to achieving income growth,” the report says, adding, “As industry leaders determine the depth of demand for an asset relative to its local competitive properties, submarket, corner and block-level analyses assist with picking the right property investments to serve future demand as well as value existing properties.”

4. Demographics driving demand

Net international migration, a critical component of U.S. population and economic growth, is projected to decline with new restrictions and mass deportations. The implications extend to supply as well as demand, as fewer foreign-born construction workers translate to higher building costs.

Fewer homeowners are moving due to the lock-in effect of their existing low rate mortgages plus higher home prices. The decades-long trend of domestic migration from the colder parts of the country to the warmer has boosted the Sun Belt’s economic growth, although this trend has reversed since 2020 due to climate warming.

5. AI’s ongoing impact

Artificial intelligence (AI) is rapidly gaining traction as an operational reality in property management.

While AI-driven job replacement remains rare among real estate firms, “job transformation and use-case exploration are more prevalent at this stage of AI adoption,” the report says, with residential operators using AI tools that streamline resident services prominent among the early adopters.

“Real estate firms with operationally intensive property holdings, such as residential and health care–related assets, are using AI to improve customer services elements of their properties,” the report notes. At the same time, “AI adoption to replace entry-level tasks is keeping more experienced employees in their roles, who themselves are using AI to gain new efficiencies around mundane tasks.”

Along with contributing to the Emerging Trends forecast, Yardi Matrix provides the industry’s most comprehensive market intelligence, offering deep analysis of conditions at the macro and micro levels that support well-informed investment decisions.