Asset Selection, Demographics, and AI: What’s Driving Real Estate’s Next Cycle

Commercial real estate is entering a new phase of expansion — with this cycle rewarding investors who know where to look. That was the central takeaway from industry leaders gathered at Goodwin and Columbia Business School’s 2026 RECM Conference.

Panelists said the CRE market is moving past the recent downturn and into a period of new opportunity, with demographic forces supporting investments in sectors such as senior housing.

Retail has outperformed expectations. Data center demand is accelerating despite supply constraints. Even parts of the office sector, long weighed down by the shift to remote work during the pandemic, may now be positioned for a rebound.

Below are five takeaways from real estate experts at this year’s event.

CRE Opportunity Lies Ahead — but Selectivity Will Define Returns

Real estate is re-emerging as an attractive investment, but the coming years will reward investors who differentiate carefully between assets, said Chad Tredway, global head of Real Estate at J.P. Morgan Asset Management, and Thomas Kennedy, head of Research and Investment Strategy for Real Estate Americas at the firm.

With stocks and bonds now more positively correlated than in past cycles, the traditional 60/40 portfolio allocation provides less diversification than in the past. Real estate can help play that role through steady cash flows and protection against inflation.

However, broad sector bets will not be enough. In other words, the era of simply buying sectors such as industrial and avoiding office is over. Portfolio performance will hinge on specific asset selection and focus on resilient sectors, such as single-family rentals and multifamily, where delayed homeownership supports longer renting cycles. Data centers are also expected to be well positioned, benefiting from sustained technology investment.

Tommy Brown, a partner at LGT Capital Partners, warned that a shakeout is coming among fund managers. “There are many zombie funds that are not going to be around in the next cycle,” he said. The capital, he added, is flowing toward hyper-specialized operators who can drive returns through operational expertise.

Why Retail Has Outperformed Investor Expectations

Coming out of the pandemic, retail valuations reflected the assumption that e-commerce would permanently hollow out brick-and-mortar. Instead, e-commerce growth has levelled off, and consumers have embraced an omnichannel approach that blends online purchases with in-store returns, said Martha Kelley, a managing director at Bain Capital Real Estate.

For instance, consumers might buy Lululemon pants online but return them in-store, where it’s easier to combine the errand with trips to places like Whole Foods rather than making a separate stop at a UPS store.

COVID underscored that consumers value certain shopping formats, such as open-air shopping centers, Kelley said.

Of course, many shopping centers still house older retailers, such as movie theaters and large department stores, which haven’t adapted well to online shopping or changing consumer habits. These “last generation” retailers often struggle with weaker sales and thinner margins. When these tenants leave, operators can replace them with newer, more financially stable brands that better fit today’s shopping patterns — including experience-focused stores.

Kevin McCrain, CEO of GGP, said retailer bankruptcies are a normal part of the business, not a crisis. McCrain said it is not uncommon to know about a bankruptcy filing 18 months before it happens, and to backfill the spaces before the filings hit. “You know what's coming,” he said. “You see the financials, you see the sales — you're planning for it.”

Demographic Forces Drive Real Estate Decisions in Era of Uncertainty

Amid heightened geopolitical and economic uncertainty, investors are increasingly relying on the surety of demographic trends.

“Demographics is something that we anchor to in this great context of constant change,” said Kimberly Adams of Clarion Partners. “There is a lot that is unforeseen on the landscape, but one thing we know for sure is how many people are turning 45 in the next year and how many people are turning 80.”

Delayed household formation among Millennials is altering long-term real estate demand. The average homebuyer age has risen from 33 to 40 in just five years, signaling longer renting cycles and higher demand for single-family rentals, the J.P. Morgan Asset Management panelists said.

The aging population is also driving demand for healthcare facilities and senior housing. Census Bureau data show that 18% of the US population is age 65 and over, up from 12% in 2004. That figure is expected to continue rising as the Baby Boomer generation reaches retirement age.

Senior housing supply arrived too early a decade ago, as many older Americans chose to age in place, and the pandemic further delayed transitions. Today, that same cohort is entering its eighties and now moving into retirement homes with large sums of accumulated wealth, Adams said.

Manraj Singh, global head of Real Estate Product at Nuveen, said investor interest in real estate alternatives is shifting from broad sector bets to operator quality. LPs are no longer just asking about track records on asset selection — they want to see how well managers have picked their operating partners, and whether those relationships are durable.

Surging Data Center Demand Meets Infrastructure Constraints

AI is accelerating demand for data centers after cloud computing was already driving strong growth.

Andrew Power, CEO of Digital Realty, explained how the demand for data centers is itself evolving. Companies tied to a single cloud provider face rising costs, and because switching is expensive, they are increasingly turning to independent data centers that allow them to use multiple providers. Further, governments are requiring data to remain within national borders.

The greater challenge lies on the supply side. Expanding capacity is difficult, costly, and slow — particularly because the US grid has been underbuilt for years, and adding transmission lines and generation capacity will take years. Land is expensive, long-term power contracts lock in obligations, and poor location choices can erode returns. Community opposition through the “Not in My Backyard” movement, as well as regulatory pressures, add further friction.

Office Sector Shifting from CRE Drag to Driver

Office may shift from being a drag on commercial real estate performance to a driver of activity over the coming years. However, that momentum is expected to be concentrated among newer buildings.

Buildings delivered in 2015 or later are seeing vacancies decline, highlighting that vintage — and the amenities and efficiency that come with newer product — is a defining factor, according to J.P. Morgan Asset Management. Meanwhile, much of the older inventory continues to struggle with elevated vacancies and weaker demand.

To be sure, not all panelists were fully convinced of a broad office rebound. Remote and hybrid work continue to persist above pre-pandemic levels, which will weigh on the sector for the foreseeable future.