CRE Investment Conditions & Perspective on AI
- So far, there have been very few signs that the uptick in
long-term rates has negatively impacted Commercial
Real Estate (CRE) sales pricing. During the first three
months of the war in the Gulf, MSCI/Real Capital
Analytics’ Commercial Property Price Index continued
to rise for all major property types with the exception of
apartments—
arguably the most rate-sensitive property
type given its current combination of relatively low cap
rates and limited NOI growth—where pricing fell 1.1%.
Meanwhile, implied cap rates for apartment, office, and
mall REITs are all currently below late-February 2026
levels, while those of industrial REITs have held steady
around 5%.
- Much of this resilience in CRE sales volume and pricing
ties back to the fact that CRE debt markets have
remained highly liquid in recent months and conviction
that downside risks are limited has helped keep lending
spreads tight. The key variable to watch, however, is
longer-term inflation expectations
- Across the U.S. (CRE trends in the U.S. are relevant for
Canada), industrial demand gained momentum, rising
21% quarter-over-quarter (QOQ), while multifamily
absorption reached a near 25-year high and vacancy fell
below 9%. Office continued its path toward recovery, and
retail held firm amid tight supply and resilient consumer
spending. Hotels and seniors housing continued to
experience record occupancy numbers.
- Our refreshed AI Impact Barometer shows capital flows into AI accelerating sharply since our February 2026 update. Venture funding for AI and machine learning hit $269 billion in the first quarter alone, already exceeding the full-year total recorded in 2025. The CRE signal is sharpening too, with availability compressing across automation-ready distribution space, Class A office in tech hubs, and data centers. Explore the Barometer.
Check out our Q2 2026 Cap Rates & Capital Markets Report to learn more.
Asset types include:
|
|
