According to the latest ValTrends report from SitusAMC, summarised by Peter Muoio, Senior Director of SitusAMC Insights, commercial real estate (CRE) has once again established itself as the preferred asset class in the company's quarterly investor preference survey. Muoio explained in a webinar titled 'CRE Sentiment Improves, but Activity Remains in Check' that CRE is currently perceived as a stable investment compared to other asset classes.
According to Muoio, this development is due to investors considering commercial real estate more stable in turbulent times than other forms of investment. Factors such as tariffs, the war in Iran, and increased uncertainty contribute to a preference for cash investments and commercial real estate, as these are subject to less extreme fluctuations than equity and bond markets. This signals that capital is not shying away from the commercial real estate market.
Alignment of Buying and Selling Interests
An interesting phenomenon in the latest quarterly data is that the preference for selling and the preference for buying within the commercial real estate segment were aligned for the first time in several years. Following the Fed's monetary tightening in 2022, buying and selling activities diverged, with holding properties dominating. The current convergence could signify an alignment of market views between buyers and sellers, thereby indicating growing potential for future transactions.
However, capital availability remains restricted for both equity and debt. This is due to ongoing uncertainty. SitusAMC observes that analyses for equity and debt are increasingly becoming property- and micro-area-specific. A broad spread is no longer effective; instead, a more selective approach to lending and equity investments is required. This explains the historically higher variance in returns between individual properties, driven by technological changes in the use of office, industrial, and retail spaces.
Re-weighted Preferences for Asset Classes
Investors are currently showing a more balanced view of different asset classes. While in previous years residential properties, particularly multi-family homes, were by far the most preferred category, followed by industrial properties – driven by the growth of AI and data centres – a shift is noticeable. In the fourth quarter of 2025, the proportion of investors naming offices as their preferred asset class rose from a previous 0-2 percent to 22 percent. For the second quarter of 2026, this figure was still a significant 11 percent.
This development in the office segment is due to several factors: significant price reductions, the conversion of offices into residential space, and a multitude of expiring financings, which are reviving interest in the sector. Retail is also seeing increased interest, with 21 percent in the latest quarter compared to 9 percent a year ago. This broader distribution of preferences indicates a more diversified investment strategy, which is considered a positive sign for future market development.
To revitalise transaction activity in the industry, Muoio believes less uncertainty and lower interest rates are needed – both closely intertwined. Global events such as the start of the war in Iran or tariffs led to an increase in the uncertainty index. If uncertainty decreases and interest rates ease, for example, through a relaxation in 10-year government bonds from a recent 4.7 percent, this could restart the flow of transactions, refinancings, and investments.
