The Expanding Universe – Nov. 2, 2026
Industry is investing in assets that require operational capabilities beyond the norm
Defining the term “commercial real estate” used to be a pretty straightforward exercise. Heading into 2027, not so much.
In the just-released Emerging Trends in Real Estate 2027 report, a collaboration between PwC and the Urban Land Institute, the authors write, “The most striking finding in this year’s Emerging Trends survey is not which traditional property type leads the rankings, it is that none of them does. Last year’s edition of Emerging Trends explored how sectors once considered niche—data centers, senior housing, self-storage, medical office, single-family rental—had ‘graduated” to essential components of institutional portfolios.
“The 2027 story is different in kind, not just degree,” the report states. “Rather than simply adding new property types to an existing framework, the industry is increasingly committed to investing in assets that require operational capabilities beyond conventional real estate ownership and management.”
In “The Expanding Real Estate Universe,” a discussion of the second of eight interconnected trends identified in the 2027 edition, the PwC/ULI team reports that when survey respondents are offered infrastructure as a category for the first time, they rank it higher than any traditional or formerly niche property type. “Energy and renewables, transportation, digital infrastructure, and water and utility systems all outscore the highest-rated traditional and formerly niche sectors,” according to the report.
This doesn’t mean that a nine- or 10-figure institutional fund will pull out of the apartment sector and start investing in solar farms or air taxi manufacturers. But it does send a message that the industry professionals surveyed for this report see some of the most compelling opportunities beyond the customary property types.
The public markets have provided evidence of this trend for some time: the report notes that some of the largest and most actively traded REITs now include data center operators, cell tower companies and specialty platforms that did not exist in the index two decades ago. “Private markets are following the same arc,” the report states.
Why now? PwC and ULI cite converging forces behind the mushrooming investor interest, including the transition to renewable energy and the newfound investor appeal of transportation and logistics hubs.
“What these categories share is a set of characteristics that real estate investors already understand: durable cash flows from physical assets, high replacement costs, limited substitution risk, and contractual revenue streams that offer inflation linkage,” the report states. “The investment thesis is familiar. The assets themselves are not.”
Capitalizing on these opportunities entails a few shifts in mindset. First, investors need to broaden their definition of what constitutes real estate, even as they apply the familiar investment thesis. Second, they must understand that familiar thesis or no, these new asset types are not bound by the same demand drivers and operating principles as the basic food groups.
Third, investors need to draw a distinction between generating income from the property itself and generating income from the business(es) contained within that property. Fourth, it’s important to understand the uniqueness of alternative assets, e.g., why a chain of car washes and a data center will not yield maximum results from a one-size-fits-all approach to asset management.