The Advantage of Scarcity – July 20, 2026

For investors thinking ahead, the issue is less about demand and more about barriers to future supply

“The World Needs More Than It Can Build,” reads the headline on the introduction to a new Hines report, summing up what the firm sees as a defining theme for commercial real estate investors in 2026. 

Hines’ 2026 Midyear Global Investment Outlook identifies what it describes as “four powerful waves crashing into the global economy.” They include intelligence, which is increasing demands on digital infrastructure and the systems supporting it; energy, where new levels of demand are being imposed on systems across the globe; security and sovereignty, which have governments and businesses rethinking supply chains, manufacturing footprints and strategic capacity; and demographics, which have been changing how and where people work. 

Accordingly, Hines believes the next phase of the real estate cycle will increasingly reward investors who recognize the scarcity advantage and identify markets where long-term demand has been reinforced by meaningful barriers to future supply. 

“Investors have spent the past several years focused on inflation, interest rates and economic uncertainty,” said David Steinbach, global CIO at Hines. “Those factors remain important, but we believe the defining investment question has shifted.  

“Increasingly, the issue isn’t whether demand exists,” he continued. “It’s whether markets can deliver the housing, logistics and digital infrastructure needed to keep pace with it.” 

The new report arrives as commercial real estate enters a new phase of recovery following two years of repricing. Financing conditions have improved, transaction activity has begun to recover and capital has gradually returned to the market, Hines says  

Yet leasing fundamentals remain uneven across sectors and regions. Hines believes this disconnect could be creating a window for investors to position ahead of a broader recovery by focusing on markets where long-term demand and constrained future supply are most closely aligned. 

“Our research suggests this will likely be a cycle defined by selectivity rather than broad market exposure,” said Joshua Scoville, head of global research at Hines. “The opportunity isn’t simply identifying where demand is strongest. It’s identifying where lasting scarcity is most likely to emerge because demand should outpace future supply. That distinction is becoming increasingly important as development slows across much of the world while long-term demand drivers continue to accelerate.” 

Key findings in the report include the following: 

• Housing fundamentals could be poised to improve. Quarterly U.S. apartment starts have fallen to their lowest level in 14 years, setting the stage for a healthier supply-demand balance as new deliveries slow. 

• Some capital markets have recovered faster than operating fundamentals. Improved liquidity and debt availability have created selective opportunities, even as leasing conditions continue to vary widely across sectors and markets. 

• Retail has continued to benefit from years of underbuilding: More than a decade of limited new retail development has strengthened the outlook for necessity-based and dominant retail centers. 

• Industrial opportunities have become increasingly market specific. Approximately 340 million square feet of industrial space remains under construction in the U.S., reinforcing the importance of focusing on locations where land, infrastructure and future development remain constrained (CoStar, Q1 2026). 

• Long-term structural demand has continued to strengthen. As artificial intelligence and electrification reshape the economy, demand for housing, logistics facilities and powered land continues to grow, while new supply remains difficult to bring online. 

“Markets often focus on what’s growing,” Steinbach added. “We’re increasingly focused on what’s difficult to build. In our view, that’s the scarcity advantage.” 

There’s an age-old principle of real estate investing implied in this scenario, summed up in Wayne Gretzky’s famous adage: “I skate to where the puck is going to be, not where it has been.” Paraphrased for a CRE context, it means anticipating the market rather than simply reacting to it.