2025-2026 Could Be a Breakout Period for Private Real Estate. What RIAs Should Watch For Now

After two years marked by rising interest rates, constrained liquidity, and market recalibration, signs are emerging that private real estate could be entering a new phase, one defined less by disruption and more by potential opportunity. For RIAs, this evolving landscape may offer a timely chance to revisit private real estate allocations and help clients position strategically for what could be a multi-year recovery.

While no cycle turns on a dime, many indicators suggest the foundational pieces for a rebound may be falling into place. Valuations have adjusted, macro conditions appear to be stabilizing, and certain sectors are showing early signs of resilience. Here’s what to watch, and why 2025–2026 may prove to be an important window for long-term investors.

Valuations Have Reset, and That May Create Entry Opportunities

The repricing of private real estate is largely underway. From 2022 through 2024, cap rates expanded, net asset values declined, and transaction activity slowed meaningfully. For many sectors, this period of correction brought asset prices down to more conservative, fundamentals-based levels.

Today, we may be nearing the bottom of that cycle. Transaction volumes are showing tentative signs of life, and large institutional players, including some of the most experienced private equity and real estate firms, are beginning to allocate again. While broad-based recovery is still uncertain, there is growing belief that pricing has adjusted sufficiently to create attractive entry points for investors with a longer time horizon.

For advisors and their clients, this moment could represent an opportunity to access private real estate at more favorable valuations before capital flows pick up and discounting recedes.

Macro Tailwinds Could Reinforce the Recovery

Macroeconomic conditions, while not yet fully normalized, appear to be moving in a more favorable direction. Inflation has eased from its 2022 peak, and interest rates—though elevated—have likely plateaued. While rate cuts remain uncertain, many market observers anticipate a shift toward stabilization or gradual easing by 2026.

Meanwhile, the U.S. economy continues to demonstrate resilience. With real GDP growth tracking in the 2–2.5% range, tenant demand across key property types has remained relatively stable. This backdrop may help support income-generating real estate strategies and bolster confidence among long-term investors. 

Importantly, capital is returning to the space. Fundraising, which had slowed over the past 18 months, is beginning to rebound, and dry powder is being selectively deployed. While liquidity conditions remain tight in some corners, sentiment among institutional allocators appears to be improving—further reinforcing the idea that a turning point could be near.

Where to Focus: Sector-Level Opportunities for RIAs

Not all segments of private real estate are rebounding at the same pace. Several property types are showing stronger fundamentals and may present differentiated opportunities for advisors and their clients.

• Multifamily remains a standout. With homeownership affordability still under pressure, rental demand continues to climb, particularly for Class A and B assets in constrained markets. Millennial and Gen Z cohorts are fueling demographic tailwinds, while new supply is slowing due to elevated construction costs.
• Industrial and logistics properties are benefiting from e-commerce demand, supply chain reshoring, and a renewed focus on inventory resilience. Vacancy remains tight in key corridors, and rental growth has proven durable in select locations.
• Life sciences and data centers are driven by structural demand, from AI infrastructure to healthcare innovation. These assets are often under-allocated in portfolios, yet they offer exposure to secular trends that may be less sensitive to broader economic cycles.
• Trophy office and high-quality retail represent more contrarian plays. While risk remains in these segments, some properties are trading below replacement cost and may be mispriced relative to long-term fundamentals. Advisors seeking selective upside in dislocated markets may find value in these sectors with the right due diligence.
• One area of particular relevance to CAI is Manufacturing Essential Assets (MEAs). As a subclass of industrial real estate, MEAs house mission-critical operations, often tied to long-term tenants with high retention rates. These assets have demonstrated stable occupancy and income generation across multiple cycles—and may offer a differentiated level of durability for investors seeking consistent performance.
  

Private Credit: Flexibility in a Tight Lending Market

In the current environment, traditional lending channels remain constrained. Banks and institutional lenders are cautious, which has opened the door for private credit strategies to play a larger role in deal structuring.

This shift benefits investors who value income and downside protection. By stepping into the role of lender, sponsors can shape terms more favorably and offer investors access to real estate exposure with potentially reduced interest rate sensitivity. For RIAs, private credit strategies may present a compelling complement to equity allocations, especially in a market where selectivity and structure matter more than ever.

What to Watch Now

As you evaluate private real estate opportunities, several indicators can help signal whether momentum is building:

• Institutional capital flows, such as large fund closings or increased allocations, often precede a broader recovery.
• Discount erosion—buyer and seller expectation convergence can indicate a maturing market cycle.
• Federal Reserve messaging and movements in the 10-year Treasury yield remain key markers for rate stability.
• Transaction activity is worth tracking. A sustained pickup in deal volume may reflect renewed confidence and liquidity.
• Tax-advantaged structures like DSTs, REIT conversions, and 721 exchanges continue to offer pathways into real estate with potential benefits for clients seeking efficiency and optionality.

A Moment to Reengage, Cautiously and Strategically

While no outcome is guaranteed, the conditions shaping up in 2025 and beyond suggest this could be a particularly opportune time for RIAs to reengage with private real estate. Valuations are more favorable, sector-level fundamentals are stabilizing, and capital is gradually returning.

For advisors seeking durable, income-oriented exposure, particularly through essential-use assets like MEAs, CAI’s approach may offer timely relevance. The next phase of this market could reward thoughtful entry, strategic structure, and long-term perspective. By staying informed and acting with discipline, you’ll be well-positioned to help your clients participate in whatever opportunities this cycle may offer.