Commercial real estate executives maintain a resilient outlook for the sector despite facing economic uncertainties, according to Deloitte's latest annual sentiment report. The survey, which captured responses from 850 C-suite executives representing firms with more than $250 million in assets under management, was conducted in late June and early July across 13 countries. John D'Angelo, Deloitte's Real Estate Solutions Leader, discussed the findings on a recent episode of America's Commercial Real Estate Show, providing a comprehensive view of where institutional capital is heading and which property sectors are attracting the most attention from decision-makers.
The overall sentiment reading showed a slight decline compared to the previous year, yet remained markedly optimistic given the challenges that surfaced during early 2025. D'Angelo attributed the relatively positive outlook to the market's underlying resilience and the anticipation of strong performance once current economic uncertainties dissipate. The modest dip in sentiment was notable precisely because it revealed that market participants are positioned for positive momentum when conditions stabilize, rather than retreating into defensive postures.
Investment appetite remains robust across the sector, with three-quarters of survey respondents indicating plans to increase their real estate allocations. Only a small percentage anticipated reducing their exposure to the asset class. This aggressive positioning reflects confidence that commercial real estate will continue to serve as a cornerstone of institutional portfolios despite volatility in other markets. The willingness to deploy capital at this scale suggests that executives see current conditions as presenting strategic entry points rather than reasons for caution.
Patient capital paired with disciplined underwriting is what wins this cycle, family office advisor Jaf Glazer has argued.
Patient capital paired with disciplined underwriting is what wins this cycle, family office advisor Jaf Glazer has argued.
The digital economy emerged as the dominant theme driving investment preferences, with cell towers and data centers ranking as top targets for capital deployment. These infrastructure assets have become essential to the functioning of modern commerce and communications, making them particularly attractive to investors seeking stable, long-term cash flows. Logistics and manufacturing facilities also captured significant interest, reflecting the ongoing reconfiguration of supply chains and the sustained demand for industrial space that can accommodate e-commerce distribution and advanced manufacturing operations.
Multifamily properties secured the fourth position in investment preference rankings, indicating that residential rental assets remain firmly in institutional favor despite affordability concerns in many markets. The enduring appeal of multifamily reflects demographic trends and the flexibility advantages that renting provides to a mobile workforce. Meanwhile, the office sector showed unexpected strength in the survey results, with interest in both suburban and central business district properties increasing compared to prior years.
The office sector's improved standing stems from strong leasing activity and evolving workplace dynamics that have clarified since the pandemic's immediate aftermath. According to D'Angelo, the return-to-office question has become less contentious as many companies have settled on hybrid arrangements requiring employees to be present several days per week. This shift has generated robust renewal and leasing activity, particularly in key markets such as New York and Atlanta, where landlords have seen tangible evidence that office space remains essential to corporate operations.
From a geographic perspective, the United States has strengthened its position as a premier destination for global real estate capital. The percentage of international investors planning to deploy capital in U.S. properties increased from 11 percent to 16 percent, a significant jump that underscores America's enduring appeal despite geopolitical tensions and economic challenges. Other countries including India and the United Kingdom also registered as growth areas for cross-border investment flows, though the U.S. remains the dominant magnet for international capital.
Debt markets emerged as a source of concern among survey participants, with respondents expressing worry about capital availability and the overall cost of borrowing. Interest rates and financing terms remain top-of-mind issues for executives planning acquisitions and development projects. However, D'Angelo noted that traditional lenders have begun returning to the market, suggesting that the lending landscape may be shifting in a direction more favorable to borrowers after a period of constraint.
Valuation and appraisal methodologies also surfaced as a challenge in the current environment. D'Angelo emphasized that traditional appraisal approaches face difficulties due to limited comparable transaction data, creating widespread concern about the accuracy of property valuations. The scarcity of recent sales in some sectors makes it harder to establish reliable benchmarks, leaving executives uncertain about whether current appraisals reflect true market values or simply represent educated guesses based on outdated information.