Commercial real estate by 2026: asset repricing and new investment strategies

Photo: Travel and Tour World

As it enters 2026, the commercial real estate market is undergoing a strategic reassessment of assets and a shift in investment priorities. Investor focus is moving away from pure growth toward selective investments and asset quality, according to a review by Travel and Tour World. Analysts point to structural changes in the office segment, rising institutional interest in alternative property formats, and the growing role of artificial intelligence and ESG factors in shaping asset values.

Office market: segmentation instead of crisis

The office real estate market enters 2026 in a phase of structural segmentation. Demand is increasingly concentrated in high-quality assets, while a significant share of obsolete stock is facing a prolonged repricing process. This is not about businesses abandoning offices altogether, but about revising requirements for workplace formats and quality.

The most resilient segment remains Class A buildings — new or refurbished properties in prime locations with developed infrastructure, modern engineering systems, and a strong focus on employee comfort. Companies view such offices as a tool for talent retention and productivity growth, allowing owners to maintain high rental rates even in a restrained market environment.

The opposite situation is unfolding for Class B and C offices. Outdated buildings, especially in peripheral areas, are experiencing declining occupancy and downward pressure on values. Owners are forced to acknowledge the structural problems of these assets and factor in a long-term decline in their investment appeal. Repricing becomes inevitable, affecting both current rental income and market valuations.

Against this backdrop, the repurposing of office real estate is no longer a niche practice but is turning into a systemic tool. The conversion of offices into residential projects or specialized hotel formats is becoming increasingly common, especially in cities facing housing shortages. In a number of countries, this process is further encouraged by urban planning policies, making adaptive reuse one of the key scenarios for distressed office assets.

Alternative segments: from niche to portfolio core

Amid the repricing of traditional formats, segments that were previously considered auxiliary are playing an increasingly prominent role in commercial real estate. By 2026, they are more often viewed by institutional investors as sources of stable income and tools for risk mitigation in a volatile market.

The most illustrative example is self-storage. This format is cementing its status as an independent commercial real estate asset class alongside offices, retail, and industrial properties. Its key advantage lies in short-term lease agreements, which allow for rapid rent adjustments in response to inflation. Demand is driven by life events—relocations, changes in living arrangements, and rising population mobility — rather than purely economic cycles, supporting the segment’s resilience.

High investment interest is also maintained in senior living properties and healthcare-related real estate. As the baby boomer generation ages, demand for modern specialized projects is growing, while supply remains limited. This creates potential for higher occupancy and income, while simultaneously raising requirements for management quality, regulatory compliance, and operational expertise.

Data centers and logistics real estate represent a separate growth vector. The expansion of e-commerce and the accelerated adoption of artificial intelligence are increasing the need for computing power and infrastructure for data storage and distribution. Investments in such assets are increasingly seen as long-term plays aligned with technological trends and portfolio diversification.

Technology, artificial intelligence and ESG

By 2026, digital technologies in commercial real estate are no longer experimental and are becoming core management tools. Property technology (PropTech) solutions are being integrated into everyday operations, affecting cost levels, management transparency, and the quality of analytics.

Artificial intelligence (artificial intelligence, AI) is used to automate routine processes and analyze large data sets. This includes predictive maintenance, energy consumption monitoring, management of engineering systems, and more accurate assessments of market parameters. This does not lead to direct staff reductions but changes the structure of employment: specialists work with digital tools, improving operational efficiency and reducing costs. Companies investing in their teams’ digital competencies gain an advantage through savings and more precise decision-making.

At the same time, the role of sustainability factors — environmental, social, and governance (ESG, environmental, social and governance)—is strengthening. For tenants and institutional investors, measurable indicators matter more than declarations: building energy efficiency, water consumption, emission levels, and the quality of engineering solutions. Assets with strong ESG performance demonstrate more stable demand, higher rental rates, and better valuation metrics, directly linking sustainability to financial outcomes.

As a result, technology and sustainability are no longer optional add-ons but factors that influence asset values and access to capital. In a market undergoing repricing, they increasingly determine which properties retain investment appeal and which come under pressure.

Capital markets: repricing, flexible financing, and inflation protection

High interest rates remain a key constraining factor for commercial real estate in 2026, but instead of halting investment activity, a more flexible capital management model is emerging. The era of cheap borrowing is over, forcing investors to rethink their approaches to financing and risk management.

Alternative sources of capital—private debt and private equity funds — are coming to the forefront. These instruments help address refinancing needs and transaction execution in an environment where bank lending remains cautious and selective. Such structures are particularly in demand for assets undergoing repricing and for projects with non-standard income profiles.

Despite rate pressure, commercial real estate retains its role as an inflation hedge. Assets with short-term leases or rent indexation mechanisms, typical of retail and industrial properties, show the greatest resilience. The ability to pass rising costs on to tenants supports cash flows and remains one of the reasons for sustained institutional investor interest.

In an environment of heightened uncertainty, the role of fundamental analysis and scenario planning is increasing. The priority is shifting from maximizing nominal returns to ensuring cash flow stability and a balanced risk-return profile. More attention is being paid to secondary and tertiary markets, where higher capitalization rates partially compensate for increased risks and create opportunities for selective deals.

Hotels as a key investment segment of the new cycle

By 2026, commercial real estate is entering a phase where the decisive factor is not scale but the quality of strategies. The repricing of office assets, the growing role of alternative segments, the adoption of technology, and the increasing complexity of capital management are shaping a market where the winners are not the most aggressive players, but the most flexible ones. Investment decisions are increasingly based on cash flow resilience, technological readiness of assets, and the ability to adapt to long-term structural changes rather than short-term cycle fluctuations.

In this configuration, the market requires a targeted approach to each segment and asset. One of the most attractive directions is the hotel sector, which in Europe has risen to second place among all asset classes. According to CBRE, more than 90% of market participants plan to maintain or increase their hotel investments, viewing them as one of the most resilient and profitable segments. The sector benefits from strong tourism demand, limited supply in key markets, and the ability to deliver returns higher than most other commercial real estate formats, especially in the upper-upscale and luxury segments.

Analysts at International Investment note the growing popularity of emerging markets, where entry conditions remain more flexible and return potential is higher. Among these destinations, Georgia stands out, as rising international tourist flows are accompanied by the active development of resort infrastructure. In particular, a large-scale, internationally branded hotel project is being developed in the Batumi area — Wyndham Grand Batumi Gonio — combining a global brand, professional management, and yield indicators that significantly exceed European averages.

Overall, experts believe that in 2026 investors will move away from universal models in favor of more differentiated strategies focused on cash flow sustainability and adaptation to changed macroeconomic conditions.