Key Takeaways
- • Real estate asset under management (AUM) has returned to growth, signaling a recovery in institutional capital interest after prior contraction, though the sustainability of this rebound remains uncertain.
- • Global office leasing activity has reached post-pandemic highs, with the U.S. market leading activity across commercial real estate sectors as of August 2026.
- • Market participants expect real estate prospects for 2026 to improve modestly, with sentiment scoring 2.81 on a five-point scale, up from 2.75 in 2025, reflecting cautious optimism rather than strong conviction.
- • Major forecasting entities including Zillow and Fannie Mae have materially altered their real estate market forecasts for 2026, indicating significant shifts in market expectations and underlying assumptions.
- • The fundamental question facing the asset class centers on whether near-term AUM growth and activity rebounds represent sustainable structural recovery or temporary cyclical relief amid persistent structural headwinds.
Summary
Real estate asset management is showing early signs of recovery as assets under management return to growth following a period of contraction, though the durability of this rebound remains contested among institutional investors and market participants. The recovery is occurring against a backdrop of mixed signals: while global office leasing activity has strengthened to post-pandemic highs with U.S. markets leading activity, broader market sentiment remains measured and cautious.
Market sentiment regarding real estate prospects for 2026 reflects modest improvement but not strong conviction. Participants surveyed across the market assign an average outlook score of 2.81 on a five-point scale for 2026 prospects, representing an incremental improvement from 2.75 in 2025. This marginal uptick suggests participants anticipate fair conditions with improving trajectory rather than robust growth or significant headwinds.
Recent revisions to major market forecasts by prominent institutions including Zillow and Fannie Mae underscore the dynamic nature of real estate market expectations. These forecast adjustments indicate that underlying assumptions about pricing, supply-demand dynamics, and capital availability have shifted meaningfully, warranting institutional re-evaluation of real estate allocations and strategies.
The critical question for institutional asset allocators centers on whether current AUM growth and activity rebounds represent the beginning of sustainable structural improvement in real estate investment returns or merely a temporary cyclical relief phase. Investors must assess whether global office leasing strength and U.S. market leadership can extend across residential and industrial segments, whether capital inflows are sufficient to support valuations, and whether macroeconomic conditions support sustained demand for real estate assets.
Market sentiment regarding real estate prospects for 2026 reflects modest improvement but not strong conviction. Participants surveyed across the market assign an average outlook score of 2.81 on a five-point scale for 2026 prospects, representing an incremental improvement from 2.75 in 2025. This marginal uptick suggests participants anticipate fair conditions with improving trajectory rather than robust growth or significant headwinds.
Recent revisions to major market forecasts by prominent institutions including Zillow and Fannie Mae underscore the dynamic nature of real estate market expectations. These forecast adjustments indicate that underlying assumptions about pricing, supply-demand dynamics, and capital availability have shifted meaningfully, warranting institutional re-evaluation of real estate allocations and strategies.
The critical question for institutional asset allocators centers on whether current AUM growth and activity rebounds represent the beginning of sustainable structural improvement in real estate investment returns or merely a temporary cyclical relief phase. Investors must assess whether global office leasing strength and U.S. market leadership can extend across residential and industrial segments, whether capital inflows are sufficient to support valuations, and whether macroeconomic conditions support sustained demand for real estate assets.
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