Key topics covered in this article:

• • Private equity remains an important capital source in commercial real estate, but investors are becoming more selective as borrowing costs stay elevated and property performance varies by sector. Instead of relying on cheap debt or market appreciation, investors are focusing more on durable demand, reliable cash flow, and operational strength.
  • Industrial, logistics, and data center properties are drawing especially strong interest because of long-term demand drivers such as reshoring, third-party logistics growth, AI adoption, and digital infrastructure needs. At the same time, constraints like power access, connectivity, and limited supply are making certain well-positioned assets even more valuable.
  • To attract private equity capital, developers and owners need more than a favorable valuation. Strong property-level financials, clear operating data, known capital needs, and a compelling story around demand, efficiency, and future value creation can make an asset easier to underwrite and more appealing to investors.

Private equity is an important source of capital for commercial real estate. The investment environment, though, looks different than it did a few years ago. Higher borrowing costs and uneven performance across property types have changed how investors evaluate opportunities.

Those changes are influencing where capital is going and how deals are structured. They are also changing what investors expect from an asset after acquisition. For developers and property owners, it helps to understand where those priorities are shifting before making the next strategic decision.

The Current State of Private Equity in Commercial Real Estate

Private equity is still moving into commercial real estate, despite a challenging economic environment. CBRE expects U.S. investment activity to increase 16% in 2026 to approximately $605 billion, and investment volume is expected to grow across all major sectors, even with the 10-year Treasury yield forecast to remain above 4% through year-end.

PE firms seem to be considering risk and concentrating capital in assets with durable demand and reliable cash flow. Investors are also relying less on market appreciation or inexpensive leverage to drive returns. If private equity is part of the plan, owners need to know what those investors are looking for before they get to the table. That can affect how they position an asset for a future investment or sale.

Private equity is active, but it’s becoming more selective.

Where Growth Expectations Are Highest

Industrial and logistics properties continue to benefit from long-term demand drivers. Manufacturing reshoring and increased use of third-party logistics providers (3PL) are increasing demand for production and distribution space. Forecasts now call for annual industrial leasing growth of 10%, up from an earlier estimate of 5%. That outlook suggests stronger leasing activity for the year ahead.

Data centers are attracting investment for different reasons. Demand for AI and digital infrastructure continues to increase the need for computing capacity. More than half of data-center investors expected to increase their buying activity by more than 10% in 2026.

The supply isn’t keeping up though. By early 2026, more than 80% of data-center capacity under construction in major North American markets was already pre-leased. Power availability and infrastructure delivery are the real bottlenecks, which means sites that already have power access, connectivity, and room to grow are scarce and increasingly valuable.

Higher Borrowing Costs Are Reshaping Deal Structures

Alongside that sector-level growth, private equity investors are bringing more scrutiny to every decision. Debt is more expensive than it was a few years ago, and underwriting is more conservative. Investors cannot rely on low-cost debt to boost returns the way they once did, but deals are still happening as buyers adapt how they finance them.

In practice, that means buyers are bringing more equity to the table, using private credit, or layering in multiple capital sources. Joint ventures, preferred equity, mezzanine financing, recapitalizations, and development partnerships have all become more common tools for managing risk and filling financing gaps. As long as borrowing costs remain elevated, these structures are likely to remain a standard part of commercial real estate deals.

Technology Is Becoming Part of the Value-Creation Strategy

With financing costs still high and near-term valuation gains less certain, investors are leaning more on the fundamentals, both in how a deal is evaluated and in how an asset performs after acquisition. Technology is increasingly part of that strategy.

Better data and analytics are giving underwriters more confidence in the numbers behind a deal. AI-driven tools are starting to do more of that work, improving pricing models to reflect current market conditions.

On the operations side, smart-building systems can give owners greater visibility into building operations, and AI-driven tools are being used to optimize maintenance. Standardized systems can also make it easier to manage assets at scale. IBISWorld identifies proptech, AI-driven analytics, and IoT as tools being used to improve efficiency and scalability.

The bottom line is that investors are looking for properties with reliable numbers and built-in efficiencies. Any technology-related capital improvements, including the kind that may qualify for accelerated depreciation through a cost segregation study, can also improve cash flow in ways that are directly relevant to how investors underwrite a deal.

What Developers and Owners Can Do to Attract Investors

For developers and property owners seeking outside capital, investors increasingly want to see more than a strong current valuation. They want to understand the strength of the property’s cash flow and where future value may come from.

That starts with reliable financial and operating information. Owners should be prepared to provide property-level financial results, occupancy and leasing information, capital expenditure history, debt obligations, and realistic forecasts. They should also be able to explain the demand supporting the property, including tenant quality and location, along with broader local market conditions.

Asset quality also matters. In industrial real estate, for example, tenants are moving out of older, less functional properties and consolidating into newer space. Maintaining a high-quality portfolio and understanding local economic and demographic trends continue to be important factors in overall real estate performance.

Developers and owners should also identify known capital needs before a transaction begins. Deferred maintenance, upcoming refinancing, planned improvements, or future development can all affect expected returns. Addressing those questions proactively, rather than leaving them for due diligence, makes an asset easier to underwrite and reduces the friction that can slow deals down or derail them.

Looking Ahead

Private equity will continue to influence commercial real estate, and investors are becoming more selective about where they put capital. Assets with durable demand and strong operating fundamentals are likely to remain attractive. Developers and owners who understand those priorities and prepare accordingly will be better positioned for future opportunities. Many CRE businesses can benefit from working with an advisor ahead of any moves. For more information, contact Jennifer French or Ryan Paul, Partners on PBMares’ Real Estate team.

Additional Source: IBISWorld, Real Estate and Rental and Leasing in the US, (February 2026).