Commercial Observer’s 2026 Commercial Real Estate Lookahead: The Asset Classes to Watch
Lee & Associates South Florida President, Matthew Rotolante, SIOR, CCIM, discusses the Real Estate Market with the Commercial Observer.
2026 Commercial Real Estate Lookahead: The Asset Classes to Watch
New York office, top malls and AI-driven data centers are among the property types that have a busy year ahead of them — as does the financing behind them all
It’s all going to depend.
Commercial property owners will face a friendlier economic environment in 2026 if the pace of inflation is slower and interest rates are lower. Even without declines in prices and borrowing costs, commercial property owners should do well in certain asset classes, including high-end retail stores, AI-driven data centers and Manhattan office space.
But the 2026 economy may not be friendly enough for some owners to grow revenue faster than expenses and to repay maturing loans on their income-producing properties. A survey of more than 850 executives in the commercial real estate industry by the Deloitte accounting firm found that some of them don’t expect their companies to repay property loans in full when they mature in the coming year.
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AI and data centers and all that
The development of data centers is key to the expansive efforts to enhance artificial intelligence. But the AI companies behind these developments face ample obstacles, including access to electrical power.
“In many markets, it can take four years or more to have high capacity power lines extended to new development sites,” according to a report on the outlook for data centers by brokerage firm JLL. “Most of this delay is associated with securing easements and regulatory approvals. … These challenges have led to a shift in site selection criteria, with land now being evaluated based on available power capacity and proximity to transmission lines, rather than pricing or total acreage.”
Rapid advances in semiconductor technology have put data centers “at the precipice of a transformative era driven by the relentless advancement of artificial intelligence,” JLL reported. Yet sales of data centers are infrequent, “due to significant bid-ask spreads and lack of available product.”
The development of AI is driving the development of data centers, which are designed to make money by leasing server space to users, and the demand is so strong that most server space is spoken for long before new data centers open.
“Roughly three-fourths of our [national] construction pipeline in data centers is pre-leased,” said Carl Beardsley, senior managing director and national data center leader at JLL. “It is the most liquid side of the market for construction financing.”
Development takes time, though, and a lot of it. “If someone is closing on land today, they may not break ground or need a construction loan for three to five years,” Beardsley said. “It can take a minimum of three years, after you close on a site, to get all the supply chain in order and get power to the site. It’s not as if they’re just closing on the site and they’re going vertical, like an industrial project.”
Political resistance to data center developments has spread nationwide due largely to citizens’ concerns about the water and electricity they consume. “There’s a lot of community resistance to data centers,” Beardsley said. “It feels like it’s everywhere right now.”
Difficulty in procuring adequate electrical power is a bigger impediment to new data centers than local community resistance, said Matt Rotolante, president of the South Florida region at Lee & Associates, a commercial real estate brokerage that works with landowners seeking to sell property for data center development.
“The current electrical grid throughout the country isn’t built to handle these additional needs, so it’s probably the biggest thing that everybody’s talking about,” Rotolante said. “I’ve heard stories about agents literally just following the power lines to go look at the substations and seeing if they have room for more transformers.”
Among the most prominent users of data centers are companies such as Amazon, Alibaba, Apple, Facebook, Google, Microsoft and Oracle.
“A lot of these groups have their own AI platforms,” Rotolante said. “ChatGPT and similar groups are leveraging the same systems.” Large users often rely on more than one data center because they want backups in place. “If you have a failure in one area, it just rolls over to the next data center,” he said. “You have redundancy.”
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Other Assets to Watch: New York Office, Housing
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About Lee & Associates South Florida
Lee & Associates South Florida is a fully vertical commercial real estate brokerage firm focused on industrial, office, retail, multifamily, investment and land sectors. Our dedicated team of professionals is led by Matthew Rotolante, CCIM, SIOR a 4th generation South Florida native in a family that has owned and operated commercial property here since 1928. Lee & Associates is the largest agent owned brokerage in the nation with Senior Agent’s ability to earn profit share resulting in the highest splits while still receiving full resources, support and leads from our national network. Our collaborative and cheerful culture allows for open communications throughout the company, fostering the sharing of information and best practices to better enable client decision making. The Lee & Associates’ robust national network that sold and leased over $115 Billion in the last 5 years offers clients a cross-market platform of expertise and deal opportunities across all asset specialties and representation roles. For the latest news from Lee & Associates South Florida, visit leesouthflorida.com or follow us on Facebook, LinkedIn, Twitter and Instagram, our company local news.
About Lee & Associates
Lee & Associates is a commercial real estate brokerage sales, leasing and management firm. Established in 1979, Lee & Associates has grown its service platform to include over 75 offices in the United States and Canada. Lee & Associates is the largest agent owned commercial real estate brokerage where agents get the greatest return for their efforts and hence are more committed and better enabled to provide superior results for their customers. For the latest news from Lee & Associates, visit lee-associates.com or follow us on Facebook, LinkedIn, Twitter and Link, our company blog.
