Real Estate Predictions
for 2026 & Beyond

Written by Michael J. Rohm, MAI, CCIM, R/W-AC

October 21, 2025

On September 25, 2025, CCAG hosted our inaugural CRE Symposium which focused on macro and microeconomics in lending, development, and land use. During the symposium, Mike Rohm and Brendan Wewer shared insights for what they believe to be the top real estate trends to look out for in 2026 and beyond. The following article is an expansion upon the thoughts they presented to the brokers, developers, investors, and attorneys in attendance.

Rising Insurance Burden & Population Trends

Insurance costs have exploded in coastal areas – and inland areas are not immune due to the concept of pooled risk pricing. We believe rising insurance costs will reshape population trends in 2026 and beyond.

The government will likely intervene through a mix of subsidies, relocation support, and affordability programs. But the tension will be who gets help ---- protecting vulnerable families vs. bailing out wealthy coastal homeowners. That political struggle will shape how equitable future housing markets become.

Affordability pressure: Homeowners in coastal and flood-prone regions are already experiencing steep increases in property insurance premiums (or outright loss of coverage). As these costs outpace wage growth, many households—particularly middle- and lower-income—may find it unsustainable to stay.

Market impacts: Higher insurance costs can suppress property values in risky areas, further discouraging long-term settlement. Conversely, inland communities with lower insurance premiums may become more attractive.

Wealth stratification: Wealthier households may absorb higher costs, leading to demographic shifts where only affluent residents remain in high-risk coastal zones, while the middle class relocates inland.

Repeated losses: As flooding and hurricanes intensify, rebuilding becomes not just expensive but exhausting. Communities hit multiple times in a decade face declining morale and rising “retreat fatigue.”

Policy changes: Governments may eventually reduce or remove subsidies for repetitive-loss properties, shifting even more responsibility to homeowners. This could accelerate out-migration from vulnerable areas.

Intergenerational shifts: Younger generations may be less willing to “rebuild the family home” after a disaster, opting instead to relocate permanently.

Psychological safety: Even beyond finances, the peace of mind of living inland—where hurricane threats are lower—will be a powerful motivator. Families especially may prioritize stability over coastal amenities.

Emerging migration corridors: Inland metros near coasts (e.g., Raleigh, Atlanta, Orlando’s interior suburbs, San Antonio, Dallas) could see population inflows from people leaving Gulf and Atlantic coasts.

Urban redistribution: Rather than mass depopulation of coasts, we may see a gradual redistribution—smaller, repeated moves inland, concentrating in cities with resilient infrastructure.

Economic ripple effects: Inland areas may experience rising housing demand, higher prices, and strains on infrastructure. Conversely, coastal economies reliant on tourism and retirees could contract.

Long-term patterns: By mid-century, we could see a “climate-driven Sunbelt shift,” with winners being inland states just beyond the highest-risk floodplains, and losers being low-lying coastal counties.

Government Intervention

Housing has become so expensive that the “American Dream” of owning a home is quickly evaporating. Considering the prospects of home equity growth is a core pillar for the US economy Ponzi scheme, it follows that the government will do anything in its power to avoid prices from falling. The stakes are even higher when you consider the political ramifications stemming from re-election aspirations.

Government intervention in affordability will likely focus on direct subsidies, building more affordable housing, tenant protections, and redistributive tax measures. The central challenge will be balancing market incentives (to keep construction going) with protections for renters and aspiring homeowners who risk being permanently priced out.

Rental assistance expansion: Programs like Section 8 vouchers could be expanded, covering more households and a larger share of rent. Governments might also implement universal rental assistance, ensuring no household spends more than a fixed percentage of income on housing.

First-time homebuyer credits: Tax credits or direct grants for down payments could help lower- and middle-income families overcome rising entry barriers to ownership.

Mortgage interest subsidies: Instead of relying on market rates, governments could subsidize part of the interest for low- and moderate-income borrowers, similar to how student loan interest relief has worked.

Social housing expansion: Governments may revive large-scale public housing initiatives, but with modernized models (mixed-income, community-based, sustainable design) to avoid past stigmas.

Incentives for affordable housing construction: Tax credits to developers (like the Low-Income Housing Tax Credit, LIHTC) could be expanded to increase the supply of affordable apartments.

Public-private partnerships: Local governments could lease land to developers at reduced rates, with the requirement that units remain permanently affordable.

Rent control or rent stabilization: More cities and states may adopt caps on annual rent increases to prevent displacement.

Stronger tenant rights: Governments might increase eviction protections, mandate longer notice periods, or guarantee lease renewals to create stability for renters.

Inclusionary zoning: Municipalities could require new developments to include a set percentage of affordable units, with governments offering density bonuses or tax abatements in exchange.

Targeted affordability measures: Programs could be means-tested so that aid flows more heavily toward low- and middle-income households rather than subsidizing wealthier buyers.

Taxation shifts: Governments might introduce higher property taxes on second homes, luxury properties, or vacant units, using the revenue to fund affordability programs.

Community ownership models: Land trusts and cooperative housing could be expanded, where residents collectively own property, shielding homes from speculation and keeping rents stable.

Interest rate policy & credit guarantees: If affordability becomes a systemic crisis, governments could direct central banks or lending agencies to back low-interest, long-term mortgages for working families.

Universal housing guarantee: Some policymakers argue for housing as a human right, pushing for universal access programs, similar to healthcare systems in other countries.

Regional balance strategies: To relieve pressure on expensive urban areas, governments might encourage population growth in secondary cities with infrastructure investments and incentives for businesses to relocate.

Ownership may concentrate among wealthier households, while renting becomes the norm for most.

Generational inequity grows, with younger people locked out of homeownership entirely unless governments step in.

Government response could swing more radical: large-scale public housing, guaranteed housing stipends, or policies discouraging real estate speculation (like foreign buyer bans or vacancy taxes).

Psychology & Consumer Sentiment will Drive Markets (Narrative > Numbers)

Consumer sentiment - fueled by viral content and easily shared unqualified opinions - is becoming just as influential as fundamentals in real estate. This makes the market more volatile and story-driven than before. While fundamentals eventually reassert themselves, the timing and magnitude of market swings may increasingly be dictated by online perception rather than hard data.

The same forces that created meme stocks are now bleeding into real estate. Online narratives, viral trends, and mass participation by uninformed voices can distort markets, creating sentiment-driven mini-bubbles or freezes. Unlike stocks, housing isn’t as fast-moving, but the parallels show a clear shift: housing is becoming more psychological and “story-driven” than purely fundamental.

Social media has democratized information (and misinformation). TikTok, Instagram, and YouTube “housing gurus” or “financial influencers” can amplify certain narratives which is sometimes accurate but sometimes speculative which shapes collective sentiment. As a result, buyers and investors often act on perceptions of risk or opportunity faster than fundamentals can justify. This creates mini “waves” in pricing and demand before data catches up.

Viral posts about skyrocketing home values or bidding wars can push buyers into the market prematurely, reinforcing bubbles. Negative viral stories like “the housing crash is coming” can spook buyers even when fundamentals (low inventory, strong employment) point to continued stability. Social media chatter about Airbnb riches, house flipping, or “up-and-coming neighborhoods” can funnel investment dollars into markets based more on trendiness than actual economic drivers.

In the past, most housing advice came from licensed professionals such as realtors, appraisers, or economists. Today, anyone with a ring light and a following can shape sentiment. Consumers may mistake views from influencers (with no professional background) as credible, leading to herd behavior. Algorithms amplify content that drives engagement, meaning extreme takes (“the market will collapse tomorrow” or “buy now or be priced out forever”) spread faster than nuanced analysis.

In 2021, “meme stocks” like GameStop and AMC surged purely on viral momentum, not fundamentals. Prices detached from earnings, debt, or business health because retail traders coordinated via Reddit and Twitter. We now see “meme markets” which are cities or neighborhoods that go viral on TikTok, Instagram, or YouTube. A single viral video about “the hottest new place to buy” can attract out-of-town investors or homebuyers en masse, creating a surge in demand disconnected from job growth, wages, or supply fundamentals.

Meme stocks swung wildly (in some case up 100% in a week, down 70% the next) as sentiment shifted online. While real estate isn’t as liquid, sentiment-driven demand can amplify cycles: sudden spikes in multiple offers, bidding wars, or rapid pullbacks when social media shifts from “housing will never go down” to “the crash is coming.”

Meme stocks eventually corrected when earnings, debt, and fundamentals could no longer justify valuations. Similarly, real estate will eventually return to economic anchors like income, affordability ratios, interest rates, and supply/demand. But in the short term, sentiment-driven waves can leave some buyers overextended or some sellers misaligned with reality.

Case Study: Austin, Texas

The Narrative: Austin’s “Silicon Hills” image exploded online — a new tech hub, Tesla and Oracle relocations, plus vibrant culture. Influencers hyped it as “the next Silicon Valley.”
The Fundamentals: Austin genuinely added jobs and attracted major employers. But supply still lagged demand, and local incomes couldn’t match Silicon Valley wages.
The Sentiment Effect: Home prices skyrocketed nearly 70% between 2019 and 2022. Social media amplified the story, driving FOMO among buyers nationwide.
The Aftermath: By 2023–2024, Austin’s housing market cooled, with price declines among the steepest in the country. The fundamentals (job growth, migration) are still strong long-term, but short-term values had overshot, fueled by hype.

Just as GameStop and AMC soared on sentiment before correcting, Austin shows how housing markets can act like meme stocks — driven by narrative, then pulled back to reality. The lesson is clear: sentiment can move markets faster than fundamentals, but it cannot defy them forever.

Tenant Health & Occupancy

The capacity for tenants to absorb rising rents is not infinite. As operating expenses climb and trade pressures bite into margins, tenant health becomes the true ceiling on rent growth. Landlords and investors will need to balance ambition with realism: tenant solvency drives rent sustainability more than market tightness alone.

When labor costs, NNN pass-throughs, and tariffs all collide, the outcome is a squeeze on tenant ability to pay—and therefore on landlords’ ability to grow rents. This creates a more fragile environment where external shocks (tariffs, inflation, wage spikes) ripple quickly into rental rate growth, vacancy levels, and property values. Even if landlords want to push base rents higher, tenant balance sheets may simply not have the capacity to absorb them. Rent growth slows, and landlords may see rising delinquencies or turnover if they push too hard.

Tight Labor Markets & Rising Operating Costs: Labor as a primary cost driver: In many sectors—retail, manufacturing, and logistics especially—labor accounts for one of the largest expense categories. With unemployment at historically low levels, employers must raise wages and offer incentives to attract and retain staff. As payroll consumes a larger share of operating income, tenants have less margin left over to cover escalating rents. This is particularly true for small-to-midsized businesses, which often operate on thinner margins. In triple-net (NNN) leases, tenants pay not only base rent but also their share of property operating expenses—insurance, taxes, and maintenance. With property taxes and insurance premiums climbing (especially in climate-risk states), tenants face rising “hidden rent,” which compounds their total occupancy costs.

Tariffs, Trade, and Supply Chain Sensitivity: Exposure to tariffs: Retailers, manufacturers, and logistics operators tied to imports/exports feel tariff shocks immediately. Raw material costs, component prices, and shipping expenses all climb. Businesses can pass along only so much of these costs to consumers before losing demand. As margins tighten, discretionary spending (like new store openings, expanded warehouse leases, or upgraded facilities) often gets delayed or scrapped. Distribution centers and port-adjacent facilities are especially sensitive. If import flows decline due to tariffs, demand for warehouse space near ports or major trade hubs can dip, impacting absorption rates.

Retail tenants: Already squeezed by e-commerce disruption, higher labor costs, and now tariffs on goods, retailers may face margin erosion that limits ability to absorb rent hikes. Struggling chains may negotiate harder on renewals or exit marginal locations.
Manufacturers: Energy, material, and wage costs rising in tandem reduce flexibility. If tariffs raise input costs, some manufacturers may consolidate facilities rather than expand.
Logistics: While demand for logistics space is strong long-term, tariffs can create short-term slowdowns in throughput. Tenants may delay expansion, negotiate shorter lease terms, or push back against higher rents when margins are under pressure.

Constrained rental growth: Even in markets with tight vacancy, landlords may face resistance on rate increases as tenant operating budgets get squeezed from all sides. If tenants downsize or shutter under cost pressure, landlords may see rising vacancy, especially in secondary assets or markets heavily exposed to trade-dependent tenants. Landlords may need to get creative—offering rent abatements, capex contributions, or more flexible lease terms to retain creditworthy tenants. Investors banking on steady rental escalations may find underwriting assumptions challenged. Yield compression could reverse in markets where tenant health deteriorates.

Inflation & Operating Expenses

NOI erosion via operating expense inflation is a systemic challenge in 2026 and beyond. Owners need to innovate in leasing, cost management, and tenant relations, while tenants must be proactive in negotiations and strategic planning to control total occupancy costs.

Net Operating Income (NOI) is under pressure as operating expense inflation (taxes, utilities, insurance, maintenance) increasingly outpaces rental income growth. Owners often try to shift costs to tenants through lease structures (e.g., NNN), but tenant resistance and market dynamics limit how much can be passed through. When rents flatten or decline due to expense pressure, NOI erosion worsens, ultimately reducing property values.

Shift Toward Expense Pass-Throughs: Owners must be steadfast in a move from gross leases to NNN or modified gross structures across multifamily, retail, industrial, and even office. Tenants may resist, but owners highlight lower base rent to reduce “sticker shock,” even though total occupancy costs rise. This strategy preserves NOI in an inflationary environment but risks tenant pushback and vacancy issues

Tenant Retention & Market Risks: High occupancy costs can force tenants to exit or demand concessions (free rent, tenant improvements, reconfigurations). Urban office markets are especially vulnerable due to shifting demand. Owners must carefully balance expense recovery with tenant retention to protect NOI.

Expense Categories Under Pressure:

Real estate taxes: volatile and unpredictable, sometimes rising even as values decline; discourages expansion in high-tax states.
Insurance: premiums rising sharply due to climate risk and pooled exposure, even in low-risk markets.
Utilities: highly volatile; energy demand from data centers may increase costs everywhere. Nuclear energy could mitigate longer term.
Maintenance & repairs: labor shortages and higher material costs continue to drive up expenses.

Strategies for Building Owners:

Adopt expense caps or stops: limit exposure, provide tenant predictability.
Invest in energy efficiency: solar, smart meters, efficient HVAC reduce long-term costs.
Use flexible leasing strategies: blended lease structures, phased rent increases, expansion rights.
Pursue property tax appeals: reduce burdens in high-tax jurisdictions.
Plan for tenant retention challenges: phased increases, selective incentives to keep occupancy stable.

Strategies for Tenants:

Total-cost-of-occupancy modeling: evaluate rent + pass-throughs for true cost.
Negotiate with transparency: clarify obligations and future risks.
Negotiate expense caps/audit rights: ensure predictability and verify charges.
Monitor rents & taxes: advocate for tax appeals where possible.
Leverage lease flexibility: shorter terms, termination or expansion rights.
Maintain a corporate real estate strategy: centralize decision-making and work with qualified advisors.

Combatting NOI erosion is about more than shifting expenses—it requires forward-looking, adaptable strategies. Owners must weigh pass-through protections against risks of tenant turnover, competitive positioning, and rising costs. Without proactive action, persistent expense inflation will continue to erode asset performance and long-term property values.

Data Center Boom

The data center boom fuels rising utility costs not only for operators but for surrounding communities. Electricity grids and water systems weren’t built for hyperscale consumption, and the spillover burden often lands on consumers through higher rates, greater volatility, and strained resources. Unless mitigated by policy, infrastructure investment, or technological innovation, households and small businesses will shoulder part of the cost of powering the digital economy.

Electricity Demand Pressures: High consumption profile: Data centers are among the most energy-intensive real estate assets. A single hyperscale facility can consume as much electricity as a mid-sized city. Rapid development of AI-driven and cloud facilities is increasing grid demand far faster than utilities can expand generation or transmission capacity. Even regions without heavy data center development may see higher electric costs because utilities often socialize grid expansion costs across their customer base. Consumers (residential and commercial) end up subsidizing infrastructure for data center growth.

Water Usage Risks: Many data centers use evaporative cooling systems that consume vast amounts of water. Estimates suggest a large facility can use hundreds of thousands of gallons daily. In water-stressed regions (e.g., parts of the Southwest), this demand competes directly with residential, agricultural, and industrial needs. As municipalities scramble to meet data center water demand, costs for water infrastructure upgrades (pipelines, treatment plants) can be spread across local ratepayers, increasing bills for consumers. In drought-prone regions, water-intensive data centers may accelerate restrictions on other users, creating scarcity premiums that indirectly raise prices for everyone else.

Why Consumers Feel It: Shared cost structures: Utility regulators often spread costs of system expansion (new substations, water treatment capacity, transmission upgrades) across the entire rate base — not just to the data centers themselves. Unlike consumers, data centers have less flexibility to reduce demand. Their “always-on” nature locks in consumption, leaving households and smaller businesses to absorb price volatility. Communities hosting large clusters of data centers (Northern Virginia, Phoenix, Dallas, parts of Ohio) are already reporting grid stress and political pushback, foreshadowing higher local rates.

Potential Mitigations:

Shift to nuclear/renewables: Nuclear and large-scale renewables could stabilize long-term energy pricing, but deployment lags demand growth.
On-site generation: Some data centers are investing in private solar, battery storage, or hydrogen systems to reduce grid reliance — though these costs don’t always shield consumers from rate hikes.
Water-efficient cooling: Newer designs are experimenting with air cooling and recycled water systems, but adoption is uneven.

Co-living Space & Furnished Rentals

What started in dense coastal markets (NYC, D.C., San Francisco) is now filtering into secondary markets like Central PA. As affordability tightens, expect a boom in co-living and furnished rentals, especially around healthcare hubs, logistics corridors, and college towns.

Affordability Pressures Driving Shared Living: With rising home prices, student debt, and higher interest rates, many younger renters in Central PA (students, early-career professionals) are priced out of ownership. Co-living allows them to split not just rent but also utilities and furnishings, making urban or desirable areas like Harrisburg, Lancaster, and York more accessible. Furnished rentals reduce upfront costs (no need to buy furniture) and appeal to those not ready for long-term commitments.

Demographic & Cultural Shifts: Millennials and Gen Z value flexibility, community, and affordability. Co-living arrangements mimic the convenience of dorm life while offering more independence. Central PA is attracting people from pricier metros (Philadelphia, D.C., New York) who seek lower costs while retaining proximity to those hubs. Many of these renters aren’t sure how long they’ll stay, making furnished rentals with flexible leases attractive. Some renters want built-in social interaction, wellness amenities, and a ready-made community — features that co-living operators emphasize.

Workforce & Mobility Dynamics: Central PA has major healthcare systems and logistics hubs. Both industries rely on transient or rotational workers (traveling nurses, contract workers, distribution employees) who value short-term furnished rentals. Professionals may split time between Central PA and larger metros, making furnished rentals with flexible leases more desirable than permanent homeownership.

Investor & Landlord Opportunity: Co-living and furnished rentals typically command higher per-room or per-month rents compared to unfurnished long-term leases. These units can serve multiple tenant pools — students, young professionals, healthcare workers, remote workers, and new transplants. Older single-family homes, duplexes, or small multifamily units in Central PA can be converted into co-living spaces with modest upgrades (furnishings, Wi-Fi, shared amenities).

Challenges & Considerations:

Regulatory uncertainty: Zoning codes in smaller municipalities may not explicitly allow co-living or short-term furnished rentals. Local opposition could emerge if operators scale too quickly.
Management intensity: Furnished and co-living rentals require more operational oversight (cleaning, turnover, tenant matching, amenities), which may deter traditional landlords.
Market education: Central PA isn’t yet accustomed to co-living as a mainstream option, so early adopters will need to sell the lifestyle concept to renters.

Restaurant Industry Health

The restaurant industry is under acute stress from converging macro pressures: tight labor, input inflation, rising overheads, and weaker beverage margins. The closures of Iron Hill and Starbucks’ store cuts aren’t anomalies — they are signals of deeper structural strain. Operators who can’t adapt or buffer their cost base risk falling behind, and landlords and real estate markets tied to foodservice could feel secondary impacts.

Core Stressors in the Restaurant Industry:

Tight Labor Markets: Restaurants are extremely labor-intensive (front-of-house, back-of-house, cleaning, delivery). With unemployment low in many U.S. markets, wages must rise to retain staff. For smaller operators especially, wage inflation erodes margins quickly. Some restaurants are forced to reduce hours, services, or seating to compensate.
Rising Food Costs & Supply Chain Disruptions: Ingredients, packaging, and transportation costs have all climbed. Global volatility (weather, trade disruptions, commodity prices) makes inputs less predictable. Restaurants can only pass so much on to customers before demand softens, especially at price-sensitive levels. Perishable inventory waste also becomes more costly when margins are thin.
Rising Operating Expenses: Beyond labor and food: utilities (gas, electricity, water), rent, property taxes, insurance, maintenance — all have seen inflationary pressure. Many smaller or legacy restaurant businesses may not have strong negotiating leverage on rent/lease or ability to sub-meter utilities. In full-service or brewpub formats (like Iron Hill), these overheads are substantial and less flexible.
Declining Alcohol (or Beverage) Consumption: A supportive revenue stream for many restaurants, especially higher-margin items like craft beer, cocktails, wine. Brewpubs or restaurants heavily reliant on craft beer sales are thus more exposed.
- Alcohol consumption is at 90-year low with 54% of adults reportedly drinking regularly in 2025 down from 67% in 2022. The decline is more dramatic with younger generations aged 18-34 fell to 59% down from 72% in early 2000s (2025 Gallup Poll).

Case Study: Iron Hill Brewery:

The chain abruptly closed all its locations and filed for bankruptcy in September 2025.
Earlier in the month, it had closed three of its locations (including its flagship in Newark, DE) citing a “changing business landscape.”
The decision highlights how even a well-known, regionally established brand with a brewpub + food model is vulnerable under current dynamics.
Because brewpubs derive significant margin from both food and beverage (beer), they are especially exposed to cost pressures on both fronts.
Takeaway: Iron Hill’s collapse underscores how elevated costs on food, labor, utilities, and shrinking drink-margin buffers can tip even stable operators into insolvency.

When costs rise across all inputs, and consumer behavior becomes more cautious (cutting discretionary spend like dining out or alcohol), operators find themselves between a rock and a hard place. They can’t always raise prices without losing traffic, and they can’t cut input costs without hurting quality or experience.

Michael J. Rohm, MAI, CCIM, R/W-AC, is a fee appraiser and real estate agent working throughout Pennsylvania.

He is president and owner of Commonwealth Commercial Appraisal Group and is director of valuation advisory and senior associate with Landmark Commercial Realty.

Contact him at mrohm@commonwealthappraiser.com.

Brendan Wewer, MAI is a commercial real estate appraiser working throughout Pennsylvania, Delaware, New Jersey, and Maryland. He is Director of Valuation & Advisory for Commonwealth Commercial Appraisal Group.

Contact him at bwewer@commonwealthappraiser.com

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Real Estate Predictions for 2026 & Beyond

Real Estate Predictions
for 2026 & Beyond