The U.S. commercial real estate market is at a critical crossroads, transformed by the aftermath of the pandemic and shifting economic conditions. Faced with rising interest rates, tighter lending and continued volatility, traditional investment strategies are not working, especially for those carrying heavy debt.

In the years following the COVID-19 pandemic, leading occupiers have been strategically rethinking their supply-chain operations in an effort to more effectively meet the sustained global demand for ecommerce products. A primary component of this new operational strategy, for firms such as Amazon, UPS, Walmart and others, is investing heavily in high-tech equipment and processes, including robotics, artificial intelligence (AI) and other forms of automation within their warehouse facilities. To support these modern requirements, many large-scale occupiers are turning to build-to-suit (BTS) development where they can fully customize properties to support a faster, more complex and more automated supply-chain infrastructure.

Net lease has moved beyond its niche roots to become a core, structurally important seg-ment of the commercial real estate market. During periods of elevated interest rates, such as now, companies are reevaluating their balance sheet efficiency to address growth capital needs and maturing debt, among other priorities. This potentially creates persistent de-mand for net lease solutions as a strategic, low-cost alternative to capital.

Institutional investors have long debated the merits of investing in private real estate funds versus public REITs. But the key question should not be which performs better, but rather whether investing in private funds and REITs is complementary in a diversified real estate portfolio and whether private fund returns deliver sufficient alpha to justify higher risk and less liquidity. Our analysis suggests both to be the case — that a well-selected portfolio of private funds outperforms over the long term, and REITs also play an important role in a portfolio, providing solid returns over market cycles while offering liquidity and certain tactical benefits.

InfraPartners and JLL have formed a new strategic agreement to fast-track how artificial intelligence (AI) data centers are developed and operated. The collaboration will initially target high-growth AI markets predominantly in Europe, the Middle East and Africa (EMEA) and the United States in first quarter 2026, with plans to scale into additional regions.

Blue Vista Capital Management has formed a strategic collaboration with UBS’s Unified Global Alternatives – Real Estate (UGA RE) business and Extra Space Storage (EXR) to invest in self-storage assets in the United States, which will have approximately $600 million in buying power to build a diversified self-storage portfolio.

The CRE Finance Council (CREFC) and the National Council of Real Estate Investment Fiduciaries (NCREIF) have launched NCREIF/CREFC Fund Index Open-End Moderate-Yield Debt.

Investment funds managed by Morgan Stanley Investment Management have collectively acquired a three-community portfolio from private equity group Kayne Anderson for $305 million.

Realty Income Corp. has plans to make an $800 million perpetual preferred equity investment in the real estate of CityCenter.

Marquee Capital has formed a programmatic joint venture with an institutional investor to acquire and manage anchored retail strip centers across the Midwest.

Alexander & Baldwin (A&B), a Hawaii-based owner, operator and developer of high-quality commercial real estate in Hawaii, has entered into a definitive merger agreement in which a joint venture formed by MW Group and funds affiliated with Blackstone Real Estate and DivcoWest will acquire all outstanding A&B common shares for $21.20 per share in an all-cash transaction with an enterprise value of approximately $2.3 billion, including outstanding debt. As a result of this transaction, A&B will become a private company.

Crescent Communities and Heitman have formed a second joint venture to invest in Crescent Communities’ single-family build-to-rent platform across key strategic growth markets.

Peachtree Group has plans to expand into the convenience and fuel retail sector, targeting up to $200 million to the Livingston, N.J.–based The Briad Group for the development and acquisition of new sites.

Barings and Waterton announced a joint venture to recapitalize two existing Outbound Hotels, The Virginian Lodge in Jackson, Wy., and Outbound Stowe in Stowe, Vt.

The Fresno County (Calif.) Employees Retirement System approved €25 million ($29 million) to PIMCO’s European Data Center Opportunity Fund and $25 million to ACORE Capital’s Opportunistic Credit II. PIMCO is seeking to raise $1 billion for the opportunistic fund, which will be used to build hyperscale data center facilities in second- and third-tier European markets. ACORE Opportunistic Credit II, an ACORE Capita–managed real estate debt fund, is seeking to raise up to $1 billion. The investment strategy for Credit II is to provide whole loans, mezzanine debt and preferred equity, while also investing in performing and nonperforming loans backed by real estate assets across the United States.

Commercial real estate is staging a comeback, though not one that lifts all segments equally. REITs have rallied about 35 percent from their 2023 lows, valuations across the four major indices appear to have bottomed, and transaction volumes have risen year-over-year for six consecutive quarters. Distress, a lagging indicator, continues to inch higher.

In a sponsored interview published in the January issue of Institutional Real Estate Americas, Paul Leonard, director of research, real estate, Americas at Nuveen demonstrates that medical outpatient buildings offer investors a rare opportunity to see outsized returns with far less risk than the broader real estate market, describing the demand drivers and supply constraints that sustain its resilience and outperformance.