Research Reports

A fun, holiday edition of Ryan Severino's Economic Outlook series.

Has excitement about AI caused data centers to become overvalued? Are land and power constraints, new regulations, and/or community pushback making development more difficult? What does an exit look like in this environment? Principal Asset Management's global data center team answers these questions.

After a challenging few years of rising interest rates and valuation corrections, private real estate is poised for a meaningful recovery in 2026, with values stabilizing and total returns turning positive for six consecutive quarters. Strengthening fundamentals position the asset class for compelling long-term opportunities despite near-term volatility from shifting geopolitics and trade policy. Explore our 2026 outlook for detail into our six investment themes for 2026, which collectively offer investors a range of compelling opportunities across risk profiles and geographies.

Asia Pacific real estate markets are stabilizing as interest rates ease and investment activity rebounds. This report highlights key drivers behind renewed momentum and sector-specific trends shaping the outlook.

Private markets are increasingly central to institutional portfolios. Shifting demographics, accelerating digitization, and the global push toward decarbonization are creating compelling opportunities across private real estate, infrastructure debt, investment grade private credit, and direct lending. As investors seek steadier income and growth in an evolving market environment, private markets are increasingly well-positioned as part of long-term portfolio construction. Discover why private market exposure has evolved from an optional allocation to a strategic one.

In 1977, Congress amended the Federal Reserve Act, directing the Board of Governors of the Federal Reserve System and the Federal Open Market Committee (FOMC) to "maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates." At times, the policy choices likely to advance one goal may not be appropriate to advance the others. At the Federal Reserve’s oft anticipated Jackson Hole policy summit in August, Fed Chairman Jerome Powell ushered in the beginning of the next period of monetary policy easing by citing the emerging change in the balance of risks in the U.S. economy as worries over inflation give way to perhaps greater concerns for labor and unemployment. Reflecting this, the FOMC agreed in September to lower the Fed’s overnight borrowing rate by 25 basis points with an expectation of additional cuts over the next 12 to 18 months as new economic data warrants. To this point, the FOMC voted to lower the policy rate by an additional 25 basis points at their most recent meeting during the last week of October.

Key Questions and Preview Answers for 2026: 1. What are the effects on real estate from K-shaped household income growth, and AI effects on the labor market? Risk for select office and retail segments, although office is still priced too low in select markets/ segments. A tailwind for select residential. 2. How long do multifamily margins compress in the Sun Belt? We expect late 2027. 3. Is industrial still mispriced for growth or correctly priced for stability? We have high-conviction views on infill vs regional warehouse pricing. 4. Are data centers in a bubble? Maybe, but modern portfolio theory has something to say too. 5. If real estate prices troughed in 2024, why are investor allocations to real estate still shrinking? Because of the magnitude of CRE underperformance since 2021.

Many portfolios today are meaningfully exposed to AI-driven and Mega-Cap tech stocks. While these areas have delivered strong recent performance, markets tend to move in cycles—making diversification essential for sustaining long-term results. REITs offer a compelling hedge by providing exposure to essential property sectors with low correlation to large-cap technology. The distinct return profile of real estate, coupled with the liquidity of publicly traded securities and the stability of underlying real assets, makes REITs an attractive way to broaden portfolio resilience while still participating in structural growth trends.

Diversifying sources of risk in a portfolio is more important than ever. Listed real assets are compelling alternatives, offering low correlations to more concentrated mega-cap tech names. Global listed infrastructure (GLI) continues to stand out as a timely and resilient solution. Conditions that support an allocation in 2026 include: Relatively low sensitivity to shifts in the macroeconomic outlook, attractive entry point to broader equities, with many sectors offering upside potential, and robust fundamentals and earnings outlook that provide a foundation for future earnings performance.

This research piece highlights critical trends in the U.S. housing market that present compelling investment opportunities. Three themes define the U.S. housing market today: 1) Rentership remains a cornerstone at approximately 35% of households, 2) the rental market extends well beyond apartments, and 3) the central challenge is not simply undersupply, but a mismatch between the types and locations of housing and where demand exists.