Commercial real estate executives are heading toward 2027 with a mix of caution and confidence, according to Deloitte’s 2027 Commercial Real Estate Outlook. The firm surveyed 950 industry leaders and found that while overall business sentiment has fallen for a second straight year, more than half of respondents still expect meaningful revenue growth in the next 12 months.
Deloitte reported that 51% of executives anticipate their organizations’ revenues will rise by more than 5%, even as the survey’s sentiment index declined to 57.8, down from 64.9 the prior year and 68.3 in 2025. Respondents indicated they plan to rein in spending on areas such as office space and talent management, and they foresee slower rental growth paired with elevated vacancies. This combination points to a more selective, performance-focused approach rather than broad-based expansion.
Sally Ann Flood, partner and US real estate leader at Deloitte, said the most striking finding was the coexistence of weaker sentiment and relatively strong revenue expectations. She told Connect CRE that executives appear skeptical about the broader market but confident in their ability to outperform through disciplined capital deployment, operating rigor and targeted investment.
Nearly 80% of respondents plan to upgrade or reposition existing properties over the next 12 to 18 months. At the same time, 46% expect to avoid selling assets and 39% anticipate no conversions during that period. Deloitte interpreted this as a willingness to invest in properties with clear upside, while delaying decisions that could lock in losses or reduce flexibility. Flood noted that reinvestment makes sense where tenant demand and rent premiums are demonstrable, but warned that repositioning can also be used to defer tougher calls.
The survey identified logistics and warehousing as the most attractive property types over the next 12 to 18 months, followed by digital economy assets. Neighborhood retail also gained favor, with respondents citing limited new supply and strong occupancy and rent growth. Hospitality assets, by contrast, slipped in the rankings, with participants pointing to price sensitivity, safety concerns and competition from alternative lodging options. Flood said respondents appear to be placing greater weight on proven fundamentals.
Tax considerations are increasingly influencing how and where capital is deployed. More than 60% of respondents plan to direct investment toward regions or assets offering stronger tax incentives, and over 90% say tax strategy is or will become central to investment decisions. Yet only about half involve tax professionals at the underwriting or investment committee stage, and just 26% bring them in at origination. Deloitte suggested embedding tax specialists earlier across acquisitions, development, capital projects, asset management and divestments, highlighting missed opportunities in areas such as cost segregation, accelerated cost recovery, repair-versus-capitalization decisions and basis planning.
Artificial intelligence is another priority, with more than 90% of respondents expecting to increase spending on data and technology in the coming year, up from 76% previously. Despite this, 92% remain in the research or pilot phase and only 8% have integrated AI into production workflows. Flood said the main obstacles appear to be related to data quality, legacy processes, governance and the effort required to redesign decision-making frameworks, not a lack of interest. She emphasized the need for robust data, access controls, decision logs, exception handling, human review and clear lines of accountability, warning that technology may be deployed faster than firms can effectively govern it.
The survey also highlighted leadership and succession as underdeveloped areas. Two-thirds of respondents cited AI and data fluency as critical capabilities for future CRE leaders, and more than half expect leadership requirements to change significantly within 12 to 18 months. Yet only 30% said their organizations are very prepared for C-suite transitions, and just 39% reported having identified and begun developing qualified successors. Deloitte recommended more systematic succession planning, including regular board-level stress-testing of leadership pipelines and retirement exposures.
Looking ahead, Deloitte suggested that a passive, wait-and-see posture may leave value on the table. Flood observed that capital is still moving and that many executives remain confident in their ability to generate growth, even as opportunities diverge across markets, assets and property types. She framed selectivity not as inaction, but as a clearer stance on where to invest, where to adapt existing holdings and where to pull back.
