Real estate stocks: What to expect in 2026

[House market growth, building, stock market]
Rasi Bhadramani

As widely expected, returns [https://seekingalpha.com/news/4529111-real-estate-stocks-post-negative-returns-this-week-2025-end-trajectory-unpredictable] across real estate subsectors varied significantly in 2025.

While the S&P 500 real estate sector ended the year in red against the broader S&P 500’s ~16% gain, health care REITs, industrial REITs, retail REITs, hotel & resort REITs, and real estate management & development stood out as winners.

Listed REITs are expected to return lower to mid-double digits at the index level in 2026, according to [https://www.cohenandsteers.com/insights/three-data-points-driving-our-2026-real-estate-outlook/] a recent report by Cohen & Steers. Listed REIT returns are represented by the FTSE Nareit All Equity REITs Index.

"As '26 shows weaker than expected demand and fundamentals that disappoint, cap rates should rise and values should decline as the year progresses, which has already been reflected in the listed market," said the report.

"While the debate over affordability is as robust within REITland as the national stage, everyone recognizes jobs and consumer health remain the keys to a rebounding year," noted Piper Sandler.

"We aren't suggesting companies do deals just to boost earnings, but believe managements need to be more aware of how lease timing (e.g., revenue recognition), redevelopments, recycling, etc., impact earnings," said the financial services provider.

"Within our coverage universe, we think NYC office stands out as the strongest, with industrial tenants emerging from the Liberation Day shock. Shopping centers are set up incredibly well with retailer demand and health all going the right way," said the research note.

"Apartments in 2026 depend on jobs, full stop, and that renewing tenants keep their habits of minimal push back on increases. We hope apartments come out with conservative guidance for 2026, given the uncertainties," added the note.

Jefferies analyst Jonathan Petersen reportedly [https://www.etftrends.com/etf-building-blocks-content-hub/rates-matter-more-2026-story-reits/] expects data center demand remaining robust as leasing continues to gain momentum.

Fitch Ratings' sector outlook [https://www.fitchratings.com/research/corporate-finance/us-real-estate-equity-reits-outlook-2026-09-12-2025] for U.S. equity REITs remains neutral, with balanced supply and demand. Data center REITs benefit from AI-driven investment, while office REITs see increased demand due to return-to-office initiatives.

Notably, commercial real estate experts are slightly less optimistic for 2026 than they were ahead of 2025, _CNBC News_ reported [https://www.cnbc.com/2025/12/30/commercial-real-estate-2026-what-to-expect.html].

"Expect accelerated M&A as capital concentrates, AI exposes inefficiencies, and platforms converge—real assets are entering a new phase defined by intelligence, integration, and scale-driven opportunity," Tim Bodner, global real estate deals leader at PwC, told _CNBC News_.

For the housing market, home prices are expected to rise slowly, and mortgage rates might dip modestly, according to [https://www.cnbc.com/2025/12/31/housing-market-outlook-for-2026and-10-cities-where-prices-may-fall.html] a recent report by CNBC.

The Mortgage Bankers Association and Fannie Mae are said to project [https://www.scotsmanguide.com/news/mba-fannie-mae-see-2027-housing-market-very-differently/] that 2026 will be a year of stabilization for the U.S. housing market.

2025 WINNERS & LOSERS

LARGECAP STOCKS ($10B TO $200B MARKET CAP)

Bottom performers

* Iron Mountain (IRM [https://seekingalpha.com/symbol/IRM]) - -20.13%
* Healthpeak Properties (DOC [https://seekingalpha.com/symbol/DOC]) - -19.79%
* Equinix (EQIX [https://seekingalpha.com/symbol/EQIX]) - -18.40%
* AvalonBay Communities (AVB [https://seekingalpha.com/symbol/AVB]) - -18.05%
* UDR (UDR [https://seekingalpha.com/symbol/UDR]) - -15.23%

Top performers

* Welltower (WELL [https://seekingalpha.com/symbol/WELL]) - +47.52%
* Jones Lang LaSalle (JLL [https://seekingalpha.com/symbol/JLL]) - +32.96%
* Ventas (VTR [https://seekingalpha.com/symbol/VTR]) - +31.48%
* CBRE Group (CBRE [https://seekingalpha.com/symbol/CBRE]) - +23.12%
* Prologis (PLD [https://seekingalpha.com/symbol/PLD]) - +22.11%

MIDCAP STOCKS ($2B TO $10B MARKET CAP)

Bottom performers

* Alexandria Real Estate Equities (ARE [https://seekingalpha.com/symbol/ARE]) - -40.55%
* Lineage (LINE [https://seekingalpha.com/symbol/LINE]) - -30.95%
* Americold Realty Trust (COLD [https://seekingalpha.com/symbol/COLD]) - -37.62%
* SL Green Realty (SLG [https://seekingalpha.com/symbol/SLG]) - -30.16%
* Park Hotels & Resorts (PK [https://seekingalpha.com/symbol/PK]) - -25.23%

Top performers

* Opendoor Technologies (OPEN [https://seekingalpha.com/symbol/OPEN]) - +276.40%
* Compass (COMP [https://seekingalpha.com/symbol/COMP]) - +82.99%
* American Healthcare REIT (AHR [https://seekingalpha.com/symbol/AHR]) - +62.74%
* Medical Properties Trust (MPW [https://seekingalpha.com/symbol/MPW]) - +34.41%
* Newmark Group (NMRK [https://seekingalpha.com/symbol/NMRK]) - +34.09%

SMALLCAP STOCKS ($300M TO $2B MARKET CAP)

Bottom performers

* Ready Capital (RC [https://seekingalpha.com/symbol/RC]) - -67.39%
* Hudson Pacific Properties (HPP [https://seekingalpha.com/symbol/HPP]) - -46.86%
* Brandywine Realty Trust (BDN [https://seekingalpha.com/symbol/BDN]) - -46.72%
* Arbor Realty Trust (ABR [https://seekingalpha.com/symbol/ABR]) - -42.52%
* Empire State Realty (ESBA [https://seekingalpha.com/symbol/ESBA]) - -41.14%

Top performers

* Anywhere Real Estate (HOUS [https://seekingalpha.com/symbol/HOUS]) - +320.90%
* Diversified Healthcare Trust (DHC [https://seekingalpha.com/symbol/DHC]) - +119.54%
* Transcontinental Realty Investors (TCI [https://seekingalpha.com/symbol/TCI]) - +92.51%
* Industrial Logistics Properties Trust (ILPT [https://seekingalpha.com/symbol/ILPT]) - +54.05%
* Five Point Holdings (FPH [https://seekingalpha.com/symbol/FPH]) - +52.62%

Here is a look at the subsector performances in 2025:
[Source: S&P, Nareit]
Percentage-wise price change across real estate indices

MORE ON REAL ESTATE

* Approach REIT ETFs Cautiously [https://seekingalpha.com/article/4855020-approach-reit-etfs-cautiously]
* My S&P 500 Prediction On Sector Outperformers And Laggards In 2026 [https://seekingalpha.com/article/4854947-my-s-and-p-500-prediction-on-sector-out-performers-and-laggards-in-2026]
* Long-term mortgage rates hit lowest level of 2025 [https://seekingalpha.com/news/4536087-long-term-mortgage-rates-hit-lowest-level-of-2025]
* Just three Office REITs are in the green so far in 2025 [https://seekingalpha.com/news/4535842-just-three-office-reits-are-in-the-green-so-far-in-2025]