Investor sentiment has always played a pivotal role in shaping market behavior but how closely does it track with the reality painted by economic research and data?.

This report seeks to uncover that relationship, examining alignment and divergence between investor options (as captured in the 2026 Matthews Investor Sentiment Survey) and insights drawn from broader economic and market research.

Ultimately, this report isn’t about predicting the future–it’s about sharpening the lens through which we view it. By understanding where sentiment and data converge or collide, stakeholders can make more grounded decisions in an environment that continues to be shaped by uncertainty, opportunity, and change.

Key Takeaways

• Most investors reported solid or steady performance in 2025, and nearly 80% experienced flat or higher property values
• Industrial is the clear sector leader
• Value outlooks skew towards flat-to-modestly high outcomes
• While bid-ask spreads are narrowing, most investors believe values have not fully bottomed
• Rising insurance costs stand out as the most significant operational headwind
• Interest rates remain the primary gatekeeper of deal activity
• Debt markets are easing slowly and selectively
• Capital is gravitating towards core stabilized assets and opportunistic/distressed opportunities
• Market selectivity is increasingly disciplined, skewed towards Sunbelt and Primary markets

Industrial Leads Preference

Investor expectations have increasingly centered around industrial assets as the leading performer, marking a notable shift from the multifamily-dominated sentiment that prevailed through much of the post-pandemic period.

While industrial briefly led preferences in H1 2021, multifamily quickly reasserted itself as the top-ranked sector from late 2021 through 2024, consistently capturing the largest share of the top-three selections amid strong rent growth and capital inflows. That dominance began to erode in 2025 as investor conviction broadened, with industrial regaining parity in H1 2025 before decisively moving into the lead by H2 2025.

Looking into 2026, industrial is positioned as the top-performing sector in investor expectations, reflecting continued confidence in logistics-driven demand, supply discipline, and resilient fundamentals.

Retail, while increasingly present in the rankings, remains a secondary outperformer relative to the two core sectors, reinforcing the view that the next cycle will be led by operationally efficient, demand-backed asset classes rather than purely yield-driven trades.

Top Performing Asset Class Expectations Over Time

Market Stabilization Reflected in Investment Performance and Values

Investor feedback suggests that 2025 marked a period of measured stabilization across commercial real estate portfolios, even as broader market adjustments continued.

When evaluating full-year performance, a clear majority of respondents reported solid outcomes, with two-thirds (66.67%) characterizing their CRE investment performance as “good” and an additional 20.83% describing results as “average.” Together, these responses indicate that most portfolios were able to maintain performance through a challenging but improving operating environment.

Overall Outlook: A Transitional Year Defined by Stability and Selective Opportunity

Heading into 2026, investor sentiment and strategy reflect a market that has regained stability but not complacency. The sharp dislocations of prior years have largely subsided, replaced by a more predictable, though still constrained, investment environment defined by selective opportunity, disciplined underwriting, and patience. Industrial assets sit at the forefront of expectations, while capital broadly favors strategies and geographies that offer resilience, liquidity, and clear downside protection.

At the same time, uncertainty around interest rates, debt availability, and the ultimate pricing floor continues to temper transaction activity.

As a result, the next phase of the cycle is unlikely to be driven by broad-based expansion. Instead, 2026 is shaping up as a year of targeted execution, where success hinges on asset quality, capital structure, and market depth rather than cyclical tailwinds alone. In this environment, investors who align sentiment with data and strategy with discipline will be best positioned to navigate both the risks and opportunities ahead.

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