Foreign Capital Returns to U.S. CRE With a Sharper Playbook Article originally posted on Globe St. on January 7, 2026 Foreign capital is not just coming back to U.S. commercial real estate in 2026 — it is returning with a far more surgical playbook. Instead of chasing broad themes, global investors are zeroing in on basis, micro‑markets and a handful of asset types where cyclical dislocation and structural demand are finally starting to line up. By late 2025, the tone among cross‑border investors had shifted from hesitation to active positioning for a new vintage year. Gunnar Branson, CEO of AFIRE, told GlobeSt.com that investors spent much of last year watching sellers finally accept repricing and “looking for what’s that point where the deal makes sense, where the numbers are starting to pencil out,” adding that more of them are now telling him “we’re reaching that point.” Sean Bannon, who runs U.S. real estate investments for Zurich, is even more blunt: “These years are going to be really, really good vintages for investment in U.S. real estate,” he told us, arguing that the current reset, driven by rate hikes rather than an economic recession, echoes the post‑RTC and post‑GFC opportunity sets. Both see 2026 as a year of increased deployment rather than a return to the froth of 2021. Bannon expects “more volume in ’26 than 25″, with last year being a “pretty good vintage year” that effectively pushed the main buying window into 2026 as price discovery caught up with sentiment. Zurich sees capital going out both for the insurer’s balance sheet and third‑party mandates. Data Centers, Housing and Selective Office The new capital is not spreading evenly across the property spectrum. All the people interviewed for this article pointed to data centers and housing as enduring draws, with a more nuanced, bifurcated view of office and a renewed willingness to rethink once‑unloved categories like retail and logistics. Branson said “continued excitement around developing data centers” is a core part of the story, noting that Canadian capital in particular re‑emerged in the second half of 2025 “on some significant data center deals.” Dan Berman, managing partner of U.S. real estate at HSF Kramer, called data centers “a sexy kind of asset class of the moment” whose pricing “has taken on almost inflated proportions,” while acknowledging that relentless energy demand from AI adoption could ultimately justify the run‑up. “Time will tell if the pricing of data centers is warranted,” he said, pointing to the tension between “rapid change of tech and the more molasses‑like change of real assets” once they are built. On the residential side, foreign capital remains focused on demographically supported rental strategies rather than speculative bets on cap‑rate compression. Branson cited broad‑based interest across apartments, single‑family rental, student housing and senior living, arguing that “demand, especially in residential, continues to outstrip supply” at the same time local and state governments are finally “removing friction for creating an appropriate level of housing,” including loosening zoning in historically restrictive markets like New York. That combination, he said, makes this “a time for intelligent, thoughtful investing” in residential rather than a tide that lifts all boats. Office, by contrast, is now a stock‑picker’s asset class. Berman said “trophy office buildings have come back” in New York and San Francisco and that the “speed at which trophy office bounced back…surprised even optimists,” a dynamic he expects to draw a broader pool of foreign investors looking “to invest in something safe.” Bannon warned against any blanket narrative of an obsolete office sector, pointing to the company’s recent acquisitions in Cambridge, Boston, Chicago’s Fulton Market and Denver’s Cherry Creek as evidence that “a node or a certain part of a market can perform very, very differently and much better than the overall market.” “This is going to be a real stock‑picker’s couple of vintages,” he added. “It’s not about saying, ‘Here’s the asset class I’m picking, and this is going to win.’” Basis, Yields and the Micro‑Market Lens If there is a unifying thread in how foreign investors plan to deploy this year, it is an insistence on buying income at a basis that was rarely available in the prior cycle. With interest rates still elevated by recent standards, the simple spread over fixed income is not enough to justify risk; what matters is where pricing sits versus replacement cost and how underwriteable the cash flows are in a given node or submarket. Bannon said the appeal today is less about headline yield than about “the dollars per square foot, or the dollars per apartment unit you can buy at a really attractive basis.” For much of the core cycle, he noted, investors liked their assets and going‑in yields but were less comfortable with how far above replacement cost they were buying; “that is very different today,” he said, arguing that entry basis in many markets now creates embedded value even before any recovery in rents or cap rates. Zurich is channeling that view through a tightly defined strategy focused on the four main property types—office, retail, industrial and apartments—in just 20 U.S. markets, with typical deal sizes between about $20 million and $125 million and the ability to buy all‑cash if warranted. That discipline is mirrored on the lending and legal side. Berman said that as commercial real estate lending has “certainly come back,” especially for high‑quality office, more conservative foreign investors are gravitating toward stabilized, low‑volatility assets where “pricing for office has snapped back” and the market “has stayed…stabilized.” He emphasized that allocation decisions now start at the top of the portfolio—“am I long real estate, or do I want to go into another asset class?”—before drilling down to country, asset type and individual capital stacks, with investors weighing real estate against bonds, equities, hedge funds and private equity in a way they did not when rates were near zero. Global Capital, Local Politics Political risk and geopolitical friction remain part of the calculus, but they appear less likely to derail capital flows than to shape geography and pace. Branson said tariffs and rate policy were real sources of anxiety for foreign investors in 2025, yet “we’re getting used to it, and we’re figuring out how to manage that kind of risk in a way that we didn’t have to before,” particularly as investors focus more on commercial paper markets and deal‑level economics than on every Fed move. He sees especially strong current interest from Asian and Australian investors, with Europe and Canada “a little more hesitant,” even as Canadian institutions have been among the most active in recent U.S. data center trades. Berman offered a window into how foreign peers perceive U.S. political volatility. After his firm’s merger with Herbert Smith Freehills created closer ties with a band‑one real estate practice in the U.K., he said conversations with London colleagues highlighted “hesitance…in the U.K. to invest in the U.S. because of the political instability” and broader disconnects over issues such as Ukraine. That volatility, he said, can translate into “some hesitance” to commit capital, even though “the U.S. is like the safest of all of the options for investing,” and he still expects foreign money “for the foreseeable future” to gravitate here. Currency and macro conditions will also shape how aggressively investors move. Bannon flagged exchange rates as “material,” noting that FX could turn into either a headwind or tailwind for inbound allocations, but said that aside from currency, there is now “much more acceptance of and much more constructive economic commentary on the U.S.” than there was in early to mid‑2025. He pointed to a “remarkably resilient” labor market, strong industrial and housing fundamentals and a retail sector that has “come back remarkably” from the late‑2010s fear that bricks‑and‑mortar was finished, arguing that global capital looking for depth, breadth and resilience will continue to find few peers to the U.S. market. Beyond the Gateway Myth Geographically, foreign investors are still drawn to marquee cities—but they are widening their aperture to select secondary and “trophy‑adjacent” markets. Berman said that while “the lion’s share” of cross‑border capital still flows to major cities like New York, there is “more of an appetite” than in the past to look at markets such as Nashville and other smaller but fast‑growing metros. Branson pointed to logistics plays tied to reshoring U.S. manufacturing as another area of focus, where foreign groups struggle to find the amount of modern space manufacturers and shippers want in certain key distribution hubs. Bannon takes the segmentation further, arguing that in 2026, the real differentiation will be at the submarket and even neighborhood level. He contrasted the outperformance of places like Cambridge versus broader Boston and Cherry Creek versus the rest of Denver, and said Zurich is actively looking to re‑enter San Francisco on the back of sharply lower basis in select creative office and mixed‑use locations after exiting similar assets at peak pricing in 2019. For foreign investors, that means the classic “buy any gateway tower” play is giving way to a more granular hunt for sustainable income streams and manageable capital intensity in very specific pockets of very specific cities.