Counselors of Real Estate ranks AI first, capital markets second for 2027

The Counselors of Real Estate put artificial intelligence first in its annual Top Ten Issues Affecting Real Estate report, IREI reported, citing growing data center demand and the expanding use of AI in real estate analysis, underwriting and workflows.

One entry, two very different businesses. The first is the data center itself, the physical plant that AI workloads require. The second is the software doing the analysis, underwriting and workflow work the report names alongside it. Both land on property owners, and they have little in common beyond the label: one is a lease, a tenant and a set of site constraints, while the other changes how every other asset in a portfolio gets priced. A ranking that merges them tells you the trade is thinking about AI as demand and as tooling at the same time.

Capital markets ranked second, with the report pointing to higher-for-longer borrowing costs that continue to pressure yields and force investors to focus more heavily on property-level income and operations. Construction costs ranked third, under continued pressure from labor shortages, energy volatility, supply-chain disruptions and higher interest rates.

Two of the top three slots, then, belong to cost — debt service, labor, materials — and the data center demand attached to the AI entry is the ranking's clearest demand-side item. It also draws on the same labor, energy and materials that entry No. 3 describes as under pressure, which puts the development case for new capacity on top of an input-cost forecast the same report calls strained. When borrowing costs stay high and yields stay compressed, what is left after debt service is the return, and the second entry's emphasis on property-level income and operations reads as the operating corollary of that arithmetic.

The remaining entries run from geopolitical risk and migration trends through housing attainability, distressed assets and refinancing risk, climate risk, labor shortages and the continuing transformation of the office sector. Labor shortages appear twice, once as a driver of construction costs and once as a standalone issue, while distressed assets and refinancing risk read as a second pass at the debt pressure capital markets raised at No. 2.

The coverage does not say how the ten issues were selected or ordered, so the ranking is best read as the organization's account of what will matter in 2027 rather than a weighted forecast. What it leaves open is the question a data center underwriter has to answer before drawing on construction debt: whether the income remaining after debt service and build costs still supports the capacity the No. 1 entry assumes.