Archives for February 2026

U.S. retail projections remain unchanged through 2026 in a just-released forecast from CoStar, the leading global provider of online real estate marketplaces, information and analytics in the property markets.

Consistent with the previous forecast, which had U.S. retail vacancy peaking at just under 4.4%, the metric is expected to rise minimally in the first half of 2026 before falling slightly during the latter half of the year and into 2027.

Though receding, store closures are expected to increase in the first half of 2026 as the bifurcated retail sales environment pushes certain tenants to trim locations. Full-year net absorption is forecasted to total just over 16 million square feet, which would be the third lowest level of annual demand formation recorded in the past decade, behind 2020 and 2025.

“Underpinning the stable outlook was the resumption of positive demand in the back half of 2025,” said Brandon Svec, national director of retail analytics at CoStar Group. “After two consecutive quarters of falling demand, retail fundamentals stabilized in the third quarter as the pace of closures slowed and backfill demand surged. With higher demand, the wave of store closures seemingly cresting, and new supply remaining elusive, performance is forecasted to remain in balance for the foreseeable future.”

“There are both upside and downside risks to the forecast, though the balance currently tilts to the downside,” said Svec. “Continued uncertainty persists around the impact of tariffs, and although retailers and suppliers have largely absorbed these costs so far, many are signaling imminent price increases, which could further strain household budgets and dampen discretionary spending.”

The full forecast can be found here.

Source: “CoStar’s U.S. Retail Projections Remain Steady Through 2026“

A steady period of oversupply has led to lower absorption rates, and future multifamily development is slowing down in response. Bright spots are emerging in select cities.

Resilient demand, new supply contraction and abundant acquisition capital are bolstering forecasts for modest growth in the multifamily sector for 2026, despite economic uncertainties, according to the Winter 2026 Yardi Matrix U.S. Multifamily Outlook report. Yardi forecasts a 1.2% increase in advertised rent growth nationally for 2026 and 2.0% for 2027, though projections vary by region. Rent growth should strengthen beginning in 2028.

Development activity is slowing nationwide. Yardi projects completions will drop 24% in 2026 to 450,000 deliveries, down from the 595,000 expected for 2025. Further slowing is projected in 2027 to 416,000, before increasing slightly to 421,000 in 2028.

Absorption Slowdown

Course correction is occurring after a period of oversupply. In its January 2026 Commercial Real Estate Insights Report, the National Association of REALTORS® reports absorption of 437,897 units in December 2025, a 19% decline from a year earlier. New deliveries of multifamily units dropped 26% over this same period and continued to exceed absorption rates. However, several regional bright spots appear.

New York City topped NAR’s list of markets with the strongest 12-month absorption at 27,704, followed by Dallas-Fort Worth (25,059), Austin, Texas (19,665) and Atlanta (19,565). Rounding out the top ten were Phoenix; Charlotte, NC; Seattle; Nashville, Tenn.; Denver and Houston.

Market conditions were mixed across classes, with Class A showing stable but soft conditions, marked by a 0.1% rent decline, while vacancies held at 10.2%, NAR data shows. In the mid-tier segment, a rise in vacancies to 9.8% and a 0.1% drop in rent growth signaled a cooling momentum for Class B. Class C continues to outperform rent growth (up 1.1%) despite ongoing tenant turnover, with vacancies the lowest among the classes at 6.3%.

Rent Pressures

The volume of new deliveries has put pressure on rents, especially in the Sun Belt, where, since January 2023, Yardi reports the largest rent declines in recent years have been in Austin (-14.2%) and Phoenix (-9%). Alternatively, markets with limited new supply saw rent growth during the same period, with New York City (13.0%), Chicago (10.2%) and Kansas City (9.3%) topping its list.

Yardi expects regional trends to continue in 2026, with limited new construction and healthy absorption supporting rent growth in coastal and Midwest markets, led by Boston and Washington, D.C. (both at 2.1%), followed by Indianapolis and Kansas City (both at 1.9%) and Columbus and Detroit (both at 1.7%).

Sun Belt cities will continue to experience weak rent growth as they work through substantial lease-up pipelines, despite solid demand, Yardi reports.

Momentum in Capital Markets

After nearly two years of weak capital markets, equity and debt volumes rose throughout 2025 (up 7.2% in November compared with the previous year), Yardi’s report says, and the momentum will likely continue, given declining interest rates, abundant acquisition capital and lenders eager to put money into the market.

Yet economic uncertainty and the widening gap in consumer wealth distribution between the top and bottom halves will continue to put pressure on the multifamily sector, which is sensitive to job growth and consumer confidence. Still, the overall stability of the multifamily sector is a positive counter during times of uncertainty.

Source: “Multifamily Sector Positioned for Modest Growth in 2026”

The hundred-billion-dollar race to build artificial-intelligence data centers as fast as possible has found a new target: bitcoin miners.

Across the country, so-called “mega-scalers” looking to build data centers in the gigawatt range have unlocked hundreds of billions of dollars to support an unprecedented effort to increase both the intelligence of AI products and deploy them widely. That means companies such as Microsoft, Google, Oracle, OpenAI and Meta are pouring money into projects across the country.

But the bottlenecks are growing, with mounting local resistance to projects, concerns over water and electricity usage, and yearlong delays to connect to the wider grid for the massive power needed to operate.

These companies, designed with the computer power needed to produce new bitcoin, already have a lot of what the hyper-scalers need: Massive, secured electrical power capacity in areas with low rates, industrial-level cooling systems, large campuses and high-bandwidth networking potential.

That’s not to say it’s an easy conversion, as bitcoin mines use different technology than AI data centers. AI data centers also need multiple levels of redundancy and often denser cooling and power requirements. The transformation can cost tens of millions of dollars or more, experts say, but it offers the most attractive quality for data center developers — speed.

“Standing up new substations and transmission lines can take years, and interconnection queues are only getting longer,” said Wayne Highfield, director of operations at Megawatt, a large-scale mining company based in Indiana. “Partnering with existing mining operators can shorten timelines, put available energy to work immediately, and create more pathways to get projects online.”

AI shift fueled by demand

The desire for speed has already begun playing out across the country.

Bitcoin miner Bitfarms Ltd. announced in November that it was converting its 18-megawatt bitcoin mining facility in Washington state to support AI workloads after signing a $128 million agreement with what it called a “large, publicly traded” provider of data centers.

Ben Gagnon, CEO of Bitfarms, said at the time that there were compelling reasons for the company to pursue a “GPU-as-a-service” model and ultimately forgo mining.

“Despite being less than 1% of our total developable portfolio, we believe that the conversion of just our Washington site to GPU-as-a-Service could potentially produce more net operating income than we have ever generated with Bitcoin mining,” he said, adding it could provide the company with a strong cashflow foundation.

Bitfarms is not the only miner to cash in on the AI tsunami.

CleanSpark Inc., which bills itself as “America’s bitcoin miner,” appointed a senior executive in charge of data centers in October as part of its effort to expand beyond bitcoin.

Former or current bitcoin miners such as TeraWulf, Soluna Holdings, Hut 8 and others have inked deals over the last year to convert existing facilities, build new AI data centers on existing sites or co-locate AI with mining operations.

Investment firm VanEck, which also offers bitcoin and related investments, said in a January report that mining activity has dropped by about 2% and the overall “hash rate” dropped 6%, a decline it attributed to miners powering down rigs to instead service demand for AI data centers.

“We expect AI data center demand to persist over the coming years, with a (+24%) CAGR through 2030, and expect bitcoin miners to increasingly devote power resources to servicing the buildout of artificial intelligence,” the company said in a blog post.

Digital asset investment manager CoinShares said the pivot to AI data centers is attractive because it offers more stable, predictable revenue — and at a much higher margin. How much? About three times the return of bitcoin on a per-megawatt basis.

By October, bitcoin firms announced about $65 billion worth of contracts with AI firms or data center operators, CoinShares reported. Of the six publicly-traded companies that have announced AI projects so far, CoinShares anticipates that bitcoin mining revenues will decline from about 85% in 2025 to under 20% by the end of 2026.

Morgan Stanley said in a September report that bitcoin mining companies have about 6.3 gigawatts of operational, large sites and another 2.5 gigawatts under construction, making them the “fastest way to obtain electricity with the lowest execution risk” for AI companies. Morgan Stanley said if mining sites were transformed into data centers, it would create about $5 to $8 of equity value per watt, far more than bitcoin.

Private consulting firm WiseGuy Reports expects to see more of the bitcoin-to-AI pivot — especially among the largest, publicly-traded firms — as more value is being placed on the number of megawatts these firms control, opposed to the power they can bring to bitcoin mining operations.

“As of early 2026, the trend has moved beyond experimentation into a full-scale land grab for power,” the report said. “Hyperscalers are so desperate for capacity that they are signing multi-billion-dollar pre-lease agreements before the retrofits are even complete.”

Another pressure on bitcoin miners is the price of bitcoin, which has steadily dropped from an October high of around $124,000 per bitcoin to around $70,000 as of publication time — putting it below the cost to mine it.

Data center conversion potential

How many potential sites across the country are capable of being converted to AI? There is no exact number.

The Energy Information Administration estimated about 137 bitcoin mines were operational across the country in 2023 — about 2.3% of the total American energy consumption. However, not every site will be suited to convert to AI demand, Wise Guy Reports said, and not every bitcoin miner will have the resources to convert their operations over to AI operations.

But for the companies that show they have the land, power and resources, there will be no shortage of interested parties willing to fund the buildout.

“This ‘build-to-suit’ demand creates a ‘de-risked’ environment for miners; if they can prove they have the power and the ability to build a Tier 3 shell, the tenants are already waiting at the door with open checkbooks,” the report said.

The rapid rise of generative AI platforms such as OpenAI’s ChatGPT, Anthropic’s Claude, Google’s Gemini and others has meant hundreds of millions of users per day are generating text and images. When it comes to widespread adoption, though, cracks have started to appear.

Small businesses collectively are not racing to adopt AI tools, with overall adoption having slowed in some cases and having stopped in others, according to a fall 2025 Census Bureau Business Trends and Outlook Survey, which is conducted once every two weeks surveying 200,000 small businesses. The percentage of small-business owners who report using AI to produce goods or services has grown since the survey launched in 2023, from an initial 3.7% to 9.7% in September, according to the survey, first reported by the Apollo Academy. The companies that are adopting the technology vary substantially by size, though.

Source: “Data center developers are zeroing in on a new target“