7 Stocks Leading the Real Estate Recovery

Every real estate cycle produces its own mythology. This one gave us the “death of the office,” the “collapse of private credit,” and the idea that “artificial intelligence was about to render half the real estate ecosystem obsolete.” The narrative made for great headlines. It did not make for good investing.

Commercial real estate is recovering—though not in a straight line and not without friction. Capital is moving, deals are getting done, and leasing activity is improving. Rather than focusing on the loudest claims, the recovery is easier to see in the businesses at the center of the transaction machine.

CRE services show the recovery is underway

Commercial real estate (CRE) services firms never stopped working; they simply had less to work on during the downturn. Now, advisory pipelines are rebuilding, leasing desks are busier, and capital markets activity is no longer frozen. Data center demand is also expanding at a pace that continues to surprise operators.

Despite these signs, stocks in the sector have often been treated as relics of a bygone era. The argument that artificial intelligence would disintermediate the entire real estate business model is described as compelling in theory but detached from how real estate transactions actually work.

Why the “AI will replace real estate” thesis doesn’t fit

Real estate is not software. It does not scale cleanly or behave predictably. Every asset is different, and every transaction includes its own complications. Information is incomplete, relationships matter, and execution is central—leaving no shortcut that replaces the work overnight.

Mortgage REITs: higher yields, but credit risk still evolving

Moving deeper into the capital structure brings more complexity, where mortgage REITs operate. The appeal is straightforward at first glance: double-digit yields and discounts to book value. That setup can attract capital at the start of a cycle.

However, the content emphasizes that mortgage REITs are not bonds. They are portfolios of commercial real estate loans financed with leverage and exposed to credit conditions that are still evolving. The system has absorbed most of the losses it is expected to take, but not all of them.

What remains unsettled

• Problem loans remain elevated.
• Foreclosures are still being worked through.
• Some parts of the market are stabilizing, while others remain under pressure.

Recovery is uneven: company-by-company sorting matters

The recovery is not uniform; it is described as a sorting process. Some companies are stabilizing and positioning themselves for the next phase of the cycle, while others are still dealing with deteriorating assets and uncertain earnings power. Treating mortgage REITs as a single group is presented as the fastest way to make a mistake.

Impact and investment approach

The central point is that commercial real estate is no longer in free fall. The recovery is taking shape, and the next step is not to chase the next headline but to position for the reality already unfolding.

The recommended approach is to “own the recovery,” “respect the credit,” and “avoid the wreckage”—with the focus on identifying where the recovery is strongest and aligning with balance sheets most capable of carrying investors through what comes next.