Emerging Risks and Opportunities in Commercial Real Estate – June 2026

Recent developments across the commercial real estate (CRE) market and legal landscape highlight several trends that are likely to materially impact leasing, development, and dispute risk in the coming quarters. Set out below are three key developments and their implications for owners, landlords, tenants, and lenders.

1. Infrastructure Constraints and Data Center Demand

The continued expansion of data centers—driven by artificial intelligence and digital infrastructure demand—is materially altering development and leasing dynamics. Power availability and interconnection delays are emerging as a primary constraint on project viability. Demand for power-ready sites is increasing significantly, and local resistance to large-scale developments is growing.

Legal and Practical Implications:

• Lease and development documents must address utility and infrastructure risk.
• Increased zoning and entitlement challenges.
• More technical lease provisions tied to energy availability and performance metrics.

2. Market Bifurcation and Distress

The CRE market continues to diverge across asset classes. High-quality office assets are performing better than secondary assets, while multifamily and hospitality sectors show mixed results. Valuation pressure and asset-level distress remain prevalent.

Legal and Practical Implications:

• Increased lease renegotiations and restructurings.
• Greater dispute risk around rent adjustments and valuation.
• Expanded reliance on receivership and foreclosure remedies.

3. Regulatory and Legislative Developments

Regulatory activity continues to increase at both state and federal levels. In Illinois, new consumer protection measures may bleed over to some commercial leases and affect fee structure transparency, while broader regulatory developments impact arbitration and compliance obligations.

Legal and Practical Implications:

• Review of fee structures and transparency in leases.
• Reassessment of arbitration provisions.
• Increased compliance scrutiny.

Key Takeaways

• Infrastructure risk is now central to CRE transactions.
• Distress-related activity is likely to remain elevated.
• Regulatory scrutiny is increasing.

This communication is not intended to create or constitute, nor does it create or constitute, an attorney-client or any other legal relationship. No statement in this communication constitutes legal advice nor should any communication herein be construed, relied upon, or interpreted as legal advice. This communication is for general information purposes only regarding recent legal developments of interest, and is not a substitute for legal counsel on any subject matter. No reader should act or refrain from acting on the basis of any information included herein without seeking appropriate legal advice on the particular facts and circumstances affecting that reader. For more information, visit www.buchalter.com.