AI immunity trade offers a multi-year allocation case for global REITs, argues Hazelview’s Samuel Sahn
Real estate investment trusts (REITs) have had a rough run.
For the better part of six years, the asset class was something institutional investors tolerated in their portfolios rather than actively pursued. Particularly as COVID hammered hotels, offices, and retail and rising interest rates crushed private market valuations.
But Samuel Sahn underscored that's now beginning to change and the catalyst is the result of fear of artificial intelligence.
Sahn, who’s a managing partner and portfolio manager at Hazelview Investments, has been tracking what he calls the "AI immunity trade" - the rotation of capital away from asset-light sectors vulnerable to AI disruption and into real estate, where the fundamentals are harder for a language model to replicate.
"AI is not making more land, AI is not building buildings, AI cannot replicate what real estate provides, which is a sense of place, a sense of office, a sense of retail, a destination for travel, shelter and homes," said Sahn. "AI is going to do a lot of good for the real estate industry around enhancing efficiencies, enhancing margins, improving earnings growth for the public companies that own real estate, it will make those companies better organizationally and smarter around allocating capital, whether it be to acquisitions, development, redevelopment, selling of property.”
According to Sahn, software companies face genuine existential questions about whether their products can be displaced by AI tools. REITs, by contrast, own physical assets with contractual rent rolls stretching out five to ten years.
For investors, he argues the appeal comes down to cash flow predictability as real estate offers a clear window into rent schedules and revenue streams over the next five to ten years. Software companies facing AI disruption cannot offer the same certainty. That visibility — combined with the basic fact that AI is not a land developer — is what has driven capital into REITs in 2026 and pushed the sector ahead of both the broader market and technology stocks.
"If you're an investor and you're looking for sustainability and cash flow, visibility in earnings, transparency in where that cash flow is coming from, you have all of that in real estate," he said.
According to Sahn, real estate never lost its status as a portfolio diversifier. Despite “real estate’s tough go from a performance standpoint because of COVID and people questioning the viability of certain asset classes in real estate,” Sahn suggests the asset class remained a fixture in institutional portfolios throughout the downturn. What changed was not its role, but investor willingness to increase their exposure.
Sahn noted COVID raised serious questions about the viability of office, hotels, retail, and senior housing. Then, when central banks began raising rates in 2022 and 2023, private market valuations fell and returns suffered across the board globally. That combination kept investors cautious, but it didn't prompt them to abandon real estate as a portfolio building block.
Now, Sahn argues, the calculus is shifting again. The disruption AI threatens to bring to other industries and business models is prompting investors to revisit their real estate allocations with fresh eyes. Many have not meaningfully added to their positions since before the pandemic, and the current environment is giving them reason to act.
Sahn suggests the rotation into REITs has the makings of a multi-year story rather than a short-term rebound. His confidence rests on the unusually depressed starting point. Going into 2026, the global REIT market was sitting at a double-digit discount to its intrinsic value, he explained. Meanwhile, multiples relative to broad equities had never been lower as ten-year trailing returns were at cyclical bottoms in every major region, from Asia to Europe to North America.
Sahn argues that valuations and growth fundamentals alone should have been sufficient to draw investors back, but they weren't, at least not at first because sentiment had to catch up. Positioning data underscored the disconnect, Sahn said, noting REITs were the most underweight asset class across both long-only and hedge fund portfolios, an imbalance he viewed as unsustainable.
The catalysts then arrived in combination as Middle East tensions pushed investors toward defensive assets. The AI immunity narrative gave them a thematic reason to favor real estate over technology. And first-quarter earnings season delivered beats and raised guidance from REIT operators, validating the fundamental story in real time. Stock prices have moved meaningfully higher across the first three and a half months of the year as a result.
Sahn singles out data centers as the REIT sector most directly powered by the AI boom, and the first-quarter leasing numbers back him up. Worldwide, more than four gigawatts of capacity changed hands, with around three gigawatts of that concentrated in the U.S. and record-setting activity in Dallas, Austin, Atlanta, and Chicago. Europe contributed over 700 megawatts of fresh leasing, led by all-time records in London and Amsterdam, while Melbourne anchored Asian demand with more than 100 megawatts.
What stands out to Sahn is the source of that demand. The familiar hyperscalers — Google, Microsoft, Amazon, Meta — are still taking down large blocks of capacity, but a newer pool of buyers is emerging beneath them. As enterprises start deploying large language models to drive efficiency, they need somewhere to run them. That shift is showing up in surging demand for smaller footprints under one megawatt, a segment that reflects mainstream corporate adoption rather than the giants. He sees real headroom for the sector in cash flow, earnings, and returns.
Meanwhile, healthcare REITs sit outside AI's reach entirely, Sahn suggests, noting senior housing demand is a demographic phenomenon, propelled by an aging baby boomer population moving into the 80-plus cohort that requires more care.
While he underscores AI can sharpen facility operations and improve the resident experience, it can’t change who needs care or when. Nor can it ease the supply constraints holding the sector back, pointing to elevated land costs, rising hard construction costs, and a higher cost of debt than the industry faced five to seven years ago.
"AI is not going to make and lead to new supply of senior housing facilities because that's really hard to build right now,” said Sahn. “Land costs are up; hard costs are up. Debt is a bit higher than it was five, six, seven years ago. There are two sectors: one where it's in the direct impact of AI that's benefiting from the technology and another where the technology around it is going to benefit the operations of facilities for the residents. But it will not change one iota what happens with the demand for that product.”
Sahn doesn't buy the premise that any REIT sector is overselling its protection from AI. In his view, no one in the market has made claims of immunity that don't hold up under scrutiny. He also isn't prepared to flag any sector as having gotten ahead of itself on that front.
Office is the most instructive example, precisely because it's where the AI fear runs deepest. Sahn points to New York City, where technology is a major source of space demand alongside financials, insurance, real estate, and legal tenants. Midtown Manhattan saw more than 10 million square feet of leasing in the first quarter while the market's largest landlord, SL Green, leased 929,000 square feet at rents 16 percent above the expiring levels on those spaces.
He also points to San Francisco's real estate market noting the very companies in Silicon Valley like Anthropic and OpenAI are taking down significant amounts of office space themselves. Sahn said public companies own many of the best trophy assets in their markets, and those are the buildings tenants still want to occupy.
“We think a lot of the fear and the narrative is unfounded,” said Sahn.
