One of Accruit’s unique advantages in the 1031 Exchange industry is the breadth of real-time market visibility available through Exchange Manager ProSM, Accruit Technologies’ software licensed by more than 30 national Qualified Intermediaries to power their QI operations. This aggregated data gives Accruit a level of insight into exchange activity, trends and investor behavior across the nation.
The first half of 2026 tells an important story about the 1031 Exchange market: investors are still transacting, values are moving higher, and tax-deferred exchange strategies remain highly relevant. At the same time, the data also shows a market that has become more competitive, more selective, and less forgiving for Exchangers who wait too long to plan their next move.
Compared with the first half of 2025, total exchanges increased 4.0%. Quarter over quarter, activity accelerated even more sharply, with exchanges increasing 30% from Q1 to Q2. That momentum suggests investors are re-engaging with the commercial real estate market after several years of elevated interest rates, slower deal velocity, and pricing uncertainty.
Year Over Year: More Exchange Activity, Higher Values, and Greater Identification Risk
Year over year, the 1031 Exchange market has shown clear signs of strength. Total Relinquished Properties increased 30.4%, while the average number of Relinquished Properties per exchange increased slightly from 1.08 to 1.10. In other words, more properties entered the exchange pipeline, even though the typical exchange structure remained relatively stable.
Average transaction values also increased. The average Relinquished Property contract price rose 10.0%, from $1.90 million to $2.09 million, while the average Replacement Property contract price increased 10.0%, from $1.30 million to $1.43 million. This suggests that Exchangers continued to pursue meaningful, higher-value transactions despite a market environment that still includes higher borrowing costs and cautious underwriting.
However, the strongest caution signal came from the Replacement Property side of the exchange. The percentage of exchanges that failed to identify a Replacement Property increased from 7% to 10%, while the average number of identified Replacement Properties declined from 1.80 to 1.62. That combination points to a market where investors may be willing to sell, but suitable replacement assets are harder to secure within the required timeline.
Quarter Over Quarter: Q2 Brought a Stronger Surge in Activity
The quarter-over-quarter data shows an even more pronounced shift. From Q1 to Q2 2026, total exchanges increased 30%, while total Relinquished Properties increased 29%. The average number of Relinquished Properties per exchange remained essentially unchanged, moving from 1.09 to 1.10.
This indicates that Q2’s growth was driven primarily by a greater number of exchange transactions rather than a meaningful change in how exchanges were structured. Put simply, more investors came to market in Q2, and they generally continued to exchange one Relinquished Property at a time.
At the same time, Q2 also showed increasing pressure around Replacement Property identification. The failed-to-identify rate rose from 9% to 10%, and the average number of identified Replacement Properties declined sharply from 2.00 to 1.32. A 34% decrease in identified options suggests that Exchangers were either finding fewer viable assets, narrowing their investment criteria, or facing a more competitive acquisition environment.
Transaction values also moved higher in Q2. Average Relinquished Property contract price increased 5%, from $2.03 million to $2.14 million, while average Replacement Property contract price increased 39%, from $1.17 million to $1.63 million. The significant increase on the replacement side suggests that investors who did find suitable Replacement Properties may have been moving into larger or higher-quality assets, even if they identified fewer total options.
Why These Changes May Be Happening
The 1031 data appears to reflect broader conditions in today’s commercial real estate market. Industry outlooks for 2026 generally point to cautious optimism: capital is beginning to re-enter the market, transaction activity is expected to improve, and pricing has become more stable after several years of recalibration. At the same time, elevated interest rates, policy uncertainty, refinancing pressure, and uneven performance across property sectors continue to shape investor behavior.
Several factors may help explain the increase in exchange activity.
- Investors who delayed transactions in 2024 and 2025 may now be re-entering the market as pricing stabilizes and expectations around financing become clearer.
- Owners may be using 1031 Exchanges to reposition portfolios, moving out of assets with near-term refinancing risk, management intensity, or weaker long-term fundamentals.
- Rising average values may indicate that larger or better-capitalized investors are moving first as confidence improves.
The decline in Replacement Property identifications is likely a reflection of today’s increasingly competitive investment market. High-quality replacement assets—particularly industrial, multifamily, necessity-based retail, medical, Triple Net Lease (NNN) properties, Delaware Statutory Trusts (DSTs), and other stable income-producing investments—remain in high demand. With more investors pursuing a limited inventory of desirable properties, many of the best opportunities are receiving multiple offers or going under contract quickly. As a result, Exchangers have fewer viable options available during the 45-day identification period, making it more difficult to identify replacement properties that meet both their investment objectives and exchange requirements.
What It Means for Investors and Advisors
The key takeaway is that 1031 Exchange activity is not slowing down, but execution risk is increasing. Investors appear to be motivated to transact, especially as commercial real estate conditions stabilize, but Replacement Property sourcing has become the defining challenge.
For Exchangers, this environment rewards preparation. Replacement Property planning should begin before the Relinquished Property is listed, not after it goes under contract. Investors may need to evaluate multiple property types, broaden geographic criteria, consider passive investment alternatives, or explore more advanced exchange structures when appropriate. Advisors and Qualified Intermediaries can add significant value by helping clients understand timing constraints, evaluate backup options, and build flexibility into the exchange plan.
Bottom Line
The year-over-year and quarter-over-quarter data both point to a 1031 Exchange market with positive momentum. Exchange volume is up, Relinquished Property activity is higher, and average transaction values are increasing. These are encouraging signs for the industry and suggest that investors continue to see 1031 Exchanges as an important tool for tax deferral and portfolio repositioning.
But the data also makes one thing clear: finding the right Replacement Property is getting harder. In the current commercial real estate market, where capital is returning selectively and quality assets remain highly competitive, successful exchanges will depend less on simply entering the market and more on planning early, identifying realistic options, and staying flexible throughout the process.