The DST market has grown from a niche 1031 replacement option into a roughly $8 billion annual business, with 2025 fundraising reaching $8.2-$8.41 billion and January 2026 alone adding about $714.8 million. Mountain Dell Consulting reported 55 active sponsors and 92 programs at the end of January 2026. Multifamily (about 51% of syndicated offerings) and industrial (about 22%) remain the dominant property types, and yields have stabilized after the post-2022 rate adjustment.
A market that quadrupled in a decade
Investors put between $8.2 and $8.41 billion into Delaware Statutory Trusts in 2025, according to AltsWire and Mountain Dell Consulting. In 2015 the figure was about $2 billion. That is roughly a fourfold increase in ten years.
A DST is a legal structure that lets many investors hold fractional stakes in large commercial properties. Its main draw is tax: an interest in a DST qualifies as replacement property in a 1031 exchange, the rule that lets a real estate investor defer capital-gains tax by rolling the proceeds of one sale into another property.
The pace has carried into the new year. January 2026 brought in about $714.8 million (AltsWire), and at the end of that month Mountain Dell Consulting counted 55 active sponsors running 92 separate programs. A typical DST raises between $50 and $150 million, and a typical individual commitment runs $250,000 to $400,000.
Three forces sit behind the climb: baby boomers stepping back from hands-on property management, wider awareness as more advisors and CPAs raise DSTs with clients, and minimums lower than buying commercial real estate outright.
The property types sponsors favor
Sponsors gravitate toward property types that throw off steady, predictable income - the kind of asset a passive investor can hold without surprises.
Property type | Market share (approx.) | Why it's popular |
|---|---|---|
Multifamily (apartments) | ~51% | Stable demand, inflation-linked rents, broad tenant base |
Industrial/logistics | ~22% | E-commerce tailwinds, long leases, low maintenance |
Net lease retail | ~10-15% | Credit tenants, predictable income, minimal management |
Medical office | ~5-10% | Aging population, essential use, recession-resistant |
Self-storage | ~5% | Low operating costs, diverse tenant base, strong fundamentals |
Senior housing | ~5% | Demographic tailwinds, growing demand |
Multifamily makes up about half of offerings and has led the field for years, valued for steady income, deep institutional demand that helps when it is time to sell, and resilience across economic cycles. Industrial has grown the fastest, tracking the broader shift of real estate money toward logistics and distribution.
Where yields sit now
DST target yields have tracked interest rates. In the low-rate years of 2019 to 2021, offerings aimed for 4.5-5.5% cash-on-cash distributions - the annual cash paid out as a percentage of the amount invested. Investors accepted that because bonds and savings accounts paid even less. As rates rose from 2022 to 2024, new offerings lifted their targets to 5.0-6.5% to stay competitive, while DSTs that had already locked in cheap financing kept paying at their original levels. Through 2025 and into 2026 the picture has settled: new offerings target 5.0-6.0% cash-on-cash, with total returns, including any appreciation when the property is eventually sold, projected at 7-10% a year.
Those are targets, not guarantees. A DST's actual distributions depend on occupancy, rent collection, and operating expenses, and can land above or below the projected figure.
Sizing up a sponsor
The market is concentrated among established sponsors with long track records. A few things separate one from another.
Track record. How many DSTs has the sponsor completed? What returns did investors actually earn, as opposed to what was projected? And how did those deals hold up through downturns?
Asset management. The sponsor runs the property for the entire hold, typically 5 to 10 years. Its property management, leasing, and capital-improvement decisions flow straight through to returns.
Disposition. The final outcome turns on how and when the sponsor sells. A history of selling at or above projected values is one signal worth weighing.
Fees. Sponsors charge acquisition fees (1-3% of property value), annual asset-management fees (0.5-1%), and disposition fees (1-3%). Each one reduces net returns, and the structures vary from sponsor to sponsor.
What's shaping 2026
1. DST-to-DST exchanges are growing. As older DSTs reach their sale phase, investors are rolling the proceeds into new offerings, a self-sustaining cycle. This "recapture" capital has become a meaningful source of DST fundraising.
2. Smaller minimums. Some sponsors have dropped minimums to $50,000-$100,000, opening DSTs to a wider range of 1031 exchangers.
3. Industrial stays in demand. Last-mile logistics, cold storage, and light industrial keep drawing DST investors after long, credit-tenant leases.
4. ESG and sustainability. Some sponsors are building energy efficiency and other sustainability features into their properties, responding to both investor preference and regulatory pressure.
5. Advisor adoption. More RIAs, CPAs, and estate-planning attorneys are bringing DSTs to their clients, broadening the investor base beyond self-directed real estate buyers.
Questions worth asking before committing
Sponsor financial health. A DST is an illiquid, long-term commitment, and a sponsor that runs into trouble mid-hold can't be swapped out easily. Its balance sheet and corporate backing carry weight.
Replacement-property pipeline. When a DST exits in 5 to 10 years, many investors want to 1031 exchange again. Some sponsors offer "next-cycle" DSTs for a seamless rollover; others leave the investor to find their own replacement.
Leverage. Some DSTs carry meaningful debt, 50-60% of the property's value, which amplifies both returns and risk. The debt structure matters, including fixed versus variable rates and maturity dates.
Property-market conditions. The tax deferral is only one part of the picture. The underlying real estate carries its own risk regardless: location, tenant quality, market fundamentals, and comparable sales all bear on the result.
By 2026 the DST market is mature and competitive, established as a mainstream 1031 replacement, with stabilized yields, more sponsors in the field, and a widening menu of property types. But a DST is a 5-to-10-year commitment to a specific property run by a specific team, and the tax deferral is only one part of what decides the outcome. The real estate and the sponsor are the rest.
Frequently asked questions
How do I evaluate DST offerings?
Start with the private placement memorandum (PPM), the offering document that lays out the property, financials, sponsor fees, risk factors, and projected returns. Weigh the offering against comparable direct-market transactions. Consult with a financial advisor who specializes in 1031 exchanges and DSTs.
Can I visit the property before investing?
Most sponsors welcome property tours, though a visit is not required. The PPM provides detailed property information, market analysis, and financial projections.
What happens at the end of the DST hold period?
The sponsor sells the property and distributes the proceeds to investors. From there you can take the cash and pay the taxes, 1031 exchange into another DST or a direct property, or pursue any other exit.