The latest “Emerging Trends in Real Estate 2025” report, released by PwC-Urban Land Institute (ULI), suggests that the commercial real estate industry’s troubled past may soon be behind us. Presented at ULI’s fall meeting in Las Vegas, the report highlights the following key points:
Confidence with Caution
According to the report, property markets are now more stable compared to previous years and investors are addressing cyclical issues such as oversupply while adapting to changing consumer and tenant preferences.
Angela Cain, CEO of ULI Global stated in a press release announcing the report that sentiment is improving but still cautious. She also mentioned that there are early signs of recovery in capital markets as firms focus on strong long-term fundamentals and adjust their strategies based on market conditions.
Questions about Multifamily Market Oversupply
One concern raised by the report is whether there is an oversupply of apartments. The peak for apartment deliveries was reached in 2024 with concerns about oversaturation particularly prevalent among sunbelt markets. However, strong job growth along with favorable demographic trends and immigration could work out well for multifamily properties. Affordability remains a challenge though as more renters struggle financially according to the report.
Rising Insurance Costs Due To Climate Change Hazards
The impact of climate change hazards such as extreme heatwaves, flooding events, wildfires and cold snaps can be seen not only on commercial real estate but also auxiliary services like insurance costs which have increased significantly due to these risks according to this year’s Emerging Trends Report from PwC-ULI . The risk assessment process has been adjusted accordingly by many real estate firms who now consider climate risk when making decisions related investments or developments.
Data Centers Continue To Dominate Market Demand
As artificial intelligence technology continues its widespread growth along with cloud storage needs increasing rapidly so too will demand for data centers continue rising over time explained within this latest report. However, supply constraints pose a challenge as major data center markets have very little vacant space available leading to higher rents and substantial profits for developers who can secure reliable power sources.
Top Cities To Keep An Eye On
The “2025 Top Markets List” released by the report names Dallas-Fort Worth as the number one market to watch. The region’s post-pandemic recovery has been impressive according to the report which also notes its economic diversity and affordability factors that continue attracting new residents and businesses despite concerns about climate change risks.
Other cities included in the top ten list are Miami, Houston, Tampa-St. Petersburg, Nashville, Orlando Atlanta Boston Salt Lake City Phoenix respectively.
