Predicting the future of commercial real estate in 2025 is a challenging task. While there are positive signs such as growth in capital markets and investment confidence, caution remains due to factors like tariffs and uncertainty from the Federal Reserve.
To provide some clarity for the upcoming year, Cushman & Wakefield has released their “10 Critical Questions for 2025” report. Here are some key questions and insights to consider:
1) Will capital markets thrive in 2025?
The answer is mostly yes. According to analysts at Cushman & Wakefield, rate cuts have encouraged more investment activity while increased confidence will likely lead to more CRE investments. Additionally, alternative investments have become increasingly popular with open-end core funds now making up over 7% of total transaction volume in the U.S.
2) What impact will a second term for President Trump have on the economy and CRE?
It’s difficult to predict how an election might affect property performance but one concern has been tariffs. However, despite similar threats during his first term, President Trump only implemented modest increases which had little impact on overall economic outlook.
4) Can we expect improved conditions for CRE debt by 2025?
There may be less panic surrounding debt-related matters by then according to Cushman & Wakefield analysts who suggest that gradual easing by The Fed could help bring down short-term yields which would put downward pressure on CRE debt costs even as other lenders increase their appetite.
9) Will demand for apartments continue its momentum?
Accordingly this report indicates that multifamily absorption rates should remain strong through at least part of next year before slowing down slightly towards what was seen back around early-2010s levels when it comes time again (likely sometime after mid-2016). Furthermore construction activity within this sector appears poised strengthen going into next year given recent trends suggesting continued strength across all major metro areas nationwide including those located outside traditional urban centers where supply constraints exist today.
10) Can the data center boom sustain momentum despite power accessibility challenges?
While major cities may struggle to meet demand for data centers due to limited power access, smaller markets and emerging areas can provide the necessary infrastructure. Additionally, advancements in nuclear energy could potentially be used to power data centers in areas with limited access.
