Predicting the future of commercial real estate in 2025 is a challenging task. While there are positive signs such as growing capital markets and investment confidence, there are also factors like tariffs and uncertainty from the Federal Reserve that create caution.
To provide some insight 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-cutting measures have encouraged more capital investment 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 minimal impact on overall economic growth.
4) Can we expect improved conditions for CRE debt in 2025?
There may be less panic surrounding debt-related issues by this time next year according to Cushman & Wakefield analysts who believe that gradual easing by The Fed will help bring down short-term interest rates which should lower costs associated with CRE debt financing options like CMBS loans or private credit/debt funds/insurance company lenders (although banks may remain selective).
9) Will demand continue for apartments into next year?
Multifamily absorption levels were strong throughout most of last decade but slowed significantly due largely because construction activity was so high it outpaced demand; however things seem poised improve again soon since new apartment development starts fell off sharply recently after peaking around mid-decade – meaning fundamentals could strengthen going forward especially if mortgage rates rise further pushing more people into renting.
10) Can the data center boom continue despite power accessibility challenges?
While saturated city and town centers may struggle to keep up with demand due to limited power access, emerging and tertiary markets could provide the necessary infrastructure for hyperscalers and colocation operators. Additionally, there is renewed interest in nuclear energy which could be used to power data centers in areas with limited access to traditional sources of electricity.
