It is our view that we will look back on 2025 as a pivotal moment of recovery in many areas of the commercial real estate sector. Below, we outline six of the top investment themes we are tracking in 2025:

1. We are in a “buy” cycle

Analysis by Hines Research has found that as of Q3 2024, just over 66% of global markets were in some phase of the “buy” cycle, the highest level since 2016 and akin to the early years of the post-global financial crisis recovery. This is a similar level to the mid-1990s as the US emerged from the savings and loans crisis. While both periods had challenges, they were excellent vintages to put money to work.

2. Renting is gaining traction

Additional analysis by our research team (using data from Oxford Economics and Eurostat, as well as Census data from the US, Canada, Korea, Australia, Hong Kong, and Japan (as of Q2 2024) estimates that we’re short about 6.5 million housing units in aggregate for a group of 14 major developed economies. There is also a significant lack of housing affordability globally. In this environment, households have shown clear momentum for renting over buying. This underscores our belief that the global living sector will likely be a strong play in 2025.

3. Retail fundamentals are healthy

The retail sector has “rightsized” and is experiencing a more balanced market where new supply is limited, and the process of sorting winners and losers has mostly played out. Across the four major property types in NCREIF, the US retail sector has ranked first in total returns in each of the past eight quarters through Q3 2024. Retail also has the second-highest percentage of markets in some phase of the buy cycle globally.

4. Embedded industrial NOI growth

Despite moderating fundamentals, the industrial sector remains attractive due to embedded net operating income (NOI) growth. We expect renewed rent growth as supply and demand come into closer alignment in 2025.

5. Office credit opportunities are unfolding

The office sector has regional variances, but dislocation in the US office capital markets specifically has created opportunities across the capital stack. As existing loans mature, the lack of traditional financing needed to meet refinancing requirements has created a situation where debt may be more attractive than equity.

6. There are bright spots in alternative sectors

Opportunities within niche sectors vary significantly across regions. Given a lack of data, success often depends on understanding local market dynamics. We believe that areas including student housing, self-storage, and data centers are building strength due to unique demand drivers.

Align yourself with a commercial agent that will help you face unpredictable times with confidence. Knowing that you have a full-service agent that understands industry shifts, and how to make them work to your advantage is key to your success. Give us a call today at Full Sail Commercial Real Estate, Mankato, MN, at 507-317-2353.

This article has been created based on internal data, information available publicly and other reliable sources. The article may also include information which are the personal views/opinions of the author(s.) The information included in this article is for general, educational, and awareness purposes only and is not a full disclosure of every material fact. Reference: World Economic Forum