2025 at a Glance: What’s Next for the Economy and CRE?
- Jul 7, 2025
- 2 min read
As we reach the halfway point of 2025, the commercial real estate (CRE) landscape is walking a fine line between uncertainty and resilience. And despite macroeconomic headwinds, the market is showing measured stability—and even signs of strategic opportunity*.
Economic Overview: Moderating, Not Stalling
The U.S. economy is navigating a unique phase. Inflationary pressures, driven partly by global tariffs, and ongoing policy debates have injected volatility into the outlook. But critically, growth is moderating rather than contracting. A recession remains off the table, and many economists anticipate a potential Fed policy pivot by year-end—setting the stage for a possible rebound in 2026.
Capital Markets: Confidence Rebuilding
There’s a quiet thaw happening in the capital markets. Debt availability is improving, investor sentiment is cautiously optimistic, and Net Operating Income (NOI) is gaining ground. With new supply tapering across many sectors, assets are beginning to regain pricing power—especially those aligned with longer-term demand drivers.
Sector Snapshots
Industrial: After a meteoric rise, industrial is cooling slightly, but remains fundamentally strong. Structural forces like e-commerce growth and reshoring are creating durable demand.
Multifamily: Demographics and persistent supply constraints are supporting healthy occupancy and rent growth. Multifamily remains one of the most resilient segments in the CRE landscape.
Office: Green shoots are emerging. While the sector remains under pressure, demand is stabilizing—particularly for Class A buildings that deliver strong amenities and flexible work environments.
Retail: Consumer spending has held firm despite inflationary pressures, and limited new supply is helping support fundamentals. The sector is proving more durable than many expected.
Alternatives: Investor interest is shifting toward segments like senior housing, data centers, and build-to-rent communities—reflecting demographic and technological tailwinds that are reshaping the demand curve.
What It Means for Strategy
This moment reflects a soft-landing scenario: economic growth is slower, but the foundational health of CRE remains intact. For owners, occupiers, and investors, the strategic lens should include:
Leveraging NOI momentum in recovering sectors
Targeting quality assets with long-term demand drivers (e.g., industrial, multifamily, data infrastructure)
Closely watching Fed signals and tariff trends to inform timing and risk calibration
Navigating What’s Next
Whether you're deploying capital, managing leasing strategy, or repositioning assets, the second half of 2025 is shaping up to be a period of recalibrated opportunity—not retreat. In a landscape defined by nuance, those who lean into data, fundamentals, and flexibility will be best positioned to lead the next cycle.
*Source: Cushman & Wakefield, Midpoint 2025 | U.S. Economic & CRE Outlook
