Top 4 Commercial Real Estate Picks of 2025

2025 Commercial Real Estate Trends

CBRE, The World Economic Forum and other trusted analyst give indication that commercial real estate owners and investors are hopeful 2025 will emerge as a year of recovery. Deloitte’s 2025 Commercial Real Estate Outlook Survey collected input from more than 880 global c-suites and major investor organizations across 13 countries. After two consecutive years where the majority of survey respondents expected revenue declines, 88% of global respondents now report they expect their company’s revenues to increase going forward, a substantial shift from the 60% who expected further declines last year. This encouraging 2025 outlook prompted a deeper dive into the 2025 commercial industry.

Here are our top 4 commercial trends for 2025:

1.) Workforce Development/ Affordable Housing (Similarly multi-families held the #1 spot on our 2024 list)

The demand for rental housing continues to outpace the supply further creating the need for investors to provide rentals. This includes the 60% of the rental population that pay over 30% of their income to housing (as cited by J.P. Morgan Chase) as well as the workforce from large employers with high concentration of local employees, such as medical campuses and universities. Further, the higher interest rates and competitive housing market of late have added demand to the already stressed rental market.

Investors are being provided with increased innovative capital to back commercial housing projects. An increasing number of investors, such as banking institutions, private corporations, foundations, civic coalitions, and individuals, are eager to collaborate on these ventures. Similarly, many local governments offer tax credits, grants, or low-interest loans to private affordable housing developers. 

2.) Industrial Real Estate

The industrial sector focusing on logistics and warehousing has long been attractive because it offers a relatively high NOI when occupied. 2024 saw rapid growth in newer industries that can be retrofitted to these large spaces. Tenants with niche demands such as data centers driven by the growth of AI, cold storage facilities, EV battery plants and quantum computing campuses are now competing for these spaces.

3.) Lodging Assets

Hotel Sector: Optimism is growing among U.S. hotel investors, as 94% of those recently surveyed by CBRE plan to maintain or boost their hotel investments in 2025, up from 85% the previous year. The primary reasons for increased allocations are a more positive outlook on total returns and opportunities in distressed investments. Traveling for both business and leisure are returning to normal CBD/Urban areas are expected to experience the most significant growth.

Short Term Private Sector: Contrary to our other top commercial sectors, this pick gets a mention for potential adaptability. The short-term rental market is actually expected to slow in growth in 2025 (after years of steady growth), but there are opportunities to be had for the savvy investor. AIRDNA's 2024 analyze of this market shows larger vacation rentals are driving market growth in 2025, with spacious, multi-bedroom properties commanding higher occupancy rates and Average Daily Rates (ADR). This opens up doors for those with otherwise long-term single-family rentals to enter this market. Other opportunities in this sector include investing in smaller cities and rural areas, marketing around local events, and incorporating luxury and unique experiences. Additionally, funding opportunities and government regulations for these types of investments are coming out of the infancy stages causing some of the barriers to entry and red tape to fall away.

4.) Office Space Shifts from "Me" to "We"

CBRE anticipates a reduced availability of prime office space, with vacancy rates returning to pre-Covid levels of 8.2% by 2027. It's time to evaluate your office spaces for the return-to-office boom. Trends indicate a decrease in individual workspaces and an increase in collaborative areas within offices. Traditional corner offices are being converted to shared work hubs and strategically placed conversation areas are at the height of the comeback trend. These designs encourage spontaneous team gatherings and informal client meetings which currently dominate many work cultures. The need to control noise is an important concern to consider as these spaces are redesigned. Office spaces need to function for employees and for video conferencing. That may mean incorporating sound-proofing finishes and installation of more phone booths.

The Long-Term Growth Perspective

Trends are inherently cyclical, yet they are crucial to consider when optimizing short-term investments. Examining the long-term effects of real estate investing reveals that properties tend to appreciate, even in more challenging sectors. Investors holding onto assets for longer durations have likely seen enough valuation growth to protect them from recent declines. For instance, on average, in the 20 largest metropolitan areas in the United States, an office property purchased five years ago (in the first quarter of 2019) is currently valued 15% higher than at the time of purchase, according to Deloitte.

The Bottom Line

The forecast for commercial real estate in 2025 is optimistic, with strong performance anticipated in the aforementioned areas. More tenant opportunities are being created, and new investment strategies are being implemented. Each commercial property is distinct, and unlike public equities, investors cannot purchase the market as a whole. Therefore, selecting the appropriate asset is vital for investors in commercial real estate.