Commercial Real Estate News
U.S. Commercial Property Market Primed for Growth in 2025
Investor Confidence Jumps in 2025, 70 Percent Plan to Acquire More Assets
According to CBRE's 2025 U.S. Investor Intentions Survey, property investors are preparing to allocate more capital into the U.S. commercial real estate market. This optimism is driven by attractive pricing opportunities, even amidst challenges from fluctuating interest rates.
The survey, which spans all asset types, reveals a strong belief in the continued recovery of real estate fundamentals. Notably, 70% of respondents plan to increase their acquisitions in 2025 compared to the previous year. Additionally, 75% expect their investment activity to rebound by mid-year, with over half already experiencing signs of recovery.
"Investors are positioning themselves to take advantage of favorable pricing and strong market fundamentals," said Kevin Aussef, Americas President of Investment Properties for CBRE. "Interestingly, investors are more confident about their own prospects than the broader market outlook, viewing the current pricing reset as an opportunity to gain a first-mover advantage as recovery progresses."
Top U.S. Markets for Investment
- Gateway and Sun Belt Markets Dominate: Investors remain focused on traditional gateway markets and high-growth Sun Belt regions.
- Dallas Leads for the Fourth Year: Dallas retains its top spot as the most preferred market, with Miami ranking second.
- Boston Gains Appeal: Boston joins Washington, D.C., and San Francisco in the top 10 preferred markets.
- Sun Belt Hotspots: Atlanta, Raleigh-Durham, Austin, and Phoenix continue to attract strong investor interest due to their growth potential.
Preferred Property Types
- Multifamily Leads: Multifamily assets remain the most sought-after, with 75% of investors targeting this segment.
- Industrial & Logistics in Demand: These assets rank second, with 37% investor interest.
- Retail Gains Momentum: Investor interest in retail is rising, outpacing last year's levels.
- Office Assets Stabilize: Office properties see renewed interest due to greater certainty around utilization rates and appealing pricing.
- Traditional Assets Prevail: Interest in alternative investments has declined as investors refocus on traditional real estate assets following price adjustments.
Investment Strategies
- Value-Add and Core-Plus Strategies Lead: Two-thirds of investors favor these strategies, seeking opportunities for higher returns with moderate risk.
- Declining Interest in Opportunistic and Distressed Assets: Strategies like core, distressed, and debt-focused investments have seen a drop compared to last year.
Key Challenges for Investors
- Interest Rate Volatility: Elevated and unpredictable long-term interest rates remain a top concern.
- Higher Operating Costs: Rising costs are impacting investor decision-making.
- Easing Recession Fears: Concerns about a recession and buyer-seller expectation gaps have diminished, reflecting improved sentiment around economic fundamentals.
Debt and Financing Trends
- Stable Debt Strategies: About 70% of investors plan to maintain their current debt-to-equity ratios.
- Confidence Amid Negative Leverage: More than half (56%) are willing to endure a year of negative leverage, highlighting confidence in recovery.
- Mortgage and Mezzanine Financing Stay Strong: Interest in mortgage financing (33%) and mezzanine debt (25%) remains robust.
- Interest Rate Challenges Persist: Uncertainty around interest rates and higher borrowing costs continue to pose challenges for debt-seeking investors.
