The 2025 outlook from CBRE, a global leader in real estate services, highlights a promising recovery for U.S. commercial real estate (CRE), despite the ongoing challenges posed by elevated interest rates. Released in late 2025, the report suggests that the CRE sector is beginning to regain momentum, marking a shift after months of pressure. While interest rates have weighed on the sector throughout much of the year, CBRE’s analysis points to a “soft landing” scenario for the industry, as several economic factors come into play to support this recovery.
One of the primary drivers behind this resurgence is robust consumer spending, which continues to fuel demand across key commercial sectors. Retail spaces, which have faced significant challenges in recent years due to the rise of e-commerce, are showing signs of stability, as businesses adapt to the new landscape of consumer behavior. Similarly, demand for data-center space is on the rise, driven by the rapid expansion of digital infrastructure and the increasing reliance on cloud-based services. Both of these sectors are seeing strong investor interest as the broader economy strengthens, contributing to the overall momentum in the commercial real estate market.
Other areas of the CRE market, such as office and multifamily properties, are also showing early signs of revival. On the office-space front, vacancies are expected to tighten as we approach the end of the year. Many businesses that delayed leasing decisions earlier in the year are now looking to secure office space in anticipation of potential cost inflation or increasing competition for prime locations. This pent-up demand is expected to gradually reduce vacancy rates, especially in desirable urban centers where businesses are seeking high-quality office environments.
In the multifamily sector, occupancy rates are forecast to continue rising, and rent growth is expected to remain strong, even with new supply entering the market. This trend is largely attributed to persistent housing affordability challenges, which have made renting a more viable option for many individuals and families. The high cost of homeownership, combined with limited affordable housing options, is driving more people to rent rather than buy, thus sustaining demand for multifamily properties. The influx of new rental units, while contributing to supply, is unlikely to significantly slow rent growth in the short term, as the demand for affordable housing remains robust.
For investors and property owners, the 2025 forecast signals a return of opportunities, albeit in a more cautious environment. While capitalization rates (cap rates) remain constrained due to high interest rates, there are still opportunities to capture upward value by focusing on high-quality properties in high-demand locations. As demand stabilizes, carefully deployed capital into the right assets could yield significant returns. CBRE’s report frames 2025 as a transitional year—offering cautious optimism rather than expecting a boom. While the market may not see explosive growth, the return of demand and tightening vacancies across key sectors suggests that the CRE market is on the path to a steady recovery.
In conclusion, while the commercial real estate sector continues to navigate elevated interest rates, the forecast for 2025 points to a gradual recovery driven by solid consumer spending, economic fundamentals, and renewed demand across various sectors. Retail, data centers, office spaces, and multifamily properties are all showing positive signs of revival. For investors, this presents opportunities, but the path forward will require careful, strategic decision-making in order to capitalize on the shifting market dynamics.
