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s a global leader in real estate investment management, PGIM Real Estate has unparalleled knowledge of local markets worldwide. Leveraging its extensive experience in commercial investing and financing, the firm is well-positioned to provide expert insights on market trends and future prospects. Bryan McDonnell, chair of global debt and agriculture for PGIM Real Estate, shares his perspective on the commercial real estate market's performance in 2024 and its outlook for 2025.

    The biggest factor affecting commercial real estate in 2024 was not a lack of capital but rather borrowers' reluctance to accept current interest rates. This led to a slower pace of transactions early in the year, which picked up as the Federal Reserve cut rates in September. As banks and CMBS lenders cleared their deals and corporate bond spreads tightened, the real estate market became more attractive.

    Looking ahead to 2025, PGIM Real Estate expects a very active market with borrowers ready to take advantage of opportunities. The firm sees significant growth potential in transitional lending, particularly short-term bridge loans for uncompleted projects. Nonbank lenders are also expected to continue gaining market share as private credit becomes increasingly prominent in the real estate ecosystem.

    To thrive in 2025, commercial real estate professionals must be focused and agile, operating quickly to capitalize on opportunities. Lenders need to be decisive and prepared to service follow-on deals. The private credit market is likely to continue growing its share of the market, and lenders should be disciplined in understanding regional differences and adapting their strategies accordingly.

    The views expressed by PGIM Real Estate are subject to change without notice and do not constitute investment advice or an offer to sell or buy any securities mentioned herein.