C
ommercial real estate may regain momentum in 2025 after years of speculation about a market downturn. According to Marcus & Millichap CEO Hessam Nadji, "2025 is a turning point for commercial real estate investment." He attributes this optimism to job growth, steady consumption, and low unemployment across all major property types. The CRE supply/demand balance has improved significantly due to limited construction in most segments.

    While the office sub-sector has been particularly weak since the pandemic, with values declining 41% from 2020, recent data suggests a stabilization of performance. Rents have plateaued, and vacancy rates are decreasing, according to Bank of America's Alan Todd. Lower interest rates, expected by the Federal Reserve next year, will further boost the sector.

    Experts point to two areas of strength in commercial real estate for 2025: data centers and retail. Data centers are benefiting from the growing focus on generative AI across various industries, with PWC's Andrew Alperstein expecting "really strong continued rent growth." Retail is also poised for success, with record-low vacancy rates and moderate revenue growth expected by Nadji.