2025 Mid-Year Update: Inside Real Estate Outlook - Back To Basics

2025-07-01 09:51:00 ET

Rich Hill, Global Head of Real Estate Research & Strategy|Art Jones, Senior Director, Global Real Estate Research and Strategy|Madhan Rengarajan, CFA, Senior Director, Capital Markets Research| Daniel Tomaselli, Manager, Global Research| Jonathan Frank, Manager, Global Research & Strategy|JD Stehwien, Senior Analyst, Global Research|Thomas McGing, Analyst, Global Research

Fundamentals drive returns in an uncertain environment

We entered 2025 on a wave of optimism, but policy and geopolitical shifts have once again altered market dynamics, pushing investors to brace for a risk-off environment. That said, we believe commercial real estate ((CRE)) remains in a stronger position today than at any point in the past three years. Pricing in the private equity market has likely reached its trough, aggregate occupancy remains healthy, and operating income supports an investment performance rebound. Debt is readily available, and U.S. publicly listed REITs were resilient in the face of a challenging backdrop (+2.1% YTD) while European REITs performed admirably (25.4% USD / +12.8% EUR). The debt and public equity markets are historically leading indicators for private equity CRE. ...

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