Midpoint 2025 | U.S. Economic & CRE Outlook

Economy 

Tariffs and related policy uncertainty will result in slower growth and renewed inflationary pressures in the second half of 2025, but a recession will be avoided. We expect that policy—both in terms of trade and Fed rate cuts—will shift favorably by year end, laying the groundwork for a stronger economic rebound in 2026.

Capital Markets 

Despite base-rate volatility, improved buying conditions and stable debt costs are boosting investor confidence, driving more transactions and support for future valuations. 

Industrial 

Industrial demand will remain subdued in 2025 as supply chains react to shifting trade policies, but long-term trends like e-commerce growth and increased manufacturing position the sector for resilience and growth. 

Multifamily 

Demand remains strong, with net absorption expected to match pre-pandemic averages over the next three years, showing the sector's stability amid weaker economic cycles. 

Office 

Although aggregate vacancy rates have not yet peaked, the office market is showing early signs of recovery, with sublease availability improving and flight-to-quality trends helping  stabilize a growing portion of the market. 

Retail  

Tariffs will have a net negative impact on tenant demand, but limited new construction and consumer resilience will mitigate disruptions to the fundamentals beyond the next several quarters. 

Alternatives  

Demand is growing in alternative sectors like senior housing, data centers (especially in emerging markets) and built-to-rent, driven by structural demographic and economic shifts.