Amid current macroeconomic headwinds, commercial real estate has entered a new valuation upcycle distinct from previous recoveries, wrote Mike Acton, head of research and strategy – North America at AEW. In a new report, he stated property income growth is expected to be slower and less broad-based, as the recent decline in valuations occurred without a recession to reset fundamentals. Senior housing appears poised for a stronger rebound, while most sectors face a late-cycle slowdown.
Limited new construction and reduced development incentives could extend this property cycle’s duration, potentially supporting gradual rent growth over time. However, uncertainty around tariffs, labor availability and material costs continues to constrain new supply. As a result, while property values may not surge quickly, muted supply could create a foundation for a prolonged, steadier recovery across U.S. commercial real estate markets.
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