Commercial real estate (CRE) fundamentals are stabilizing but vary widely by sector and asset quality, with industrial and housing supported by long-term demand drivers despite recent supply increases, according to Ryan Severino, BGO chief economist.
Retail has shown resilience due to limited new supply and steady consumer spending, while data centers remain a high-growth sector constrained primarily by infrastructure, especially power availability. Office markets have likely bottomed but face a slow, uneven recovery, with strong demand for high-quality assets and ongoing challenges for outdated buildings.
Capital markets are gradually improving, though refinancing risk and higher borrowing costs remain key concerns, creating opportunities in CRE credit and recapitalizations. Overall, the next phase of the cycle should reward selectivity, strong asset quality and disciplined capital structures, rather than broad market exposure or reliance on falling interest rates.
