The commercial real estate (CRE) sector faced challenges in 2024, but there is room for hope with inflation stabilization and potential upcoming rate cuts, according to Dechert’s Real Estate Trends and the 2025 Outlook.
Uncertainty in the geopolitical realm paired with high interest rates and elevated inflation led to slowed deal activity in many parts of the CRE market. However, investors and borrowers found ways to manage the obstacles and navigate successful business amongst the challenges.
As for the office sector, vacancy rates and finances costs were both high. Industrial properties offered an opportune alternative, with data centers taking the lead in asset demand due to the momentum of artificial intelligence (AI) and other emerging technologies. While ecommerce holds a strong reign on the retail sector, brick-and-mortar retail assets have quickly evolved and performed well in many investors’ portfolios.
Loan sizes were on the moderate side