Research Reports

The multifamily, industrial, retail, and office sectors have all gone through phases of favorability with investors and experienced their own challenges, whether vulnerability to oversupply driven by consensus amongst investors (i.e., multifamily and industrial) or technological disruptions that fundamentally change the way we utilize the spaces (i.e., retail and office). However, within each of these major asset classes there are niche subsectors that behave differently because they 1) lack institutionalization, creating more attractive pricing and a lack of over-supply, and 2 provide essential services that are core to society, driving strong real estate fundamentals (in the form of occupancy and rent growth). We believe these niche subsectors will present compelling investment opportunities in 2025.

Already massive, accelerating data center demand is driving unprecedented levels of demand for power capacity—potentially growing at three times the pace of the last 20 years.Power supply is constrained by a number of factors, including permitting timelines and equipment supply chains. There is a range of ways savvy developers are getting the power they need: on-site generation, co-development of power infrastructure with utilities, proactive land development and power procurement, and (to a lesser extent) moving to new markets.

The painful reset of private real estate seems to be in the rearview mirror, and we expect 2025 to be a good vintage for real estate investment. Values have stabilized, total returns are positive in most markets and the dearth of new construction activity bodes well for medium-term fundamentals. The U.S. election outcome will create headwinds and tailwinds for various sectors and geographies, but the megatrends that underpin our investments will play out over decades. Our 2025 outlook includes snippets on our top investment ideas and insights on the global need for housing, the strength of alternative property types, the rebirth of retail and the shifting nature of environmental, social and governance (ESG) considerations.

The U.S. consumer remains strong on the back of a healthy labor market and inflation is moving back to target, albeit slowly. Home prices continue to rise nationally despite 30-year mortgage rates being over 400 bps above levels seen four years ago. About 75% of outstanding mortgages are locked in at a rate below 5%. Demographic trends are favorable for housing because of expected strong household formation and growth in prime home buying age groups. Elevated construction costs and interest rates have caused a slowdown in the building of single-family homes and apartments. Despite a slowdown in new construction, elevated deliveries of SFR and multifamily product over the last two years is causing a near-term headwind to fundamentals for those segments. A strong consumer, positive demographic trends and supply constraints underpin the case for housing, but higher for longer interest rates pose a risk.

Looking back at 2024, many investors eagerly awaited the prospects of future rate cuts but remained cautious due to uncertainty around potential labor market weakness, softening rent growth for real estate assets located in growth markets, real estate investment managers taking on negative leverage and uncertainty around global politics and elections. In hindsight, little transaction or capital activity occurred as many investors awaited a global easing of interest rates. In 2025, ORG is anticipating an investment environment with capital markets that will become more open due to the real estate industry adjusting to interest rates that are higher than the pre-pandemic era. In this article, ORG will review the major market developments of 2024 and what investors should watch for in 2025.

In today’s evolving landscape of technological transformation, staying ahead of the curve has never been more critical, especially with the rapid advancements in artificial intelligence. The recent emergence of the Chinese company Deep Seek’s open-source AI model, R1, is disrupting industries worldwide, fundamentally reshaping how we approach data, innovation, and decision-making. Technology advancements once projected to take a decade are now materializing in half the time, with more efficient and arguably superior models becoming available to all industries, including CRE investing. Simultaneously, the real estate market faces significant headwinds, including heightened interest rate volatility and historically low transaction volumes throughout 2023 and 2024. These challenges highlight the growing need to harness new data-driven insights to drive the best use of capital. In this brief, learn how Green Cities is leveraging AI, machine learning, and advanced data models to unlock powerful market insights and drive alpha by combining cutting-edge technologies with systematic market analysis. While we believe this approach is industry leading, we also understand that this is just the beginning in how our industry can advance the underwriting and management of investments in real estate.

A report on trends shaping commercial real estate markets. This comprehensive update from our real estate investment team delves into key themes including: Commercial real estate valuations are at their bottom; what can we expect in 2025? Outlook for private and public real estate equity and debt. Key themes and structural trends impacting real estate. Property sectors we believe provide the greatest opportunities over the next 12 months, and those that warrant caution.

CLOUD COMPUTING AND GENERATIVE AI ARE SUPERCHARGING DEMAND The boom in cloud services and the surge of Generative AI have set data centers on an upward trajectory. In 2024, U.S. data center absorption is on pace for over 7,300 MW, a 29% increase in total U.S. inventory. SUPPLY STRUGGLES AGAINST POWER BOTTLENECKS The race to meet this demand is not simple. Power infrastructure is lagging, land that fits data center requirements is scarce, and the supply chain is strained, illustrated by record-low national vacancy rates of just 1.7% in Q3 2024. GOVERNMENT AND PRIVATE SECTOR TACKLING ENERGY GAPS While Washington and local utilities roll out grid modernization plans, the tech giants are getting creative, with moves towards nuclear energy investments signaling a bold shift in tackling energy constraints. ADAPTABILITY AND ALIGNMENT Strategic collaboration with hyperscalers through tailored designs and powered shells has emerged as a key approach to addressing the growing supply demand imbalance in the cloud and AI landscape. This adaptability strengthens tenant relationships and positions facilities to be future-ready for evolving technologies.

In the final quarter of 2024, the REIT market met continued uncertainty stemming from geopolitical risks and inflation expectations with cap rate expansion. Most notably, the industrial sector experienced the most dramatic change. Due largely to a mismatch in supply and demand, deteriorating fundamentals in the sector have led to investor wariness. The vacancy rate increased while rent growth flatlined, with more supply expected to hit the market in 2025, potentially further exacerbating uncertainty in the sector. Our Q4 2024 REIT Cap Rate Perspective Full Report offers more detailed insight into these sectors, as well as our perspective across the REIT market.

We have a year of change ahead, with many questions to consider, but have managed to narrow them down to our Top 10 for 2025. The key topics include analyzing Donald Trump’s plans as he returns to the White House, with tariffs expected, and the potential impact on the real estate market. We also discuss where the real estate market is in the cycle and its rebound potential. Next, we revisit the topic of Artificial Intelligence (AI), analyzing the pressure it’s putting on scarce electricity supplies and the resulting shift to nuclear power by BigTech. In addition, we discuss the slowdown in sentiment towards ESG, residential rent controls and how professional sports and real estate can interact for success or failure.