
Donald M. Pepe
Partner
732-568-8370 dpepe@sh-law.comFirm Insights
Author: Donald M. Pepe
Date: January 14, 2025
Partner
732-568-8370 dpepe@sh-law.comWhile the commercial real estate sector will face uncertainties in the coming year, there are reasons for optimism. 2025 is expected to bring positive changes, including reduced inflation and positive economic growth. No matter what the future brings, real estate owners, developers, and investors must stay informed on legal developments. Partnering with an experienced commercial property solicitor can help navigate both challenges and opportunities effectively.
The overall economic environment has a significant impact on the commercial real estate market. At this point, it appears that the United States will avoid a recession. In other good news, the pace of inflation has decreased substantially in recent months. Consumer spending is also predicted to expand, albeit moderately, in the coming year.
The prospect of economic growth is fueling optimism in the commercial real estate industry. Deloitte’s 2025 Commercial Real Estate Outlook Survey, which polled more than 880 global chief executives and their direct reports at major real estate owner and investor organizations across 13 countries, found that 88% of respondents expect their company’s revenues to increase going forward. This is a significant improvement over 2024’s survey in which 60% of executives reported that they expected further revenue declines.
While many in the real estate industry have renewed optimism, there are still several reasons to exercise caution. Interest rates remain elevated, particularly compared to the record low rates of the prior decade. Additional rate cuts are not guaranteed. This is especially important due to the influx of maturities for commercial mortgages. These mortgages were originally underwritten at lower interest rates. Many will require refinancing over the next year.
Uncertainty also surrounds the new Trump Administration, which is expected to seek broad policy charges. Some of the biggest changes are expected in terms of taxes, immigration, trade, and global economics. Ongoing geopolitical conflicts in Ukraine and the Middle East may also temper economic growth.
Overall, moderate recovery in real estate investment activity is expected in 2025. Some sectors will see more robust growth than others. Below is a brief overview:
While commercial real estate investment can generative lucrative returns, the industry is also prone to volatility. To reduce your risks and maximize your returns, you need skilled commercial property solicitors on your team. With broad experience that spans every sector of the industry, our Commercial Real Estate Group is well-positioned to successfully handle the wide range of issues that arise in complex real estate investment matters.
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