Cushman & Wakefield (NYSE:CWK) today released its Midpoint 2025 Outlook, providing a comprehensive snapshot of the U.S. economy and commercial real estate markets as they navigate a complex post-inflationary landscape. Although there are challenges presented by higher tariffs and policy uncertainty, property markets are expected to be resilient before gaining more momentum in 2026 as a stronger growth backdrop emerges.
"The commercial real estate (CRE) sector entered 2025 on relatively solid ground, with certain segments even gaining momentum," said Rebecca Rockey, Deputy Chief Economist and Global Head of Forecasting at Cushman & Wakefield. "Even now, amidst the uncertainty, the capital markets are continuing to thaw, capital is plowing back into the property sector, and leasing fundamentals are largely holding up well. With property, the devil is always in the details, and of course, risks have shifted to the downside given the macro uncertainty, but we are still seeing healthy trends in the data."
Sector Highlights
Capital Markets
- Investment activity remains below historical averages, but momentum is building as long-term interest rates remain range-bound and the pricing gap between buyers and sellers continues to narrow.
- The outlook for net operating income (NOI) is slated to improve in coming years as fundamentals inflect and the construction pipeline thins across most property subtypes.
- Although the volume of distressed sales remains low, the market is preparing for potential opportunities as refinancing challenges mount for some over-leveraged assets.
Industrial
- The industrial sector continues to normalize from record-setting years and faces near-term headwinds amidst trade tensions. Demand is expected to remain cyclically challenged in 2025; however, the once-overheated development pipeline is now cooling at a healthy pace. After the current wave of supply delivers, there is not much behind it, setting the stage for more of snap-back recovery in 2026-27.
- Longer-term, the industrial sector will continue to benefit from structural demand drivers, including e-commerce expansion, supply chain restructuring, and onshoring/nearshoring strategies.
- Select markets that experienced aggressive development cycles are seeing short-term oversupply, in some cases, resulting in lower rents. These conditions will not last long but are opportunities for tenants seeking relief after several years of double-digit rent growth.
Multifamily
- Multifamily fundamentals remain solid, with healthy occupancy and sustained (though moderating) rent growth, even as construction pipelines remain near cyclical peaks.
- Affordability pressures in the housing market and demographic trends continue to support demand, especially in undersupplied urban cores and markets with high in-migration.
- Institutional investors are selectively re-entering the space, drawn by improving yield spreads and long-term structural housing shortages.
Office
- Net absorption is improving. While still negative, nearly half of the markets Cushman & Wakefield tracks reported positive absorption thus far in 2025. Moreover, demand is improving (i.e. become less negative) across almost all markets, bringing aggregate absorption closer to a positive turning point.
- The flight to quality persists, with newer, highly amenitized and energy-efficient buildings commanding a disproportionate share of leasing activity.
- Legacy office stock faces mounting obsolescence risks, driving elevated vacancy rates and prompting owners to consider repositioning or conversion strategies.
- Occupier confidence is gradually improving. Though the overall demand recovery remains slow and concentrated in top tier product, there are an increasing number of green shoots emerging in the leasing dynamics.
Retail
- Retail continues to show resilience, with steady consumer spending underpinning performance. A lack of development will buttress markets as demand navigates the shifting tariff environment.
- Bifurcation remains a key theme: necessity-based and experiential retail outperform, while mid-tier and department store formats lag.
- Foot traffic in urban and lifestyle centers is returning to pre-pandemic levels in many markets, driven by tourism and changing consumer preferences.
- Vacancy rates have stabilized or declined in prime locations, and occupiers are increasingly focused on optimizing store portfolios for both physical and digital engagement.
"Thus far, the property sector has remained extremely resilient against an avalanche of uncertainty," said Kevin Thorpe, Global Chief Economist. "Although 2025 will undoubtedly be a choppier year, CRE was positioned for continued recovery and our assessment midway through the year is that those fundamental forces are still in play."
For more information or to download the full report, visit https://www.cushmanwakefield.com/en/united-states/insights/midpoint-economic-and-cre-outlook
About Cushman & Wakefield
Cushman & Wakefield (NYSE:CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In 2024, the firm reported revenue of $9.4 billion across its core service lines of Services, Leasing, Capital markets, and Valuation and other. Built around the belief that Better never settles, the firm receives numerous industry and business accolades for its award-winning culture. For additional information, visit www.cushmanwakefield.com.
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