U.S. Economic & CRE Outlook
by Rebecca Rockey and James Bohnaker
As we reach the midpoint of 2025, the commercial real estate landscape continues to evolve in response to shifting economic forces, dynamic investor preferences and changing occupier demands.
The Cushman & Wakefield Midpoint 2025 report provides analysis into these developments—examining what has changed, emerging trends, and what it means for the remainder of this year and beyond.
Below are the key takeaways from Midpoint 2025:
Economy
Tariffs and related policy uncertainty will result in slower growth and renewed inflationary pressures in the second half of 2025, but a recession will be avoided. We expect that policy—both in terms of trade and Fed rate cuts—will shift favorably by year end, laying the groundwork for a stronger economic rebound in 2026.
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.
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
Although aggregate vacancy rates have not yet peaked, the office market is showing early signs of recovery, with sublease availability improving and flight-to-quality trends helping stabilize a growing portion of the market.
Retail
Retail continues to show resilience, with steady consumer spending underpinning performance.
Tariffs will have a net negative impact on tenant demand, but limited new construction and consumer resilience will mitigate disruptions to the fundamentals beyond the next several quarters.
Alternatives
Demand is growing in alternative sectors like senior housing, data centers (especially in emerging markets) and built-to-rent, driven by structural demographic and economic shifts.
“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.cushman-wakefield.com/en/united-states/insights/midpoint-economic-and-cre-outlook
