On September 12th, Liz Berthelette from Newmark provided over 300 members with an overview of what the commercial real estate sector can expect next year with her "The Road to 2025" presentation. She energetically outlined the top 10 trends that our members need to be thinking about as the new year approaches and how they impact our business:
1. Interest Rates - we know a rate reduction is imminent but Liz explained that this rate cut has already been worked into the market assumptions.
2. Elections - despite all the discussion around this, history shows that elections have little effect, with the average growth in Real Private Nonresidential Fixed Investments and home prices essentially the same in election years as in non-election years.
3. Distressed Real Estate - loan extensions provide a "pretend and extend" phenomenon that delays distress in the real estate market.
4. Made in America - domestic manufacturing has grown monumentally across the country, heavily centralized in the Midwest and Southeast.
By sector:
5. Office - the bottom of the office market is still being sought. Landlords are buying occupancy with 1.9b sf expiring between 2024 - 2027.
6. Industrial – e-commerce growth - our online shopping and that of the next generation continue to drive demand and industrial demand!
7. Retail - continues to have its day with healthy fundamentals and record-low availability.
8. Multifamily - new supply breaks an all-time quarterly high, with deliveries peaking in 4Q 2024. However, this is expected to level off over time.
9. Life Science - there has been a historic shift with the highest vacancy on record in this sector, but there are some signals of growing VC funding.
10. Alternative Assets - health care, self-storage, student housing, and data centers have seen a shift of interest above the historical norms.
Liz had time to take over 10 questions from the audience, which provided an opportunity to dive deeper into some specific questions around construction costs, office conversions to residential, multifamily supply constraints in Boston versus the rest of the country, and a deeper discussion about niche investments.
We hope all who joined us found it informative and thought-provoking. These trends can significantly impact the real estate market, so we appreciate all those who were able to attend and contribute to the discussion. Thank you to Liz and her team at Newmark for helping educate us on the trends to prepare for the year ahead!
