Post-Election CRE Outlook: A Fresh Start for 2025!

In recent years, commercial real estate (CRE) transactions have been challenged by inflation and high interest rates. For example, Q1 2024 saw just $31.6 billion transacted across major property types in the U.S., a 28% drop from the previous year and the lowest since early 2013¹. However, there’s optimism for recovery on the horizon, particularly with the Federal Reserve’s recent actions and potential future rate adjustments.

Industry Predictions

On November 7, 2024, the Federal Reserve announced its first rate cut since the election, and second cut of the year, lowering the benchmark rate by 0.25 percent (25 basis points). This move, aimed at providing relief amid cooling inflation, is expected to positively impact borrowing costs in the CRE sector, potentially helping to stimulate transaction volume.

According to MarketWatch, the market may be approaching a bottom in pricing and volume, setting the stage for potential growth². If the Fed signals further rate cuts or maintains steady rates in the coming quarters, the CRE market could see more favorable transaction conditions by late 2024 and into 2025.

 

Supporting this, recent data shows an uptick in CRE lending. In Q3, the CBRE Lending Momentum Index rose 13% from Q2 and 15% year-over-year, nearing pre-pandemic levels³. Life insurance companies led non-agency loan closings with a 43% share, while alternative lenders contributed 34%—a notable trend driving the market’s gradual recovery. Additionally, CMBS issuance surged to $29 billion, tripling from last year’s volume. Multifamily asset lending by government agencies also increased by 40%, as lowered base rates allowed for higher borrowing proceeds.

Reports like Deloitte’s 2025 Commercial Real Estate Outlook suggest a promising shift as the industry prepares for long-term growth scenarios, identifying areas of opportunity in today’s pricing dynamics⁴. In the same vein, the Urban Land Institute’s Emerging Trends in Real Estate 2025 report shows a cautiously optimistic outlook, highlighting market recovery despite ongoing challenges⁵.

 

Adding to these insights, GlobeSt recently reported on the ongoing uncertainty of the interest rate trajectory, which remains a key variable for CRE investors post-election. While rate cuts could invigorate the market, the timing and extent of Federal Reserve actions remain unclear, which means continued caution for CRE investors in the short term⁶.

Upgrade Your CRE Tech® Stack

With transaction volume and investment activity projected to rise, now is the time to elevate your CRE Tech® stack. TheAnalyst PRO offers sophisticated tools for property analysis and marketing that keep you ahead of the curve. Don’t wait until the next assignment lands on your desk to upgrade; prepare today so you’re ready when opportunity knocks—or better yet, proactive in seeking out new assignments.

 

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References

1.  Altus Group, “U.S. CRE Transactions Q1 2024”

2.  MarketWatch, “Starwood, Newmark, KKR Real Estate Upgraded on Better CRE View”

3.  BizNow, “CRE Lending Surged in Q3 as Alternative Lenders Drove Market Recovery”

4.  Deloitte, “2025 Commercial Real Estate Outlook”

5.  ULI Knowledge Finder, “Emerging Trends in Real Estate 2025”

6.  GlobeSt, “Interest Rate Trajectory Still Unclear”