The commercial real estate market and commercial property REITs could benefit in 2025 from improvements in the economy, a convergence of public-private real estate valuations, and an increase in property transactions.
Lingering and new risks, including fundamentals in some property sectors, higher-for-longer interest rates, fiscal uncertainty, and the potential for new or higher tariffs affecting growth, may restrain CRE performance in 2025, according to date from Nareit, the association representing REITs and publicly traded real estate companies.
The charts below illuminate some of these trends and challenges.
CRE Fundamentals: Property Type Occupancy Rates
Source: CoStar; Nareit. Data as of 2024: Q3.
Convergence: Public-Private Real Estate Valuations
Source: Nareit T-Tracker®, NCREIF, FTSE Russell, FactSet Research Systems, S&P Capital IQ Pro.
Note: REIT metrics are from Nareit’s quarterly REIT industry tracker and the FTSE Nareit All Equity REITs Index. Private real estate measures focus on properties from open end diversified core equity (ODCE) funds from the National Council of Real Estate Investment Fiduciaries (NCREIF).
Inverse Relationship: REIT Total Returns & U.S. 10-Year Treasury Yield
Source: Nareit, FTSE Russell, FactSet Research Systems.
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