Despite a slower-than-expected pace of interest rate cuts, sentiment has remained upbeat, according to CBRE’s regional investor intentions survey, which polled 1,421 CRE investors in the United States, Europe and Asia-Pacific.
Investors and lenders will face several headwinds over the coming year, including the 10-year Treasury yield likely remaining above 4% as markets react to a persistently large budget deficit, stimulative fiscal policy and the potential for higher inflation. Nevertheless, strong economic growth driving positive fundamentals will support the recovery in investment activity, with investment volume forecast to increase by 8% in 2025, according to CBRE.
Seventy percent of U.S. investors indicated they plan to buy more this year, and nearly 30% said their offensive strategy would remain the same. Investors cited favorable pricing as their top reason for targeting more buying opportunities this year. CBRE noted investors have turned slightly more cautious in the three months since the survey was conducted on expectations that interest rates may remain higher than previously expected.
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“Capital continues to gravitate toward real estate investment in the U.S.,” said Kevin Aussef, Americas president of investment properties at CBRE. “Despite higher-for-longer interest rates, we see signs of a healthy economy supporting improved real estate fundamentals with more bidder activity every month.”
In all regions, the majority of investors selected value-add as their preferred strategy, followed distantly by core-plus. In the United States, this preference reflects a growing search for higher returns while minimizing risks, as well as enhancing operational management amid asset repricing and improving market fundamentals, said the report.
Multifamily/residential and industrial & logistics were among the top three most preferred property types across all regions, the survey found. Despite record supply, the U.S. multifamily market continues to perform well as the rental market benefits from high mortgage rates discouraging home buying. About 72% of U.S. investors preferred multifamily investments, 37% were targeting industrial & logistics, and 27% were looking at retail opportunities.
Meanwhile, investor sentiment about the office sector differed from regionally. European investors ranked office as their third most preferred sector and Asia-Pacific investors placed office second. However, no U.S. investors indicated a preference for office among their top three sectors. CBRE noted that U.S. office leasing activity in prime office buildings has picked up in major cities. Manhattan is leading this trend and San Francisco and Seattle office markets may be improving due to demand from AI companies and return-to-office mandates, the report said.
The regions also showed little consensus on preferred alternative sectors. U.S. investors remain at the forefront of alternative real estate investments, including self-storage and industrial outdoor storage. Less than half of U.S. investors expressed interest in pursuing alternative investments this year as they target repriced assets in main property sectors instead. Data centers are included among mainstream opportunities rather than alternative assets in the U.S. survey, and investors ranked this category as the sixth most preferred.
U.S. investors cited elevated and volatile long-term interest rates as the biggest challenge to investment this year.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
