The commercial real estate sector has entered 2025 only to discover the terrain is more unpredictable than ever. After years spent waiting for a rebound, industry leaders now face a market where past patterns and familiar playbooks offer little guidance. That’s the message from a recent JLL Trends & Insights podcast, where top strategists dissected what it really takes for executives to navigate this office cycle, drawing on candid research, direct market observation, and analysis of global shifts.
What’s changed? Experts emphasize that this is not simply a repeat of previous downturns. “If you apply prior easing cycles and policy rates to this one, you will draw the wrong conclusions,” warns Brian Klinksiek, LaSalle Investment Management’s global head of research and strategy. The current investment landscape is defined by less dramatic swings in interest rates—now “high-ish for longer”—and a relative alignment between transaction markets and underlying valuations, making it simultaneously more challenging and more transparent for deal-making to proceed.
Surviving—and thriving—demands a strategic reset at the tactical level. The biggest opportunities are in recognizing that not all offices, markets, or even investment cycles are created equal. The office market’s performance, as Ben Breslau, JLL’s global chief research officer, points out, varies not just from country to country but from building to building within the same city.
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The divergence is especially stark between top-quality, modern, sustainable properties—which are often near full and drawing strong demand—and middle-tier or aging stock, which continues to struggle. This “flight to quality” is playing out worldwide, signaling that the future belongs to those able to secure or create best-in-class office space.
For executives, several real-world tactics emerge from this new scenario.
First, approach each local market on its own terms. While capital markets may be global, property fundamentals are intensely local, and even within global cycles, “there are many cycles at play,” notes Klinksiek. Asia has seen post-pandemic office attendance recover more quickly than the U.S., again underscoring the need for granular, market-specific strategies.
Second, focus capital on repositioning assets. Upgrading mediocre buildings to meet premium standards isn’t just a theoretical strategy; it has become one of the few clear paths to relevance in cities where the supply pipeline for quality office space is collapsing. With new office development shut down and financing scarce, executives looking to upgrade should act quickly, as demand is expected to outstrip supply in the coming years, even in markets with overall high vacancy rates.
Still, vigilance is critical. Klinksiek offers a pointed reminder that not all growth narratives justify runaway pricing: “You have to be careful as an investor to not only see the trend…without bringing in the factor of price.” In other words, don’t get caught chasing “priced to perfection” assets—balance the allure of best-in-class space with a realistic assessment of required return and market risk.
Another essential tactic is disciplined, data-driven evaluation of asset value. LaSalle’s approach centers on assessing “fair value”—weighing the required return for each potential investment against the expected return and factoring in risk premia by sector and geography. This insistence on quantifying both upside and exposure to risk is now a key advantage in a market where price discovery has returned. “Numbers are just a language to show our views,” Klinksiek explains, but that language is critical to making the right choices in an unpredictable world.
Executives should also stay nimble in asset allocation. Beyond trophy offices and data centers—both currently in favor—industrial outdoor storage and next-generation residential segments are emerging as “top calls” in the U.S. and Europe, respectively. In Europe, creative approaches to “late student and early professional” housing are outperforming, while in Asia, deeper urbanization and alternative residential models are shaping strategy.
On the occupier side, company leaders report a stronger willingness to make real estate decisions. JLL’s data shows more than half of corporate occupiers expect to grow their footprint, a potential catalyst for stabilized leasing and capital markets activity in 2025.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
