As the calendar turns to the second half of 2025, optimism is growing in the U.S. commercial real estate market, which has moved past the uncertainty and is showing tangible signs of recovery. According to CBRE global head of research Henry Chin, the resilience evident in leasing and capital markets—especially offices and industrial properties—signals a turning point. Institutional investors are returning, further supporting forecasts that U.S. CRE investment activity will climb by 10% during the year, even amid ongoing macroeconomic uncertainty.
Momentum in the office sector is particularly striking as leasing activity picks up, driven by the premium placed on Class A properties in dynamic, well-connected locations. Investment volumes for offices surged 20% in the second quarter, led by markets such as San Francisco, which saw more than 15 deals, most below $100 million. “Office occupiers and investors are prioritizing high-quality buildings to draw employees back to the workplace,” Chin notes, adding that significant volumes of non-Class A spaces will require redevelopment or major capital infusion for years to come.
The industrial market continues to demonstrate strength in new leasing, even as overall absorption remains negative due to a migration away from older facilities. “Third-party logistics providers, accounting for roughly 40% of leasing demand, are targeting single-story, modern buildings with robust power supply—a trend reflected in both U.S. and Asia-Pacific markets,” Chin highlights. E-commerce expansion also drives the demand for upgraded industrial space.
Retail is completing its transformation as open-air formats jump from overlooked to outperformers, now forecasted to deliver the highest total returns among asset classes over the next five years. Power centers are expected to maintain their lead. With prime retail space in short supply—thanks to ten years of underbuilding—retailers are eagerly waiting for openings in populous areas, according to Chin.
Rental growth for multifamily properties appears to be bottoming out after reaching a supply peak in 2024. While the rebound is uneven—with the Midwest and Pacific Northwest leading—Sunbelt regions continue a slower recovery due to lingering oversupply, according to Chin.
Alternative and niche real estate sectors such as data centers, single-family rentals, build-to-rent communities, self-storage and student housing are attracting new investment, though mainstream capital remains focused on traditional asset classes. “Data centers and self-storage offer strong opportunities, although power supply constraints pose challenges for data centers,” Chin explained. He added that real estate credit vehicles, which are now delivering equity-like returns with extra tax benefits for offshore buyers, are becoming a mainstream part of the investment landscape.
Looking to the remainder of 2025, Chin says that fundamental improvements in U.S. CRE are set to continue and may even surpass current expectations. A more stable trade environment, improved investment confidence and the potential for Federal Reserve rate cuts—should 10-year Treasury yields stay in the 4% to 4.5% range—could continue to boost the market’s recovery.
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