An upturn in all commercial real estate sectors, including industrial? That’s what PwC and the Urban Land Institute are predicting in their Emerging Trends in Real Estate 2025 report.

The report points to the Federal Reserve Board’s decision to start lowering interest rates last year. This move should spur an increase in commercial real estate transactions in 2025, according to PwC’s and the Urban Land Institute’s report.

To create their report, the two organizations personally interviewed more than 450 commercial real estate industry experts, including investors, lenders, brokers, advisors and consultants. The Emerging Trends in Real Estate Report also includes survey responses from almost 1,600 people.

As a sign of the optimistic tone of this year’s survey, 65% of respondents rated the chance of their firms being profitable this year as “good” or “excellent.” That’s up from just 41.3% of respondents saying the same in 2024.

This doesn’t mean that 2025 won’t bring challenges. A total of 55% of respondents said that commercial real estate debt markets are still undersupplied for acquisition activity, while 58% said they were undersupplied for refinancing and 75% for development activity.

Respondents, though, were hopeful that economic conditions would continue to improve in 2025. A total of 49.9% of respondents said that they expected inflation to decrease this year, while an additional 1.8% said that they expected it to decrease significantly. A total of 38% of respondents said that they expected inflation to remain stable at current levels throughout this year.

Marcus & Millichap facilitated the sale of Corporate Park Place, a 113,429-square-foot office building in Irving, Texas.  

Ron Hebert and Joseph Jaques, investment specialists in Marcus & Millichap’s Dallas office, exclusively marketed the property on behalf of the seller and procured the buyer, a local 1031 exchange investor, in an all-cash transaction. 

Located at 1333 Corporate Drive, Corporate Park Place is a Class B, multi-tenant office building situated on 6.08 acres. Built in 1980, the property includes 52 office suites with flexible layouts. It is just off the President George Bush Turnpike, two miles from DFW International Airport, and minutes from the Toyota Music Factory. 

CBRE brokered the sale of Baybrook Passage, a 189,334-square-foot shopping center at 19425 Gulf Freeway in Webster, Texas.

Mark Witcher, Jolie Duhon, Chris Cozby, Jim Batjer and Harrison Tye with CBRE National Retail Partners arranged the transaction on behalf of the seller, Gulf Coast Commercial Group. The buyer, SLS Properties was self-represented.

The shopping center was built in 2003 and is anchored by Best Buy and Staples. Additional tenants include Boot Barn, Skechers, and Memorial Hermann, as well as a national roster of food & beverage, medical and service-oriented retailers. At the time of sale, the property was 97.2% occupied by 29 tenants with an average tenure of 18 years.

The multifamily housing sector is expected to experience steady, if unspectacular, growth in 2025, according to Yardi Matrix’s Winter Multifamily National Report. While rents are set to rise moderately, sales activity is likely to remain subdued amid ongoing economic challenges.

Yardi Matrix forecasts a 1.5% national increase in multifamily advertised rents in 2025, driven by sustained demand in regions like the Northeast and Midwest, where supply growth is constrained. However, the pace of rent increases continues to slow significantly from the post-pandemic boom.

Between 2021 and 2022, multifamily rents soared by a combined 21.4%, fueled by surging demand. By contrast, rent growth in 2023 and 2024 totaled just 1.9%, with 2024 alone posting a modest 1.0% rise.

Affordability Challenges Bolster Demand

Key factors sustaining demand for multifamily housing include limited affordability in the for-sale housing market. Elevated 30-year mortgage rates, which peaked at 7.4% in late 2023 before settling in the mid-6% range by December 2024, continue to place homeownership out of reach for many Americans.

Despite the Federal Reserve’s interest rate cuts in the fall of 2024, the average rent of $1,783 in the third quarter remains far below the typical mortgage payment of $2,416. This disparity keeps would-be buyers renting longer, further underpinning demand in the multifamily sector.

Construction Slowdown on the Horizon

Although 2025 will see significant new multifamily deliveries, the pipeline is beginning to tighten. After a record 550,000 units came online in 2024, the report anticipates a slight decline to 508,000 units in 2025, adding 3.0% to the total U.S. stock.

Markets expected to see the most significant increases in stock include Austin (7.3%), Charlotte (6.2%), and Nashville and Phoenix (both 6.1%). Other fast-growing metros like Raleigh-Durham (5.4%), Denver (4.9%), and Miami (4.2%) will also see notable expansions.

The largest absolute delivery volumes in 2024 were concentrated in Dallas-Fort Worth (32,600 units), Phoenix (23,200), and Austin (23,100), with similarly high levels expected in these markets for 2025.

However, as construction starts slowed during the latter half of 2024, the report anticipates a more pronounced decline in new multifamily deliveries in 2026 and 2027.

Sales Activity Remains Tepid

The multifamily sales market has struggled to regain momentum, despite a brief surge when interest rates dipped. Through October 2024, $62.7 billion in multifamily properties changed hands, mirroring the previous year’s volume.

Rising rates and uncertainty about future income growth are expected to keep transaction activity muted in 2025. Investors remain cautious as another 500,000 units are delivered before the impacts of slowing starts become apparent.

Lee & Associates Dallas-Fort Worth completed a new lease transaction for a 91,520-square-foot industrial space at Prologis Park 35, 12301 Stemmons Freeway in Farmers Branch, Texas.

Ally Tanghongs and George Tanghongs of Lee & Associates Dallas-Fort Worth represented the Tenant, E-Future Logistics, Inc.

Steve Berger of CBRE Inc. Dallas represented the Landlord, Prologis.

Denholtz Properties has signed a 31,760-square-foot lease with OTC Industrial Technologies at Clovis Crossing, a newly-constructed, two-building, 213,125-square-foot industrial property at 1603 Clovis R Barker Road in San Marcos, Texas.

Acquired by Denholtz Properties in early 2024 as a key piece of its continued national expansion, Clovis Crossing is located on a 13-acre site approximately 30 miles from both Austin and San Antonio. Both of the brand-new Class-A, shallow-bay industrial buildings boast 32’ clear ceiling heights and rear load configurations making them ideally suited for a wide range of tenants.

Headquartered in Columbus, Ohio, OTC Industrial Technologies is a one-stop supplier of comprehensive industrial and manufacturing solutions. With over 60 locations across 40 states, the company offers products from more than 40 leading brands. Its lease at Clovis Crossing will support the expansion of OTC Industrial Technologies’ growing filtration division. As one of the largest filter suppliers in the industry, the company will use the space for warehousing and distribution of its extensive range of HVAC filters, liquid filters, and filter media to customers nationwide.

Denholtz Properties’ acquisition of Clovis Crossing highlights the continued expansion of its national industrial portfolio. Earlier in 2024, the firm also acquired the Lehigh Valley Portfolio, an 18-building, 723,734-square-foot flex/industrial portfolio spread across Allentown and Bethlehem. Over the past several years, Denholtz Properties also entered the Savannah, Ga. market with the acquisition of the three-building, 358,884-square-foot Coleman Industrial Portfolio and acquired two industrial assets to grow its presence in North Carolina – 9201 Forsyth Drive, a 53,811 square-foot industrial property in Charlotte and Interstate Commerce Park, a five-building, 218,570-square-foot industrial portfolio in Greensboro. 

Transwestern’s Carter Thurmond, Nash Frisbie and Bailey Sousa represented Denholtz Properties and Colliers’ Shane Woloshan, Nolan Babb, Travis Hicks, Chase Clancy and Michael Modesett represented OTC Industrial Technologies in the transaction.

181,365 square feet of industrial space is currently available at Clovis Crossing.