SitusAMC White Paper Offers 2025 CRE Forecast and Analysis of Political Policy

Macro economic factors and investor sentiment appear to support a continuation of the stabilization that began last year in commercial real estate (CRE). However, a new set of uncertainties has emerged as the presidential administration attempts bold policy changes. In a new white paper, “Commercial Real Estate in 2025: Can the Transition to Stability Continue?” SitusAMC provides forecasts for economic growth, interest rates, inflation and the labor market, and reviews recent policy actions and proposals, with analysis of the implications for commercial real estate (CRE). Download the paper here.

“With a stable economy and labor market, cooling inflation and stabilizing interest rates, interest rates should trend flat-to-down in 2025,” said Peter Muoio, Senior Director and Head of SitusAMC Insights.  

SitusAMC Insights expects gross domestic product (GDP) to increase 2.2% at an annual rate, cooling slightly from last year. Unemployment should remain low, inflation continue to hover above the Fed’s 2% target and interest rates decline slightly.

“With interest-rate rises abating in 2024 and the prospect of lower rates ahead, commercial real estate should see growth in originations, securitizations, asset values and returns,” Muoio said.

Total CRE returns turned positive at the end of 2024 and are projected to outperform the long-term average in 2025. However, the office sector will likely continue to struggle as it contends with the ongoing post-pandemic shift in workplace patterns.

Meanwhile, with a new U.S. administration, significant policy uncertainty and ongoing geopolitical turmoil, CRE trends in 2025 could be sideswiped by policy-driven macro developments, the paper states. The white paper delves into the potential effects of administration policies related to immigration, tariffs, return-to-office mandates and the Department of Government Efficiency (DOGE), with a deep dive into their economic, labor and real estate implications.

“Specifics about these policies are constantly changing with many unknowns,” said Jen Rasmussen, Vice President and Head of Market Commentary of SitusAMC Insights. “Not only are policy directives quickly evolving, but legal challenges put their implementation in limbo, making it difficult to determine whether existing policies will merely be delayed, or blocked altogether. Even under more certain circumstances, public policies would have complex effects on real estate markets."

Download the white paper, “Commercial Real Estate in 2025: Can the Transition to Stability Continue?” here. For more information on SitusAMC Insight’s research, analytical tools, or data products, visit our website.