CRE Investment Outlook 2025: Signs of Recovery Amid Sector Shifts
While 2023 and the first half of 2024 marked a significant decline in commercial real estate (CRE) investment sales volume and values, CBRE’s H2 2024 Cap Rate Survey indicates signs of stabilization. After a 51% drop in 2023, investment sales rebounded by 9% in 2024. The survey reflects steady investor sentiment despite volatility in Treasury yields, with cap rates remaining relatively flat across most sectors. Industrial and multifamily cap rates declined slightly, supported by more optimistic NOI growth expectations, while the office sector continues to face headwinds, with financial distress pushing cap rates higher.
Retail investment surged to $21.2 billion in H2 2024—a 36% increase over the first half—according to JLL’s Q4 retail market dynamics report. The uptick was fueled by interest rate cuts, limited new supply, and low vacancy rates. JLL projects continued growth in 2025, as investors target prime retail opportunities in convenience, luxury, and urban corridors. The average deal size in 2024 hit a 12-year high of $20.2 million, bolstered by large-scale acquisitions, including prominent malls and flagship retail properties. Investment activity is expected to remain strong in 2025, particularly in value-add opportunities within large-format centers and malls trading below replacement costs.
Although the office sector remains challenged by ongoing uncertainty and evolving workplace trends, the broader CRE market is showing signs of recovery.
Contact us to discuss how we can help you navigate the market and achieve your CRE investment goals.
Sources:
1. GlobeSt. (2025, February 27). Cap Rates Indicate End of Repricing Phase in Most Sectors. Retrieved from https://www.globest.com/2025/02/27/cap-rates-indicate-end-of-repricing-phase-in-most-sectors/
2. GlobeSt. (2025, February 19). Retail Investment Boom Expected to Continue in 2025. Retrieved from https://www.globest.com/2025/02/19/retail-investment-boom-expected-to-continue-in-2025/
SOURCED BY
Greg Offsay
Executive Vice President
(818) 697-9387
greg@illicre.com