What do the CRE experts predict for 2025 and how are their organizations positioned for the next 12 months? On the positive side of the ledger are factors like the strong economy, access to willing capital sources, price stabilization, and the narrowing bid-ask gap. These factors are setting the playing field up for a rebound in investment and lending this year. On balance, the forecast is for a moderate pace of recovery given the significant risks and uncertainty on the negative side of the ledger.
Based on direct outreach to LightBox’s CRE Market Advisory Councils in the Environmental Due Diligence and Capital Markets sectors, this 2025 Predictions Report takes a timely look at what current market sentiment could mean for professionals across LightBox’s broad client base of CRE lending, brokerage, investment, appraisal, and environmental due diligence sectors.
Five Trends of 2025
1. Interest rates edge down modestly in the second half of the year, 50 to 75 bps for the year. After spending much of 2024 in limbo awaiting the first interest rate cut, the Fed delivered three cuts totaling 100 basis points (bps) in September, November, and December. The Market Advisory Council members predict that the Fed will implement two to three cuts later in the year, assuming inflation continues to move closer to 2% target without spiking.
2. CRE lending increases 25% as banks re-engage. Banks are coming off several years of restructuring, modifications, and the sale of non-performing loans to improve their balance sheets, and Q4 earnings reports paint a healthier financial picture for large banks that paves the way for their return to CRE lending. The lending market will be a competitive one as banks compete with other sources of debt capital like insurance companies and private equity. Market Advisory Council members predict that while smaller regional banks may remain less active, especially over the near-term, large banks are expected to increase their activity with a preference for loans on properties perceived as lower-risk including multifamily, self-storage, industrial, and grocery-anchored retail.
3. CRE property transactions rebound 15-20% YOY as pricing stabilizes. Going hand in hand with the expected uptick in CRE lending is an increase in CRE dealmaking. Market Advisory Council members are forecasting an increase in the range of 10% to 35% for an average growth rate of 17% above 2024 levels.With greater pricing clarity, particularly in CBD office, buyers and sellers are expected to meet in the middle as a combination of distressed assets and traditional deals change hands.
4. Treasury rates remain volatile, hovering around 4% at year-end. The 10-year Treasury yield, after a year of significant volatility, will be a closely watched barometer this year given market uncertainty. Market Advisory Council members forecast that the yield will hover around 4% for much of 2025, although one member forecasts the yield could drop as low as 3.2% this year. As borrowing costs remain at high levels, Treasury rates will continue to be volatile and close to 4% by end of 2025.
5. LightBox CRE Activity Index averages 95-100 for the year. The LightBox CRE Activity Index, an aggregate measure of data on property listings, environmental due diligence, and appraisals, tracks broad CRE trends. Based on the latest forecasts for investment and lending activity, and considering the myriad areas of market uncertainty, LightBox predicts moderate improvement in the CRE Activity Index this year.Assuming interest rates continue their slow decline, the Index will build on modest uptick in investment and lending volume and will approach early 2021 baseline.
If Not a ‘Banner Year,’ a Better Year
In the next few months, the market will have more specifics on the direction of federal policies and where interest rates are generally heading. Barring an unexpected market upset, the expectation for 2025 is for a moderate growth path for investment and lending as prices reset and the market sees more opportunities than in 2024. The velocity of CRE as measured by the LightBox CRE Activity Index will reflect momentum that is better than the last two years but nowhere close to the record-high post-COVID rebound of 2021.
Download the full CRE Expert Predictions for 2025: Driving the Recovery report or click here to view the flipbook and explore key insights from our expert panel.
Thank you to Contributors:
LightBox is grateful to the members of our CRE Market Advisory Council for 2024-2025 for their invaluable insights. These subject-matter experts and industry leaders from CRE and environmental due diligence firms across the U.S. contributed to the yearly LightBox Predictions Survey, sharing their perspectives on market trends, top challenges, emerging opportunities, and the near-term forecast for 2025. Their input ensures that our analysis remains aligned with real-world industry conditions, providing a comprehensive outlook for the CRE sector in the year ahead.
LIGHTBOX COMMERCIAL REAL ESTATE MARKET ADVISORY COUNCIL
Victor Calanog
Global Research and Strategy/Chief Economist
Manulife
Ryan Severino
Chief Economist
BGO
Cindy Cooke
Vice Chair Multifamily Investments
Colliers
Jon Winick
CEO
Clark Street Capital
Bryan Doyle
Managing Director Capital Markets
CBRE
John Chang
National Director of Research
Marcus & Millichap
Lisa Strope
Vice President Head of Research
TA Realty
Wanda Riley
Managing Principal
Cushman & Wakefield
Matthew Osborne
Executive Vice President & Chief Credit Officer
Eastern Bank
Arthur Milston
Senior Managing Director & Head of Capital Markets
NAI Global
Jeff Rinkov
CEO and Chairman of the Board
Lee & Associates
LIGHTBOX ENVIRONMENTAL DUE DILIGENCE MARKET ADVISORY COUNCIL
Chuck Merritt
President/LEED AP
Merritt Environmental Consulting Corp
Steven McNeil
Chief Strategy Officer
Blew & Associates Inc.
Kathryn Peacock
Principal
Partner Engineering & Science, Inc.
Brad Wolf
Executive Director of Environmental Services
Principal, BL Companies
Ben Bremer
President
LCS
Dana J. Wagner
Vice President/National Director/Due Diligence Services
Terracon
Adam Bennett
Senior Vice President
AEI Consultants
Kevin Karr
National Practice Leader Environmental Site Assessment
CBRE
Brian Wilson
Managing Principal
August Mack
Nolan Previte
President and CEO
EBI Consulting
Adam M. Meurer
Senior VP, Director of Environmental Services
ECS Mid-Atlantic, LLC
Jennifer Ewing
Senior Project Manager
Civil & Environmental Consultants, Inc
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