As the Tide Turns – August 11, 2025
Market disruptions create “rare windows of opportunity” for investors, say Cushman & Wakefield economists
Commercial real estate investment is launching a new cycle after the significant slowdown of the past two years. Since the beginning of 2025, Cushman & Wakefield has produced a global series of forecasts that are intended “to guide investors through key decision-making as they start to deploy capital more aggressively into the sector.” The latest in the firm’s Tide is Turning series—separate forecasts focusing on the U.S., Europe and Asia Pacific markets—have just been issued, and the introductory paragraph for each report serves as a call to action.
“Periods of major market disruption only come around a handful of times during most CRE investment careers,” writes Dominic Brown, head of international research, at the beginning of the Asia Pacific forecast. “However, most investors know from experience that these episodes provide rare windows of opportunity to capitalise both on dislocations in pricing and disruptions to supply pipelines that eventually set the stage for income growth as new cycles take shape.”
We’re seeing just such an episode playing out in this country. “It is not hyperbolic to characterize the latest decline in U.S. commercial property values as a generational reset,” write Abby Corbett, senior economist and head of investor insights, and Adrian Ponsen, senior economist, investor insights. “Most industry benchmark indices show aggregate U.S. CRE pricing down anywhere from 13-21% from their mid-2022 peak.” There have been only two other times in the past 40 years during which aggregate CRE valuations have experienced even steeper declines: the early 1990s and the Great Financial Crisis.
Both periods led to “significant surges in 7- and 10-year price appreciation, marking dramatic accelerations in growth,” Corbett and Ponsen write. “In both cases, the strength of those rebounds generated significantly higher 7- and 10-year pricing gains than those achieved on investments made anytime within the five years prior to each correction.”
For Europe, the pricing recovery is broadly similar. Rebecca Rockey, deputy chief economist and global head of forecasting, observes that “the combination of a yield reset and attractive risk premiums, along with improving investor sentiment and broader sources of capital, point to a finite window between the market deterioration of mid-2022 to 2023 and a full-paced recovery which is in the early stages of taking hold… In other words, the market is currently in transition and offers compelling strategic opportunities.”
All three forecasts highlight their current markets’ strategic implications for investors. The wording in the descriptions may vary, yet each forecast identifies the same three implications, along with others:
Adopt a medium- to long-term perspective. “Investors should measure their expectations for CRE performance in the near-term given the demand-side implications of a cooling macroeconomic landscape,” write Corbett and Ponsen. “Reduced construction pipelines and recent pricing declines will nevertheless foster an environment that is more conducive to a gradual, insulated CRE recovery in the immediate term.”
Accept the new reality around tighter yield spreads to benchmark rates. “Prices have adjusted, but so too have benchmark yields, resulting in historically attractive prime CRE yield spreads,” Rockey writes. “Yet, the stabilisation in pricing, together with improving investment volumes, is proving that investors are not necessarily being deterred from deploying capital. Rather, the focus is on longer-term investment themes and income growth.”
Capitalize on shifts in investor risk appetites amid heightened uncertainty. “As economic growth returns and inflation and interests continue to normalise, the desirability of CRE relative to other asset classes will likely improve among multi-asset class investors,” writes Brown. “In these early stages of this transition, owners of institutional-quality buildings will be positioned to capture mounting interest from prospective buyers chasing existing assets with credit tenants and longer-weighted average lease terms.”
Or, as Rockey sums up, “Investors who act decisively in this transitional phase will be well-positioned to capture the upside of the next cycle.”