The Questions to Ask – Jan. 6, 2025
It has become a marker of the start of a new year—albeit perhaps not quite as universally recognized as the descending ball in Times Square—for commercial real estate firms to identify trends that are likely to shape the market over the next 12 months. The Cushman & Wakefield team just issued an interactive report titled “10 Critical Questions for 2025,” and it seems appropriate to frame these issues as questions rather than straightforward predictions, because there’s a lot of variables in the year-ahead outlook.
The report frames the discussion in these terms:
- Will the capital markets take off in 2025?
- What does a Trump 2.0 presidency mean for the economy and CRE?
- What can we expect for Treasury rates considering recent economic and political developments?
- Are CRE debt conditions expected to improve in 2025?
- Will the potential new tariffs affect U.S. port volumes?
- Is there demand for office space that isn’t “top-tier”?
- Could recent store closures lead to a more balanced retail market?
- How will life sciences venture capital funding shape CRE in 2025?
- Will demand for apartments maintain its momentum?
- Can the data center boom sustain its momentum amid power accessibility challenges?
The complete report provides a combination of topline analysis, a forward-looking ‘What to watch” summary and sidebar points to consider, framed as “Did you know?” pop-ups. It also offers links to related analyses and thought-leadership pieces.
In terms of the time frame for each question to be resolved, you have a mix of wait-and-see watchfulness and following the calendar. Donald Trump is slated to take office in two weeks, and that will start the clock on the effects of his administration’s policies generally and the enactment (as well as impact) of broad-based tariffs in particular. And one of the factors affecting Treasury rates is the Federal Open Market Committee’s decision-making on monetary policy, as determined during the FOMC’s regularly scheduled meetings throughout the year. (The first one is set for Jan. 30-31.)
Since the advent of Trump 2.0 is likely to produce results within weeks, let’s delve into the two questions that relate to the incoming administration’s actions. Regarding the question of Trump’s impact on commercial real estate broadly, the report cites a cloudy crystal ball: “Many of the changes to policy have the potential to exert offsetting forces on macroeconomic growth and inflation, making it hard to predict how this election will impact property performance.”
That said, the report sees a soft landing underway for the economy. “With a soft landing in progress, two major unknowns remain: the path of monetary policy and the extent to which President-elect Trump might escalate tariffs,” the report states. “Pay close attention to what policymakers do rather than what they say.”
Shippers aren’t necessarily waiting for tariffs to be implemented, though. The report cites an ongoing rush to import goods ahead of the imposition of tariffs—following a pattern that the shipping industry and industrial landlords saw in 2018, with a subsequent decline in import volume as the tariffs went into effect.
Both Trump-related questions include a link to the same report for additional insights: “Trump 2.0 & Implications for Property.” Once again, there’s the message of actions speaking louder than words when the subject is policymaking and its effect on the industry.