If CBRE’s 2025 U.S. Investor Intentions Survey results are correct, CRE markets should be on the upswing this coming year. Investors are reportedly ready for growth.
According to the study, 70% of CRE investors expect to buy more assets in 2025 than in 2024. Just under half expect to sell more than they did. While 54% think that overall investment activity will start a recovery in the first half of this year, three-quarters expect their own investment activity to start recovery in 2025 H1.
This is in the face of two major difficulties. CBRE expects that the yield of the 10-year Treasury will remain above 4% during the year and that interest rates will be volatile and high over a longer term.
Interest rates, at least for longer-term loans like mortgages, are a combination of the proxy for the risk-free rate (the 10-year yield) and the risk premium a lender perceives is fitting. The Treasury Department as of last Friday shows the 10-year yield above 4.60%. Both Derivative Logic and Chatham Financial project rates to rise and eventually stay above 4.60% as the year progresses.
If a strong majority of people increase their purchasing volume, CBRE says the effect would likely be increased competition for properties, which would help prices to firm. An improved dynamic will likely mean an influx of more capital, “with all investors either maintaining or increasing their allocations to real estate.”
A “slight majority of investors” expect favorable pricing will drive their increased allocations. However, as GlobeSt.com reporting has suggested, the expectations of significant volumes of distressed pricing haven’t yet proven themselves. It may be that the wave of extend-and-pretend will eventually develop into significant distress, but it hasn’t happened yet even with repeated past predictions.
Also, CBRE’s take is that with the Federal Reserve’s interest rate cuts — even if the central bank has signaled that the pace of reductions will be slower than many had expected — and the Trump administration’s policy that could be pro-growth. That could reduce any denominator effect and allow investors to put more capital into CRE as individuals and institutions look to reconsider and rebalance their portfolio allocations.
All that said, it’s compared to 2024 and in the last several years, many people in the industry thought that things would improve in the directly following year. Early in 2025, Treasury yields and interest rates are casting shadows on the immediate future.