2025 Real Estate Forecast: Commercial Market Update

Decoding the January 2025 Economic Update: Key Insights and Takeaways

The start of 2025 brings a fresh perspective on the economic landscape. With the recent Economic Update, we can better understand trends shaping industries, from logistics and retail to real estate and labor. Let’s unpack the key highlights of this 2025 real estate forecast.

1. Logistics Activity: A Seasonal Slowdown with a Strategic Upswing

As December closed out the year, the Logistics Managers’ Index (LMI) dropped to a four-month low of 57.3, reflecting the expected seasonal inventory decline. However, upstream manufacturers ramped up imports to hedge against potential tariffs, leading to an unexpected inventory buildup. This strategic move was supported by a 15.6% year-over-year increase in U.S. imports from China. Meanwhile, transportation costs surged amid heightened holiday demand.

Takeaway: Despite short-term logistics slowdowns, strategic planning is keeping supply chains resilient.

2. Outdoor Shopping Centers: The Unsung Heroes of Retail

While traditional indoor malls grapple with rising vacancies, open-air shopping centers are thriving, hitting a historic low vacancy rate of 6.2%. Despite the growth of e-commerce, physical stores accounted for 77% of 2024 holiday sales, highlighting their ongoing importance. Discount retailers are fueling this trend, with many planning expansions in 2025.

Takeaway: Open-air retail spaces are proving their staying power, creating investment opportunities in retail real estate.

3. Commercial Real Estate: Refinancing Takes Center Stage

Trepp’s 2024 analysis revealed a robust recovery in market liquidity, driven primarily by refinancing activity. With $96.83 billion in loans maturing by 2026, refinancing remains a safer bet for many property owners compared to sales. The private-label CMBS market saw an impressive 165% year-over-year growth, marking a strong rebound.

Takeaway: Refinancing trends underscore cautious optimism in commercial real estate markets.

4. Where Are People Moving?

Migration patterns reveal continued interest in the Carolinas, Texas, and Arizona, with Dallas and Charlotte leading as top destinations. U-Haul data shows a shift in inbound migration trends, indicating emerging hotspots beyond traditional movers’ hubs.

Takeaway: Population shifts are reshaping housing demand, retail activity, and local economies in these areas.

5. Inflation Stabilizes, but Challenges Remain

December’s Consumer Price Index (CPI) report showed signs of disinflation, with a 0.4% monthly and 2.9% annual increase. Core CPI slowed as well, offering a glimmer of relief. Stock markets responded positively, anticipating fewer rate hikes, but the Federal Reserve remains cautious about potential policy impacts.

Takeaway: Stabilizing inflation offers hope, but global economic uncertainties keep markets on edge.

6. The Federal Reserve’s Balancing Act

The latest FOMC minutes reflect optimism about inflation trends moving toward the 2% target. Yet, concerns over labor market tightness and policy uncertainties persist, as the incoming administration’s tariff and immigration changes could shift economic dynamics.

Takeaway: Policymakers remain cautiously optimistic, emphasizing adaptability in the face of evolving conditions.

7. Global Economic Outlook: Slow and Steady

Capital Economics predicts modest GDP growth for major economies in 2025. China is expected to rebound, thanks to government interventions, while the U.S. may see minor inflationary pressures from proposed tariffs. A soft landing remains the central theme for the year.

Takeaway: While slower growth is anticipated, global markets appear resilient.

8. Job Market Gains Momentum

The U.S. added 256,000 jobs in December, exceeding expectations and nudging unemployment down to 4.1%. Wage growth remains steady at 3.9%, indicating a strong labor market. However, markets are recalibrating expectations for rate cuts in light of this resilience.

Takeaway: A robust labor market could anchor broader economic stability in 2025.

9. Economic Optimism Holds Steady

Although optimism dipped slightly in January, Americans remain generally positive about the economy, with the RealClearMarkets/TIPP index holding above 50. Concerns about trade policies and tariffs, however, are beginning to weigh on sentiment.

Takeaway: Confidence persists, but it’s fragile in the face of potential policy shifts.

10. Real Estate Special Servicing: A Mixed Bag

Trepp reports a rise in special servicing rates for mixed-use and multifamily properties, with mixed-use loans hitting their highest rate since 2013. On the flip side, industrial real estate continues to perform well, with minimal special servicing rates.

Takeaway: The divergence between property types underscores the importance of strategic sector focus in real estate investments.

Final Thoughts The January 2025 Economic Update highlights a dynamic economic environment marked by resilience and strategic adaptation. While inflation cools and logistics recalibrate, strong job growth and retail demand signal robust underpinnings. For investors, business owners, and policymakers, the year ahead presents opportunities to navigate change with confidence.

What’s your take on these economic shifts? Share your thoughts below or reach out to discuss how these trends might impact your industry!

“SVN Vanguard is pleased to announce the opening of the Nativity Prep Academy STEM center and Commercial Kitchen. SVN Vanguard has been responsible for the initial school site acquisition, project design, project management, tech, and landscape. SVN Vanguard was also responsible for the space layout, interior design, and tech buildout of the STEM. Congratulations to Nativity Prep!!!

– Joe Bonin, Managing Director

At SVN Vanguard, we believe in the power of community and the importance of education. Our commitment to these values is exemplified by our Managing Director, Joe Bonin, whose dedication extends beyond the boardroom and into the heart of San Diego. Joe has been actively involved in supporting Nativity Prep Academy, a Catholic middle school. Located at 4463 College Ave, San Diego, CA 92115.

A New Era for STEM Education

This year, Nativity Prep Academy has taken a monumental step in advancing educational opportunities with the inauguration of a state-of-the-art STEM Center. This innovative facility offers a cutting-edge learning environment designed to inspire and equip students with the skills needed for the future.

The STEM Center boasts a variety of specialized spaces:

Building a Diverse and Talented Workforce

STEM workers drive our nation’s innovation and competitiveness with the creation of new ideas, new companies, and new industries. However, children from underserved communities, particularly girls and students of color, are vastly underrepresented in the STEM industry. Providing our students with opportunities to pursue — and thrive in STEM careers will help to create social mobility, enhance economic security, and ensure a diverse and talented STEM workforce.

We envision our programs building a pipeline for future employees and entrepreneurs in STEM fields and invite you to partner with us to make this a success. Designed as an early-intervention program, we aim to introduce STEM concepts to middle school students, enabling them to continue their learning in STEM fields throughout high school and college.

Comprehensive Educational Support

The curriculum at the STEM Center is not only focused on academic excellence but also on career exploration, helping students to envision and work towards their future careers. With the addition of more classroom space, Nativity Prep Academy can now welcome even more students into its programs, providing them with the resources and support they need to succeed.

The new STEM Center also introduces sustainable revenue streams to support the Academy’s annual operating budget. By renting out the kitchen, labs, and classrooms, Nativity Prep ensures a steady flow of income to maintain and enhance its educational offerings. The upgraded kitchen facilities will significantly improve daily nutrition services for students, ensuring they have the energy and focus needed for their studies.

Furthermore, the enhanced parent education program will provide valuable resources and support to families, fostering a stronger community bond. The shared STEM programming opportunities extend beyond the school, supporting the local community and nurturing a culture of learning and innovation.

Commitment to Community and Education

At SVN Vanguard, we are incredibly proud of Joe Bonin’s involvement with Nativity Prep Academy. His dedication to supporting educational initiatives aligns with our company’s values and our commitment to making a positive impact in the communities we serve. The new STEM Center is not just a facility; it is a beacon of opportunity, empowering students and enriching our community.

Join us in celebrating this remarkable achievement and supporting the future leaders of our community. To learn more about Nativity Prep Academy and how you can get involved, visit their website or view our non-profit real estate page. Let’s cultivate curiosity together and build a brighter future.

NBC San Diego:

https://www.nbcsandiego.com/videos/nativity-prep-academy-gets-new-stem-center/3527180

The SVN Regional office was also named #3 in the nation among all SVN real estate brokerages for 2023.

SVN Vanguard finished #1 in the region and #3 nationally in this year’s SVN National conference in Miami, FL. Following a successful 2022 campaign as the international firm of the year, SVN Vanguard continues to deliver top tier performance for 2023. 

In addition, the San Diego County Vista Chamber of Commerce named the SVN | Vanguard North County Office the New Business of the Year. 

To compile rankings for SVN’s national conference, SVN International Corp. identifies the top producing brokerages and advisors based upon closed commercial real estate transactions. Top producing Advisors are ranked in three different categories based on their gross commission income (GCI). The categories are: Partner’s Circle, President’s Circle and Achiever Award. Tony Yousif, Director- National Accounts, achieved Partner’s Circle status as one of the top advisors in the SVN network.  Cameron Irons, Executive Director at SVN Vanguard, and Senior Vice President, Jon Davis, were also recognized for ranking within the Top 100 Advisors of 2023. 

About SVN Vanguard

SVN Vanguard is a full-service commercial real estate office of the SVN brand, comprising over 1,600 commercial real estate Advisors and staff, in more offices in the United States than any other commercial real estate firm and continues to expand across the globe. We believe geographical coverage and amplified outreach to traditional, cross-market and emerging buyers and tenants is the only way to achieve maximum value to our clients.



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