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!

If you’re wondering where the smart money is heading in commercial real estate, look no further than the Southwest Region. From the tech boom in San Diego to the resurgence of Las Vegas, and Denver’s growth spurt to the ever-evolving Los Angeles landscape, this region is buzzing with opportunity. But with so much happening, how do you separate the hype from the real deals?

That’s where our SVN Southwest Region team comes in. With boots on the ground in every key city—San Diego, Denver, Las Vegas, Los Angeles, Orange County, Inland Empire, Phoenix, Fort Collins, Albuquerque, Dallas Fort Worth, and Houston —we don’t just watch the market; we live it. Our local experts are quick in catching the latest trends, shifts, and opportunities before they hit the headlines. So, whether you’re an investor, developer, or just a real estate enthusiast, grab a cup of coffee (or maybe something stronger) and let’s dive into what’s happening right now in the Southwest Region commercial real estate market.

Los Angeles and Orange County lead the way with their robust economies driven by tech, entertainment, and a resilient industrial sector. The tech and biotech industries continue to fuel growth in San Diego, while the Inland Empire keeps it position as a key logistics and distribution hub, powered by e-commerce. Meanwhile, Las Vegas is redefining itself beyond tourism and becoming a major player for innovation, logistics, and entertainment.

Heading east, we have Phoenix and Denver who are emerging as the top-tier choices for businesses and residents alike, thank to their competitive costs, lifestyle appeal, and growing job markets. Fort Collins, known for its high quality of life and emerging tech sector, complements the Denver market, while Albuquerque offer affordability and growth potential in market that is often overlooked.

Dallas-Fort Worth and Houston are both experiencing rapid growth, with DFW’s thriving corporate relocations and tech startups, while Houston has its diversified economy and its strong industrial / office demand.

As these cities continue to evolve, the Southwest Region presents an abundance of opportunities with each market offering a unique dynamic and potential for growth. It’s a region where staying ahead means staying informed , and any of our SVN® teams are here to provide you with the best advice and market information you need to navigate the commercial real estate world.

SVN® Desert Commercial AdvisorsSVN® Vanguard Commercial Real Estate Advisors
SVN® Insight Commercial Real Estate AdvisorsSVN® The Equity Group
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SVN® Walt Arnold Commercial BrokerageSVN® J. Beard Real Estate

June 26, 2024 – 2024 Southwest Region Meeting – Del Mar Races

The SVN Vanguard Southwest Region Conference delivered a day filled with valuable insights, networking opportunities, and a deep dive into the latest trends and developments in the commercial real estate industry. Here’s the breakdown of emerging topics covered throughout the conference. 

Breakfast by Rise Southern Biscuits and Righteous Chicken

The day kicked off with a delicious breakfast courtesy of Rise Southern Biscuits and Righteous Chicken. This gave our SVN advisors the perfect opportunity to get to know each other and network within SVN’s Southwest Region circle. 

This was a key part of the day because it opened up the opportunity for brokers to team up with others and close deals across state lines to utilize our national network in the future.

A special thanks to all the SVN branches who made it out to San Diego:

Opening Remarks – Team Introductions

Joe Bonin, Managing Director, San Diego led the opening remarks, introducing the other SVN Managing Directors and setting the stage for the day’s events, providing an overview of the conference’s objectives and the value it offers to its attendees.

Managing Directors:

Joe Bonin on QSR Business Automation

The first conversation consisted of Joe Bonin (Managing Director, SVN San Diego) explaining the importance and intricacies of Quick Service Restaurants (QSRs) and how their pivoting business model can have a future impact on the employment industry. 

The main QSR discussed during this conversation was about the quick rise to popularity of Rise Southern Biscuits and Righteous Chicken. If you haven’t tasted it, we suggest you do! Ever since 2020, the restaurant scene has been ever changing and Rise is ahead of the curve on this drastic change. By implementing technology to streamline the ordering and pickup process for customers, Rise has been able to severely cut down operational costs and increase profitability of their restaurant. 

By having customers simply order through Rise’s app, they are able to cut down waiting times substantially and collect valuable marketing information that can be implemented into their advertising systems and automations for each individual customer. Will QSR’s become the new norm within the service industry due to their low cost of operation and lower liability risks?

What do you think? Are QSRs the future? 

Ryan Ward on How to Set Up Buildout Grids

The next speaker was Ryan Ward, a seasoned Senior Advisor for SVN Vanguard and a well-respected multifamily broker within the San Diego market. Ryan provided valuable insights into the challenges advisors face in the multifamily industry, particularly highlighting the complexities involved in evaluating and underwriting multifamily properties.

Ryan emphasized the shift away from traditional methods, such as meticulously crafted Excel sheets, which have long been the standard for property valuation. He introduced a new, innovative approach on Buildout’s platform that streamlines the evaluation process, making it more efficient and accurate, while having the ability to implement real-time numbers your client might suggest. Ryan’s method leverages advanced technology and data analytics to assess the value of properties, providing a more comprehensive and nuanced understanding of the market. 

By adopting this new methodology, advisors can now evaluate properties with greater precision and confidence, considering factors that might have been overlooked in the past. This approach not only saves time but also enhances the accuracy of valuations, ultimately benefiting both advisors and their clients. Ryan’s presentation underscored the importance of embracing modern tools and techniques in a rapidly evolving industry, paving the way for more informed decision-making and better client outcomes.

Patrick Millay on the Impact of Insurance Changes to Both Tenants and Landlords

Patrick discussed the recent changes in insurance policies and the implications for both tenants and landlords. This conversation explored how these changes could affect businesses and how SVN can offer strategies to navigate the evolving insurance landscape.

One of the key highlights of Patrick’s presentation was the introduction of SVN Vanguard’s Master Insurance Program. This innovative program is designed to assist brokers within the Southwest Region in providing substantial cost-saving solutions to business and property owners. By consolidating vetted property owners into a portfolio of assets, the Master Insurance Program enables these owners to benefit from reduced insurance costs.

The program works by leveraging the collective strength of multiple properties, allowing participants to access more favorable insurance rates and terms that might not be available to individual property owners. This not only helps lower the overall insurance expenses but also offers comprehensive coverage tailored to the specific needs of the included properties.

This program represents a significant opportunity for our Advisors to pitch SVN Vanguard’s services (property management and brokerage) to potential clients, positioning the firm as a valuable partner in managing and optimizing insurance costs. The Master Insurance Program exemplifies SVN Vanguard’s commitment to providing innovative and practical solutions supporting the financial well-being of their clients.

Product Breakout Session

Attendees participated in four breakout groups, each focused on a different asset type: Office, Retail, Industrial, and Multifamily. These breakout sessions provided a platform for in-depth discussions about the unique challenges and opportunities associated with each asset class across various markets, including San Diego, Las Vegas, Phoenix, and Orange County.

Across all breakout groups, there was a shared understanding of the importance of adapting to market changes and leveraging local market knowledge to capitalize on opportunities. The sessions provided valuable insights and actionable strategies for participants to apply within their own markets, reinforcing SVN Vanguard’s commitment to fostering collaboration and innovation in the commercial real estate 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.

Macroeconomy & Labor Environment

Inflation, uncertainty, tightening, recession — these are just a few of the many terms thrown around in recent months, placing investor pessimism on display. However, the economy is sending mixed signals about its health. Let’s look at the state of the commercial real estate market for 2023.

While several large and attention-generating companies have recently completed or announced rounds of layoffs, nationwide job growth continues to be relatively impressive. According to the Bureau of Labor Statistics, the US economy added 311,000 jobs in February, falling from a January tally of 504,000 but far from labor market loosening.

Unemployment claims have jumped to begin March after falling to a nine-month low in January, but job openings remain robust, with more than 10.8 million open positions across the country.

However, investor jitters aren’t without merit. Over the past several weeks, a complex web of economic data, business news, and policymaker statements have only blurred the outlook further.

Let’s start with inflation. The post-pandemic inflation saga has now stretched into its third calendar year, and while there are signs that price growth is slowing, policymakers will be keen on preventing embers from reigniting the flame.

After peaking at a generational high of 8.9% in June of last year, the Consumer Price Index (CPI) has improved for seven straight months, declining to a 6.0% annual inflation rate in February. Still, even if monthly inflation remained flat (0%) through the next six months, annual inflation would still be above the Fed’s 2% target.

Despite rising uncertainty, early 2023 data suggests that at least some of last year’s momentum is carrying into the new year, dampening the likelihood that we are already in recession. Still, policymakers at the Federal Reserve are warning that more good news about the economy may be increasing the risk of a hard landing. As the US economy charges forward, it risks placing further upward pressure on prices, backing the Fed into a corner where higher rates are their only tactical option.

Minutes from the FOMC’s January policy meeting alongside a March 7th speech by Fed Chair Jerome Powell reflected the committee’s willingness to again “increase the pace” of rate-hikes if, in Powell’s words, the “totality of the data were to indicate” such was needed. Fed officials’ increasingly hawkish sentiment has reinforced the consensus that policymakers will be going the distance on fighting inflation, even if markets sit in the crosshairs.

However, a new development may throw water on theFed’s plans. On March 10th and in the days since, the collapse of Silicon Valley Bank and Signature Bank became the largest US bank failures since the 2008 financial crisis — primarily due to a lapse in strategy for today’s rising interest-rate environment. While regulators have stepped in and given public assurances to help affirm faith in the financial system, the market is betting the SVB failure forces Jerome Powell and company to pivot their monetary policy.

According to the Chicago Mercantile Exchange’s Fed Watch Tool, futures markets are pricing in a 58.3% chance of a 25-basis point hike in March and a 41.7% chance that the committee will hold rates constant at 450-475 (as of the morning of March 13th, 2023).

For context, just a few weeks ago, an overwhelming majority (90.8%) of futures traders projected a 25-basis point rate increase in March, driven toward consensus by improving inflation metrics and a gradual reduction in the Fed’s recent rate hikes. The consensus then shifted to forecasting a 50-basis point hike following Powell’s hawkish March 7th press conference — only to move back to 25 bps following the SVB failure.

Overall, the state of the US economy in 2023 is, well…complicated. And we didn’t even mention Washington’s ongoing debt ceiling dilemma. As investors look through their windshields, factoring in this increased uncertainty will be necessary. Receding market panic from the SVB/Signature collapse alongside inflation’s tepid deceleration in February increases the likelihood that policymakers will raise rates by at least a 25 basis points later this month. If the above assumption holds, the development should provide markets with a better sense of direction moving forward and reduce short-term uncertainty.

This new office in North County San Diego will be an addition to the SVN Vanguard offices in San Diego, Santa Ana, Long Beach, Los Angeles.

SVN Vanguard is an independently owned company that is part of the 200+ companies in the SVN global network. SVN Vanguard is one of largest companies in the SVN system and is currently ranked #3 globally.

SVN Vanguard offers commercial real estate sales and leasing, property management and maintenance services. Joe Bonin will be the North County office Managing Director and Tony Ying will provide Regional Manager support.

“SVN Vista is now officially open. Servicing commercial real estate in North County San Diego including San Marcos, Escondido, Encinitas & Poway”

The SVN Vanguard Vista location will focus on support for clients in the retail, industrial, land, office and non-profit sectors.

About SVN Vanguard

SVN Vanguard is a full-service commercial real estate franchisor of the SVN brand, comprised of 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. Visit http://svnvanguardsd.wpenginepowered.com for more information.

Read the Economic Update HERE

Featured topics:

  1. Consumer Price Index
  2. Consumer Sentiment
  3. Logistics Managers Index
  4. MBA Mortgage Applications
  5. Workplace Occupancy
  6. Tech Workers and Remote Work
  7. Construction Spending
  8. Yield Curve and Predicted GDP Growth
  9. Special Servicing Rates
  10. CMBS Delinquencies

Read the Economic Update HERE

Featured topics:

In February, the national VODI grew 29%, increasing by 13 points to 58.

By Les Shaver | March 25, 2021 at 07:03 AM | Originally Published on GlobeSt.com

One year after the COVID lockdowns began, demand for office space is finally approaching pre-pandemic levels.

The national VTS Office Demand Index (VODI), which tracks tenant tours, both in-person and virtual, of office properties across the nation, posted significant gains in January and February and is now 38% lower than it was just before the pandemic. By comparison, it was 85% below pre-pandemic levels last May.

In February, the national VODI grew 29%, increasing by 13 points to 58. “While we saw some growth in demand in the back half of 2020, the exponential increase in the first two months of 2021, combination with the announcement from the Biden Administration that all Americans will be eligible for the vaccine by May 1, 2021, is providing confidence that a meaningful recovery is on the horizon.” VTS CEO Nick Romito said in a prepared statement.

February also marked the first month since October 2020 where demand grew in all of the office markets tracked by VODI. Previously hard-hit markets New York City, Seattle and Washington, D.C. led the growth.

In New York, demand for office space jumped 120% in 2021 and is down 40% from pre-pandemic levels. The VODI has steadily risen from 35 in December to 77 in February after hitting a low of 7 in May 2020.

Last year, some observers, like Michael P. Feldman, CEO of Choice New York Cos., predicted that the office situation would improve in the city.

“At some point, we’re going to have our arms wrapped around this thing,” Feldman said at the time. “And most things will go back normal. To me, it is going to look more like the old normal than most people think.”

While Seattle experienced seasonal declines in Q4 2020, demand is now up 182.6% in 2021. It rose 22 and 20 VODI points in January and February, respectively, to 65. The city’s leasing demand is now only down 24% from pre-crisis levels one year ago.

Two California markets, San Francisco (down 5%) and Los Angeles (down 18%), have almost regained their losses since the beginning of the pandemic. San Francisco’s VODI picked up 38 VODI points from 15 in November to 53 in February, jumping 253% over the last three months. In mid-2020, there was almost no demand in the city.

“While it is encouraging that San Francisco has made up almost everything lost since the pandemic started, it is important to remember that demand in San Francisco was depressed leading into the pandemic, VTS Chief Strategy Officer Ryan Masiello said in prepared remarks.

San Diego office space in March 2021 was half of what it was pre-pandemic. This market is experiencing fits and starts with relative stability now in 2022 – now at 87% of normal.

Not every hard-hit market is experiencing rapid recovery, though. While Boston and Chicago gained 3 and 8 index points in February, respectively, they are coming out of a period of flat or negative growth. VTS thinks growth could be “latent as opposed to absent in these cities.”

VTS isn’t the only source seeing strength in the office market. Investor KBS says that there will always be demand for office space, but with the vaccine rollout and an end in sight for the pandemic, it is bullish on office activity this year.

“Office buildings are not going away any time soon,” Giovanni Cordoves, Western regional president, tells GlobeSt.com. “As long as workers have a need for community and employers strive for ingenuity and collaboration, there will be a demand for office space. Additionally, as the COVID-19 vaccine becomes more widely available and people feel safe and comfortable, well-amenitized office properties will once again be in high demand.”


Are you looking to purchase an office property? Does your business need office space for lease? View our inventory on our Properties page for current availability.



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