After three rate cuts by the Federal Reserve this year, institutional investors and financiers are cautiously re-entering the real estate market, signaling the beginning of an upswing in transactions after a prolonged downturn. Colliers' latest outlook forecasts a significant rebound in pricing and transaction volume in 2025, driven by improving fundamentals and growing investor confidence across asset classes.
Transaction volume will bounce back by 25%-33% compared to 2024, with industrial properties leading the charge in pricing growth.
Although borrowing costs have not decreased as expected—key benchmarks like the 10-year Treasury yield and SOFR have lagged behind the Fed’s rate cuts—market activity has continued to rise.
Recommended For You
“From the denominator effect and fund extensions to the deployment of sidelined capital, the conditions are prime for a more active year ahead,” said David Amsterdam, Colliers' president of U.S. capital markets.
As asset prices are near their bottom, investors are snapping up properties trading at deep discounts to replacement costs, adding fuel to the optimism for a recovery. The commercial mortgage-backed securities (CMBS) market is also playing a role, with issuance exceeding $100 billion in 2024 for only the second time since 2007. Colliers expects CMBS to remain a vital tool for financing in 2025, especially for cash-flowing assets that continue to attract investor interest.
However, the outlook for 2025 remains mixed. While market fundamentals continue to improve, loan extensions are still widespread as borrowers adjust to the higher-rate environment. Colliers estimates that $280 billion in loans were extended from 2023 to 2024, with a similar amount expected in 2025. This sets the stage for a peak year in loan maturities in 2025 and may lead to significant refinancing activity by 2026.
Distress is also beginning to play a larger role in the investment landscape, particularly in the office sector, where nearly 10% of third-quarter sales in 2024 were distress-driven. Despite this, the office sector is expected to see the strongest volume gains in 2025, with generational acquisition opportunities drawing capital back to the sector.
With sidelined capital flowing back into the market and pricing trends showing signs of upward movement, 2025 could be a turning point for real estate. While distress and loan extensions may still be prevalent, the combination of stabilizing market conditions and growing investor demand offers a promising outlook for the year ahead.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
