Investors may hit the pause button as the United States enters a new period of uncertainty driven by news of tariffs, deportations and government cost-cutting. This pause could last for weeks, months or even years as investors wait for clarity, said John Chang, national director of research and advisory services at Marcus & Millichap.
Last October, the U.S. economic uncertainty index was fairly low at 109, but since then it has more than doubled to 225, which is similar to the level of uncertainty during the Global Financial Crisis, said Chang. Historically, high levels of uncertainty have led to volatility in the financial markets. In such markets, commercial real estate investment offers a positive outlook.
“The durability of commercial real estate investment is particularly appealing despite the uncertainty and the risk of financial market volatility,” said Chang. “The underlying economy remains sound, with healthy GDP growth, consistent job creation, low unemployment and modest but positive inflation adjusted retail sales gains.”
Recommended For You
CRE prices have adjusted over the past couple of years to align with the cost of debt capital, and the outlook for CRE vacancy and rent growth remains positive. Office and retail construction remains limited and multifamily and industrial construction are tapering. Policies like tariffs and stricter immigration enforcement are likely to further restrain new supply additions from the demand side, he said.
“We continue to see strength with apartment absorption in the second half of 2024 delivering record results,” said Chang. “Office absorption has turned positive and appears to be gaining momentum, and we still see pent-up retail space demand in the market with supply limitations restraining retailers’ ability to achieve their expansion goals.”
With constrained supply and growing demand for all types of commercial real estate, the stable long-term opportunities offered by the industry should be appealing, said Chang.
© 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.
Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
