CBRE’s 2025 U.S. Investor Intentions Survey reveals that investor optimism is present but cautious due to prevailing uncertainties and risks, most notably, elevated and volatile long-term interest rates. While 54% of investors anticipate an overall recovery in investment activity by the first half of 2025, a larger percentage (75%) are even more optimistic about the recovery of their own investment activity within the same timeframe, suggesting a pursuit of first-mover advantages.
Despite the anticipated continuation of 10-year Treasury yields above 4% throughout 2025, a significant 70% of surveyed investors plan to increase their commercial real estate asset purchases compared to the previous year, while just under 50% plan to sell more. This dynamic is expected to intensify competition for assets, contributing to price stabilization, despite relatively high interest rates. Investor allocations to real estate are set to either hold steady or increase, driven primarily by attractive pricing, while interest rate cuts by the Federal Reserve and pro-growth policies potentially from the Trump administration are predicted to further alleviate concerns, particularly those related to the denominator effect.
Dallas maintains its position as the top-performing market for the third consecutive year, with Miami/South Florida remaining a strong contender. Several gateway markets, including Boston, San Francisco, and New York City, have regained prominence in investor preferences. Value-add and core-plus strategies continue to be favored by the majority of investors. Multifamily assets remain the most sought-after property type, followed by industrial, with retail showing increased appeal. Pricing expectations are stabilizing across most property types, with the exception of office assets, where wider discounts are anticipated.
Most investors (nearly 70%) intend to maintain their existing debt-to-equity ratios, with a tolerance for up to one year of negative leverage. Uncertainty surrounding interest rate movements and higher interest expenses remain key challenges in securing debt. Investors are primarily interested in mortgage financing, mezzanine financing, and, to a lesser extent, distressed debt. A notable trend is the increased preference for direct real estate equity investments, driven by opportunities presented by favorable pricing.
In conclusion, investors are gearing up to deploy more capital in 2025, signaling a continuation of recovery in investment activity despite high interest rates. Strategic market and asset selection will be crucial as a new real estate cycle commences, especially amidst potential interest rate volatility.
