At the start of each year, we ask experts from our Spaces team to share the trends they’re most excited about for the year ahead. In 2025, the outlook is clear: private capital is set to play a larger role in commercial real estate financing, multifamily housing is on track for a strong rebound, and resilient, sustainable construction is emerging as the new standard.
Here’s a closer look at the key trends shaping the future of real estate.
1. Private capital will play a bigger role in CRE financing
Even as the commercial real estate financing landscape begins to stabilize, big banks are expected to remain cautious about deploying new capital in 2025. This hesitation, however, is creating significant opportunities for private lenders. Private equity firms, family offices, and other alternative lending groups are poised to step in, leveraging traditional lenders’ continued aversion to CRE risk — a result of recent regional bank failures and the looming $1 trillion maturity wall forecasted for next year.
Private debt will be especially critical in providing bridge financing for owners facing loan maturities on underperforming assets. Many of these owners are investing in property upgrades and amenities to address high vacancy rates driven by hybrid work trends. However, with interest rate cuts anticipated in 2025 and a competitive private capital market, traditional lending is expected to regain footing, driving higher valuations. With that, the window to seize these opportunities may be narrowing for private lenders.
By: Chris Singleton, Account Director, Spaces
2. The multifamily market is set to bounce back
The multifamily sector is poised for modest growth in 2025, following a lackluster 2024.
A record-breaking 500,000 new apartment units were delivered in 2024, creating a supply glut that led to rising vacancies and declining rent growth across the sector. However, with completions expected to ease considerably in 2025, market fundamentals are set to improve.
Meanwhile, industry experts point to a more favorable debt environment driven by declining interest rates, a strong economy, and robust renter demand that will likely contribute to the sector’s rebound.
Deal activity, which began to pick up in late 2024, is expected to accelerate in 2025 as investors deploy dry powder amid improving property values. According to CBRE’s 2025 Market Outlook, “multifamily is the most preferred asset class for commercial real estate investors in 2025.”
While macro fundamentals will show moderate improvement across the U.S., rental rate growth will vary by market. The concentration of recent deliveries in Sun Belt cities will likely constrict rent growth, compared to gateway cities and other regions with fewer completions.
By: Champaign Williams, Director, Spaces
3. Proactive, climate-resilient construction will become the new standard
As extreme weather events become more frequent and severe, the real estate industry is shifting from reactive mitigation to proactive investment in resilient, low-carbon assets. This evolution reflects a deeper recognition of an interconnected challenge: reducing carbon footprints while safeguarding asset value against escalating climate risks.
Developers are adopting advanced, eco-friendly materials and construction methods that prioritize both sustainability and resilience. Solutions like low-carbon concrete, cross-laminated timber, and reclaimed materials are no longer niche options — they are becoming essential components of climate-resilient construction. Notably, the global market for low-carbon construction materials is projected to grow by over $24 billion in 2025, reflecting an annual growth rate of nearly 9 percent.
This transformation is also reshaping the property insurance market, as climate change drives up premiums. Insurers are revising risk assessments, placing greater emphasis on how assets are designed and built Data shows that insurers faced significantly higher costs in regions with elevated climate risks between 2018 and 2022. As a result, properties designed for resilience and sustainability are increasingly viewed as lower-risk investments, benefiting from more favorable premiums. Conversely, those that fail to meet sustainability benchmarks may face higher premiums or, in extreme t cases, become uninsurable.
This shift marks a pivotal moment for real estate, where environmental responsibility and asset performance are intrinsically linked, fueling meaningful change across the sector.
By: Isabella Sarlo, Account Supervisor, Spaces