By Mel Schultz Market Trends 2025, leasing

2025 Commercial Real Estate Market Trends

Is the commercial real estate market finally rounding a corner? Many CRE professionals believe 2025 will be a better year for commercial real estate than the last few years. Understanding trends in the real estate market can help you build a more profitable portfolio.

For a detailed look at the CRE trends for 2025, we took a close look at Deloitte’s 2025 Commercial Real Estate Outlook. If you want to read the entire thing, here’s the link. But if you don’t want to take a half-hour out of your day to digest global CRE trends, then we’ve got a great summary for you. Read on.

Overall Optimism for the 2025 CRE Market

At the heart of the Deloitte outlook is a survey of commercial real estate professionals from around the world, including those in North America. Deloitte’s most recent survey found that 68 percent of respondents expect the global commercial real estate market to improve in 2025. This is significant, as just 27 percent of respondents to last year’s survey had such optimism.

Globally, professionals see improvements in a number of CRE fundamentals, including leasing and transaction activity, rental growth and increased property prices, and improved availability of capital.

In North America, 72 percent of respondents expect to see improvements in leasing in 2025. This includes increases in rent as well as leasing activity, leading to lower vacancies. Nearly as many respondents also believe property prices and transaction activity will improve, while 69 percent expect improvement to the lending market, including a decrease in the cost of capital and more capital availability.

Specific Areas of Improvement

Let’s take a closer look at specific areas of improvement. Generally, real estate professionals believe financing will be easier and less expensive to obtain for borrowers, though the numbers will vary by geography and property type.

Globally, respondents indicated that the industrial/manufacturing, digital economy, and multifamily housing markets present the greatest opportunity in 2025. Optimism for the industrial sector is primarily driven by manufacturing space demand in the wake of the COVID-19 pandemic and its related supply chain issues. In the US, other factors include companies reshoring manufacturing operations to the United States from abroad and the CHIPS and Science Act driving demand for semiconductor manufacturing.

Demand for properties to house data centers and other internet and telecom-related enterprises continues to rise in North America and across the world. Real estate professionals are also bullish on properties designed for the life sciences as well as self-storage facilities.

Offices Still in a Slump

However, Deloitte survey respondents were less optimistic about office space in 2025. These lower expectations were driven by persistent elevated vacancies and more expensive financing costs. As a result, there could be more consolidation of lower-value properties if valuations continue to decline.

Sustainability Investments Continue

Property owners and developers will continue to make sustainability improvements to their properties in 2025. While some of these professionals feel sustainability is core to their business strategy, an increasing number will choose sustainability improvements due to their modest financial returns. What’s more, sustainability improvements may help portfolio owners avoid asset obsolescence and extend the profitability of their book.

What are your predictions for the 2025 commercial real estate market? We’d love to hear about what you’re seeing on the ground, and if it aligns with what professionals across the country and around the globe are observing. Whatever is in store for us next year, the Clarity Commercial team is here to support you. For professional commercial real estate management, contact Clarity Commercial today.

Properties management Minnesota - IREM Property Manager Professional Development Events commercial tenants - commercial real estate market

For more information or to request a free estimate, visit their website at https://myclaritycommercial.com/ or give us a call at (952) 370-224-2699.

Affiliations & Credentials: We are proud members of IREM, CCIM and MNCAR along with various professional organizations and hold relevant certifications in the real estate management field. Our affiliations and credentials demonstrate our commitment to excellence and our ongoing efforts to stay up-to-date with industry best practices.

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leasing, sustainability, occupancy costs

June 20, 2024

By Mel Schultz Tenant/Landlord leasing, occupancy costs, sustainability

5 Ways to Lower Your Occupancy Costs

We’re halfway through 2024, and it looks like multifamily, retail, and industrial properties are bouncing back from last year’s slump, while office vacancies continue to rise. If you’re looking for ways to cut your costs as your portfolio recovers, we have five ideas on how you can lower occupancy costs to improve portfolio performance. These tips are valuable not only for landlords; your tenants can use these tips to reduce their own costs and mitigate the need to look for another space once their leases are up.

1. Reconfigure Your Space to Lower Occupancy Costs

Hybrid work is driving changes in the configuration of office space. Private workspaces are going empty, while demand for collaborative spaces in offices has risen 40 percent since 2021. Over the last few years, tenants have been cutting space or reconfiguring their spaces to accommodate more coworking, teleconferencing, and flexible work.

As a landlord, you can capitalize on these trends by reconfiguring your existing spaces to make them appealing to tenants who are looking for more collaborative spaces or a reduced overall footprint. One large office suite could transform into two suites with flexible space. You may also consider investing in common area improvements that appeal to companies offering hybrid work, such as collaborative work areas and high-speed WiFi throughout your building.

2. Dig into Your Analytics

Your books can tell you a lot about the health of your portfolio. They can also help you find ways to cut your occupancy costs. Clarity Commercial can review your books with you to reveal your top costs, project future investments, and find opportunities to reduce current expenses.

3. Reduce Capital Expenses

In our review of your books, we may uncover ways to reduce capital expenses and cut future occupancy costs. Investments in many building improvements and upgrades can be converted from capital expenses to operating expenses once they are complete, turning them from investments into services you provide your tenants. An example of this would be installing solar panels on your building. You may be able to further reduce capital expenses by making early commitments on equipment orders and bundling smaller projects or recurring projects together.

4. Automate with Smart Technology

Smart technologies not only make it easier to manage your buildings, they reduce costs and can lead to increased tenant satisfaction. Your building engineering, HVAC, janitorial, security, landscaping, and access control can all benefit from smart technology improvements. These improvements help you cut your energy costs, more efficiently allocate your resources, and track occupancy levels.

5. Make Sustainability Improvements

Sustainability improvements are not only attractive to tenants, they help you reduce your operating costs and help you anticipate future regulations and mandates from your city, county, or state. Examples of sustainability improvements include switching to LED lighting, automating HVAC systems to improve efficiency, investing in solar power, implementing a recycling and composting program, and installing EV charging stations in your parking areas.

The CRE market is on the upswing in many areas, but we’re not out of the woods yet. Clarity Commercial can help you make sense of your books so you can uncover cost savings opportunities. Our CRE experts can help you make smart investments in the building improvements that will attract and retain tenants. For professional commercial real estate management support, contact Clarity Commercial today.

a building with a parking lot - Occupancy Costs

For more information or to request a free estimate, visit their website at https://myclaritycommercial.com/ or give us a call at (952) 370-224-2699.

Affiliations & Credentials: We are proud members of IREM, CCIM and MNCAR along with various professional organizations and hold relevant certifications in the real estate management field. Our affiliations and credentials demonstrate our commitment to excellence and our ongoing efforts to stay up-to-date with industry best practices.

March 26, 2024

By Mel Schultz Commercial Properties, Commercial Property Management budget, leasing, maintenance, Property Management, tenants

Attract New Tenants with These 5 Alternative Uses for Vacant Commercial Space

If you’re struggling to fill vacant commercial building alternative uses this year, you’re not alone. Many commercial property owners are finding it challenging to attract traditional tenants for their offices, retail, industry, and other space.

To survive in a hard market, it is important to think outside the box. Here are a few alternative uses for vacant commercial space that could help you land your next loyal tenant.

Commercial Building Alternative Uses

1. Life Science Labs

Life science companies require a mix of office and laboratory space. If you’re willing to work with the tenant on the build-out, your vacant office space may be the perfect future home a biotechnology, food processing, or medical device firm. Your existing building may be a more attractive option to the right company than ground-up new construction.

2. Medtail

In a similar vein, your retail space may be the ideal home for a new medical office. The medtail model puts outpatient services in a retail setting. Not only is this convenient for consumers, it can open up an entire new tenant market for you. Medtail build-outs are relatively straightforward, and the new tenant may attract other medical businesses to your property.

3. Eatertainment

It’s eating. It’s entertainment. It’s eatertainment. The Twin Cities is home to several eatertainment venues (think CanCan Wonderland in St. Paul or Punch Bowl Social in the West End). If you have a big space to fill, a tenant that plans to combine a restaurant or bar with sports, music, or other social activities might be the perfect fit.

4. Glamping

If you have vacant land in a rural area that is awaiting development, consider marketing your property to potential glamping tenants. Glamping, or glamorous camping, is an increasingly popular way for non-outdoorsy people to enjoy the outdoors. Your acreage may be the ideal spot to attract vacationers.

5. Pickleball

Pickleball was 2023’s fastest-growing sport in the United States, so why not capitalize on the trend? Pickleball courts are popping up in empty big-box stores and other properties with tens of thousands of square feet. This is a great opportunity for commercial real estate owners looking to repurpose their vacant spaces.

For those who are unfamiliar, pickleball is a racquet sport that combines elements of tennis, badminton, and ping pong. It can be played both indoors and outdoors on a smaller court than traditional tennis, making it accessible for all ages and skill levels. The game’s popularity has exploded in recent years due to its ease of play and social nature.

With the rise in demand for pickleball courts, Commercial Building Alternative Uses owners are taking advantage of this trend by converting unused spaces into dedicated pickleball facilities. These spaces can range from empty storefronts to large warehouse buildings – as long as there is enough space to fit the necessary dimensions of a pickleball court.

For businesses looking to attract more customers or provide additional amenities for their tenants, adding a pickleball court can be a smart investment. Not only does it offer a unique and fun activity for patrons and residents, but it also presents opportunities for hosting events and tournaments that can bring in revenue.

Pickleball courts can also be a valuable addition to hotels and resorts, providing guests with another form of entertainment during their stay. They can even be used as an attraction for corporate team-building activities or family gatherings.

If you’re struggling to attract tenants, Clarity Commercial is here to help. Our property managers can help you market your portfolio and find the ideal tenant, even if they are outside the box. Contact Us Clarity Commercial today for expert property management advice.

For more information or to request a free estimate, visit their website at https://myclaritycommercial.com/ or give us a call at (952) 370-224-2699.

Affiliations & Credentials: We are proud members of IREM, CCIM and MNCAR along with various professional organizations and hold relevant certifications in the real estate management field. Our affiliations and credentials demonstrate our commitment to excellence and our ongoing efforts to stay up-to-date with industry best practices.

Tag: leasing