With the midpoint of 2025 rapidly approaching, real estate services company Cushman & Wakefield has released a report that foresees continued strong demand for multifamily housing and an office market showing early signs of recovery. The report “Midpoint 2025 – U.S. Economic & CRE Outlook” said the commercial real estate landscape continues to evolve in response to shifting economic forces.
In looking at the U.S. economy in general, the report suggested that tariffs and related economic policies will result in slower growth and growing inflationary pressures in the second half of the year. The authors, Rebecca Rockey, C&W’s deputy chief economist, and senior economist James Bohnaker said policy changes would lay the groundwork for a stronger economy in 2026.
The report said that demand for multifamily housing remains strong and is likely to benefit from challenges in the homebuying market.
“Renting will remain economically more favorable than purchasing housing due to high mortgage rates,” the report said. “Robust demand remains a consistent theme for the multifamily segment as 102,000 units were absorbed in Q1 2025, building on momentum from 2024.”
Cushman & Wakefield said that over the past 25 years, including three recessions, there has only been one quarter of negative net absorption of multifamily housing.
The report said that the office market is showing early signs of recovery, with sublease availability improving.
“Physical office occupancies have been stable for about three years, but company announcements show that employers are directionally moving back toward an office-centric approach,” the report said. “Net absorption is on the rise. While still negative, nearly half of the markets we track reported positive absorption in Q1 2025. Moreover, demand is improving across almost all markets, bringing aggregate absorption closer to a positive turning point.
Cushman & Wakefield said that well-located, newer Class A spaces could emerge as a strong opportunity in the evolving office market.
“Retailers will bear the brunt of the direct impact of higher prices stemming from tariffs, with some looking to offset those costs by rightsizing supply chains and real estate portfolios,” Cushman & Wakefield said. “Profit margins were already pressured heading into 2025, and the additional costs will likely weigh on leasing over the next several quarters. Vacancy rates at shopping centers are trending near historic lows with a national average of 5.5% as of Q1 2025, even as recent bankruptcies and closures begin to hit the market.”
The report said that consumer confidence, credit quality and the job market will need to be watched in the months ahead. It said that demand is growing in alternative sectors like senior housing, data centers and built-to-rent, driven by structural demographic and economic shifts.
According to Kevin Thorpe, C&W’s chief economist, “The trade war will be inflationary to the U.S. economy, in our view, but the additional upward pressure from tariffs will eventually abate, leading to a more attractive combination of faster growth, decelerating inflation and likely more accommodative monetary policy as 2026 unfolds. The policy agenda also has the potential to shift toward more growth-friendly items such as tax cuts and deregulation.”
