Article

US and global commercial real estate — fourth quarter 2025 outlook

September 4, 2025
Mike Bessell
Mike Bessell
Managing Director, European Investment Strategist
Michael Sobolik
Mike Sobolik
Managing Director and North America Research Strategist, Invesco Real Estate
Chase Bolding
Chase Bolding
Portfolio Manager
Aerial Bird View of Skyscrapers at Dusk / Jinan, Shandong, China

It’s been a year of significant shifts in global trading and economic growth patterns. Tariffs and trade wars have disrupted global trade flows, contributing to slower growth in key economies. In this environment, we believe that real estate sectors with higher income yields and income streams that are less tied to the business cycle are best positioned to outperform.

Here are some key takeaways from our current outlook for commercial real estate (CRE) for the US and globally. For a deep dive into our post Labor Day 2025 outlooks, read US commercial real estate outlook and Global commercial real estate outlook.

Key trends impacting real estate today:

  • Tariffs — less uncertainty, higher costs
    Resolving tariff negotiations could reduce the current geopolitical uncertainty. The overall economic impacts remain unclear, but the combination of improved confidence and revised supply chains is likely to lead to improved warehouse leasing.
  • Housing unaffordability drives rental demand
    Rising homeownership costs are driving more people to rent. Limited new supply will tighten vacancies, with the strongest rent growth expected for higher-income renters in mid-tier products.
  • Slowing immigration impacts some sectors
    Changes to the availability of foreign-born workers potentially place incremental pressure on sectors typically most reliant on lower-skilled labor, including construction and manufacturing.
  • Secular trends drive strongest growth potential
    Slower near-term growth puts focus on long-term drivers. Data centers, warehouses, manufacturing, senior housing, and medical outpatient buildings may benefit.
  • Construction slowdown shifts focus to demand
    High interest rates, immigration-driven labor shortages, tariff-driven increases of construction materials costs, and reduced availability of construction debt should curb new building activity.
  • Support for artificial intelligence (AI) and technology changes
    A number of markets are introducing policy measures to encourage further investment in this space.

In assessing the impacts of these trends on real estate investment returns, the starting point in terms of relative pricing and local interest rates is also important. For more detail and a deep dive into these key takeaways in our post Labor Day 2025 outlooks: US commercial real estate outlook and Global commercial real estate outlook.

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    Important information

    Data as of 1 September 2025 unless otherwise stated.

    Views and opinions are based on current market conditions and are subject to change.

    This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.

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