PODCAST: ‘Not your typical cycle’: commercial real estate in 2025

As commercial real estate markets enter a new cycle, experts warn not to assume the past will be any sort of guide for the year ahead.

Investors and occupiers are looking at 2025 as a year full of opportunities. The data center sector continues to expand. Housing is high in demand. Offices continue to fill back up. Different regions and countries are showing new promise.

But the common thread running through it all that differs the outlook from previous cycles: interest rates. Central banks have been aiming to ease monetary policy in the face of generally strong economies, particularly in the U.S. This has led to an easing cycle "high-ish for longer" interest rate environment, rather than dramatic cuts.

"If you apply prior easing cycles and policy rates to this one, you will draw the wrong conclusions," says Brian Klinksiek, global head of research and strategy for LaSalle Investment Management. "We have a totally different scenario today."

Klinksiek was speaking alongside Ben Breslau, JLL's global chief research officer, on a recent Trends & Insights podcast.

"The market overall has turned the corner, and 2025 will be a year of rebalancing and improving in a lot of places,” says Breslau. “And if you look out over a few-years horizon, I think we are going to get to a point where we see supply shortages in many sectors and many geographies, but not all for the same reasons.”

Two sectors of note the duo highlighted: data centers and specialized housing solutions.

According to JLL's Global Data Center Outlook 2025, the global data center market is projected to grow at a CAGR of 14% from 2024 to 2025, driven by increasing cloud adoption, 5G rollout, and the rise of AI and machine learning technologies.

"However, there's not a lot of discussion around the required return for data centers,” says Klinksiek. “How do you price the technological risks and potential changes to things that really shape the supply of data centers like power availability?"

In the housing sector, Klinksiek highlights an interesting development in Europe. "There's a sweet spot of providing housing for 20-somethings: it's late-student accommodation, early professional years. There's product in some markets that's a blend of that, which is really hard to come by due to rent control in many European markets."

Klinksiek also highlighted industrial outdoor storage in the U.S.: “It's less expensive, hard to access, but also hard to recreate because many municipalities don't want these pieces of land with trucks parked on them.”

"We see pretty robust growth and transformation in markets like India, Saudi Arabia, and the UAE, accompanied by an improvement in transparency on the real estate data side," Breslau says.

To gauge market recovery, the experts use JLL’s proprietary Bid Intensity Index, looking at real-time bid data for transactions in private real estate markets to gauge liquidity. “The index improved noticeably in 2024 demonstrating further recovery in overall investor activity”, according to Breslau.

Both emphasize the challenges in forecasting, particularly regarding interest rates.

"The direction of interest rates is by far the most difficult thing to forecast,” Klinksiek says. “If we were good at forecasting interest rates, we'd probably be in a different business other than real estate researchers."

Listen to the full episode of the Trends & Insights podcast, and subscribe for regular updates on market trends, expert analyses, and strategic insights that will help navigate the evolving world of commercial real estate in 2025 and beyond.

LaSalle’s Global Head of Research and Strategy

As head of global research and strategy at LaSalle Investment Management, Brian leads a team of experts analyzing market trends and investment opportunities worldwide. He oversees crucial functions including investment risk assessment, global quantitative analysis, and climate strategy development. Brian serves as editor-in-chief for LaSalle's Insights, Strategy and Analysis (ISA) publications and is a key member of the Global Investment and Management Committees. Prior to his current role, he led LaSalle's European Research and Strategy team and held various leadership positions at Heitman across Hong Kong, London, and Chicago.

JLL's Global Chief Research Officer

Ben leads a global team of 500 researchers analyzing commercial real estate across property types in approximately 100 countries. Based in Boston, he oversees JLL's research and strategy capabilities, delivering insights to investors, occupiers, and institutional clients. Ben chairs the Global Research Executive Board and regularly presents at conferences and to media. With nearly 25 years in commercial real estate, he specializes in future workplace trends, urbanization, capital flows, technology, demographics, and sustainability. Ben co-authored "The Workplace You Need Now" in 2021 and actively participates in industry associations including ULI, NABE, and CoreNet.