In the evolving sector of commercial real estate (CRE), JLL‘s “2025 Guide: The State of Commercial Real Estate – Private Investor” offers a roadmap for private investors seeking to build steady positions. Released amid stabilizing markets, the report underscores the personal nature of CRE investments, from revitalizing vacant warehouses into mixed-use hubs to expanding revenue streams beyond residential properties.
With global transaction volumes for properties valued between $5-30 million reaching $218.6 billion in 2024—a rise from $207 billion the previous year—the research report highlights a recovering market ripe for strategic entry.
The state of the market reveals pockets of resilience in assets under $50 million, including multifamily apartments, industrial warehouses, self-storage, medical offices, undeveloped land, and resurgent retail.
Office spaces, while challenged, show selective opportunities.
Anticipated improvements in liquidity for 2025 stem from increased lender allocations to commercial mortgages, contrasting with 2024’s caution due to high interest rates and economic uncertainty.
This shift allowed private buyers to snag discounts, but as institutional investors return with rigorous underwriting, early movers in 2025 could secure first-mover advantages.
However, supply constraints from delayed completions and elevated construction costs will intensify competition for premium assets, while steady rates stabilize debt and spur demand.
Why invest in CRE? The report touts its superior long-term performance, with U.S. private real estate delivering 11.19% annualized returns from 2013-2023, outpacing Europe (9.40%) and Asia-Pacific (7.98%).
It excels in inflation hedging, offering steady income and mid- to long-term gains, even if rates linger.
Sector breakdowns provide targeted insights. Multifamily investments are booming, fueled by urbanization and population growth.
Global sales jumped from $162.9 billion in 2023 to $188.1 billion in 2024, with the U.S. accounting for $132 billion.
Emerging markets like the UK, France, and China see maturation in student and single-family rentals, capitalizing on housing shortages.
Retail is rebounding, drawing interest for strong returns and rent growth in prime locations such as high streets and grocery-anchored centers.
In the U.S., private investors dominated 71% of 2024 transaction volume, particularly in Sun Belt states like Texas and Florida, where demographics drive performance.
Industrial and warehouse sectors face headwinds from tariffs and inflation but maintain liquidity, with global sales rising to $166 billion in 2024.
Future drivers include e-commerce, nearshoring, and sustainability demands for energy-efficient spaces.
Offices present a mixed picture: U.S. sales hit a low of $17 billion in 2024 for mid-tier properties, but global figures climbed 13% to $147.9 billion, buoyed by return-to-office trends and Asia-Pacific leasing strength in Japan and Australia.
Tenants prioritize quality, amenities, and prime locations.
Looking ahead into the foreseeable future, the report urges private investors to act amid rebounding liquidity, diversifying portfolios and evaluating risks through data-driven strategies.
By consulting with industry specialists, investors can potentially navigate market uncertainties, broaden exposure, and position for wealth-building in 2025’s / upcoming 2026’s market.