After more than a year and a half of hesitation, CBRE Investment Management and its investors are ready to jump into the fray again.
Bisnow/Ciara Long
CBRE IM’s Wei Luo, Bernie McNamara, Robert Shaw, Lucy Fletcher and Elisabeth Troni.
Political unpredictability and macroeconomic indicators could still be stumbling blocks for commercial real estate deals this year, but investors now feel they have enough information and certainty to take action, albeit with a more nuanced approach to location and asset class, CBRE IM experts said Thursday.
“In terms of client sentiment, things are warming up,” said Bernie McNamara, CBRE IM’s head of client solutions.
CBRE IM is the asset management arm of the world’s largest real estate services company, with a $146B portfolio of assets managed on behalf of sovereign wealth funds, pension funds and other institutional backers. The division generated $650M of revenue for the company in 2024, according to its annual report.
While investors are concerned about crosscurrents in the U.S. economy, with higher growth potentially undercut by interest rates remaining higher for longer and sticky inflation, there is “a clear shift for most investors, from defense to offense, switching back to investing,” McNamara said.
Private equity real estate funds raised just $131B last year, the lowest volume since 2012, PERE News reported. But 2025 may see the end to three years of declining investments in real estate: 70% of investors surveyed by CBRE IM planned to buy more assets this year than they did last year, according to a report released this week by the company.
Investors’ interests have been piqued by U.S. markets with more domestic migration, thanks to the federal government’s “radical shift in immigration policy,” CBRE IM Global Research Director and Senior Economist for Insights and Intelligence Wei Luo said.
“We expect to see slower international migration,” she said.
Cities like Dallas, Phoenix, Austin and Nashville, with lower cost of living and lower taxes, may unseat locations like New York City and Los Angeles this year as investor favorites, CBRE IM believes.
“We’re going to study and focus on markets that will be the next Nashville, the next Dallas,” Luo said.
But investors are taking a more nuanced approach to asset classes in 2025 than they have in the past. Assets like “boring, classic office” are still challenged, Portfolio Manager Elisabeth Troni said. That could pose difficulties for the borrowers of roughly $30B in office loans expected to mature this year.
“It goes back to the durability of cash flow,” she said. “You’re having this forced moment in office where you have to put additional capital into an office, but you’re uncertain on the durability of the cash flow.”
Instead, investors are looking at variations on old themes. While multifamily, industrial and retail remain among investors’ favored asset classes in 2025, interest is most active in more niche subsets.
Infrastructure projects like data centers and the real estate supporting the electrical grid, such as EV charging networks and building electrification, create higher demand for electricity, said Robert Shaw, CBRE IM’s managing director for private infrastructure strategies.
Within housing, investors are most interested in student and senior housing, especially as baby boomers begin to occupy senior housing at a rapid clip. More than 560,000 new units are needed by 2030 to keep up with current demand, but the development pipeline only has 191,000 units expected to be delivered by then, The Wall Street Journal reported earlier this month.
Investor interest is in senior housing communities rather than care homes, McNamara told Bisnow.
“My in-laws, mid to late-60s, active — they’re playing pickleball in an over-55 community, and there’s relatively low supply at that end of the market, and also not the operational and headline challenges that the higher acuity type of facilities have,” he said. “There, again, there’s just a parsing of the various subsectors.”