Despite ongoing macroeconomic pressures, including elevated interest rates and global market uncertainty, multifamily properties have emerged as the leading force in U.S. commercial real estate in 2025. According to CBRE’s latest market outlook released on June 19, 2025, investor interest in multifamily assets remains strong, supported by robust rental demand and an improving trend in rent growth.
The report paints a cautiously optimistic picture of the commercial property landscape. While office space vacancies remain historically high, they appear to have reached a plateau, sparking interest in adaptive reuse strategies—particularly in major cities where urban density and housing demand create favorable conditions for conversions.
Multifamily Sector Resilience
Multifamily properties are thriving in what many might consider a challenging environment. CBRE notes that vacancy in this segment remains low, hovering around 4.8% in the first quarter of 2025, with slight upward projections to 4.9% by year-end. Despite interest rates that have constrained financing activity in other sectors, multifamily assets continue to attract capital.
The enduring appeal lies in fundamentals: renters have shown consistent demand, especially in urban and suburban markets where housing affordability remains strained. This is driving steady rent increases, with CBRE forecasting a national rent growth rate of approximately 2.6% for 2025. In particular, secondary markets such as Raleigh, Tampa, and Salt Lake City are outperforming with higher-than-average returns.
“Multifamily remains the most liquid and resilient segment of the market,” said a CBRE analyst. “Investor appetite persists, particularly for well-located Class B and workforce housing that caters to broad renter demographics.”
Office Market Stabilizes, Conversions Expand
After several tumultuous years marked by remote work and occupancy declines, the office sector may be entering a phase of stabilization. CBRE reports that national office vacancy has leveled off at around 19%, signaling a potential turning point after years of climbing rates. However, demand for traditional office space remains tepid, pushing developers and municipalities to consider long-term transformation plans.
An emerging trend is the conversion of underutilized office properties into residential or mixed-use developments. This strategy is gaining momentum in cities like New York and Chicago, where aging office inventory, zoning incentives, and acute housing shortages intersect.
In New York City, for example, recent redevelopment plans at 5 Times Square and the former Pfizer headquarters are expected to yield more than 2,800 new residential units through conversion. CBRE estimates that such projects could remove nearly 4% of total office inventory from Manhattan, signaling a fundamental reshaping of the urban core.
This transition is viewed not just as a tactical response to office oversupply but as a broader reimagining of how downtown areas function in a post-pandemic world.
Other Commercial Sectors Adjust Strategies
Beyond multifamily and office, other commercial real estate segments are also adapting. The retail sector, though uneven in its recovery, is benefiting from foot traffic in mixed-use developments and suburban nodes. Meanwhile, logistics and industrial assets remain essential to domestic supply chains but are facing pressures from global tariffs and shifting sourcing practices.
In response, companies are increasingly embracing onshoring—bringing production and distribution closer to U.S. markets—and adopting tariff mitigation strategies. These changes are altering demand patterns for industrial space, particularly near ports, rail hubs, and inland logistics centers.
Data centers, a previously niche asset class, are gaining momentum amid surging demand for cloud infrastructure and AI computing. Developers in this space are focusing on energy efficiency and grid access, particularly in Midwestern states with favorable land and energy conditions.
Outlook: A Year of Strategic Adjustments
CBRE concludes that 2025 represents a year of strategic adjustment rather than aggressive expansion. Investors are focusing on durable asset classes, particularly multifamily, and are scrutinizing office footprints for redevelopment potential. Risk management, zoning reforms, and creative financing are expected to play key roles in how projects are structured and evaluated.
While interest rates remain a limiting factor, many in the industry believe the current environment presents an opportunity for repositioning and long-term value creation. In this landscape, multifamily properties stand out not just for their resilience, but for their central role in the transformation of urban commercial real estate.