“Survive ’til ’25” was the unofficial mantra across commercial real estate this year, but now that 2025 is nearly here, several trends are emerging that will define the CRE landscape in the months ahead.
From the evolution of AI and asset classes that have gone from niche to mainstream, to ongoing business challenges posed by too much office space and too little housing, Taylor Johnson clients are among the industry experts preparing for the highs and lows of a year widely viewed as one of recovery.
(NOTE: To go directly to the trend, please click on the headline below or scroll down for write-ups. A full image gallery is available here. For original expert commentary/interviews on these trends, contact Matt Baker at (312) 267-4512 or mbaker@taylorjohnson.com or Abe Tekippe at (312) 267-4528 or atekippe@taylorjohnson.com.)
- AI is A-OK
- From Bits to Qubits: High-Tech Niche Properties Surge Ahead
- Affordable Housing’s Next Frontier
- Are You Not Entertained?
- RTO Movement Redefines ‘We’ Space
- AI is A-OK
The AI revolution is here, but is the industry — and society — ready for its wide-reaching impacts? That depends on who you ask. Increasingly, property management firms and other real estate companies are turning to AI for cost savings. This could mean unleashing the technology for everything from refining marketing campaigns to running chatbots that interact with tenants and prospects. Some companies are even using AI to look for hints of itself during the recruitment process, weeding out autogenerated resumes and cover letters. However, not everyone in the industry is fully on board. Detractors point to tenants’ preference for face-to-face interactions, especially during the leasing process or with maintenance requests. Because it is so versatile and powerful, there’s little doubt many companies will continue to explore ways AI can streamline operational tasks. But in a business as relationship-driven as real estate, experts agree AI will be a supplement rather than a replacement for workers, freeing up time for them to focus on tasks requiring a personal, and human, touch.
- From Bits to Qubits: High-Tech Niche Properties Surge Ahead
Years ago, many investors had to be sold on the idea of buying warehouses, but now industrial is one of CRE’s hottest sectors. Can other niche asset classes follow this path? Many experts agree data centers — including those needed to power AI technologies — along with cold storage facilities, EV battery plants and even quantum computing campuses will continue to attract a greater share of investment dollars. Each of these property types has its challenges, be it elevated water and power consumption, costly and highly specialized buildouts or NIMBYism. Yet the wide-ranging economic benefits created by supporting next-generation industries have often been enough to garner support from elected officials and community groups that might otherwise stand in the way of such projects.
- Affordable Housing’s Next Frontier
To bring desperately needed affordable housing to underserved areas, including smaller secondary and tertiary markets, real estate firms are forging new partnerships with local municipalities and nonprofits that lack development expertise. In 2025, expect more regulatory changes allowing multifamily projects to arise in places previously zoned for single-family homes. Demonstrating the widespread need for housing solutions, communities such as Ann Arbor, Mich., Springfield, Ill., and Rifle, Colo., are offering subsidies and support to private developers capable of building, renovating and operating affordable and mixed-income properties — projects that wouldn’t be possible without this level of public-private collaboration. Many affordable housing providers are also adopting a holistic approach, offering built-in auxiliary services like financial education, child care and health care. It’s not just about housing anymore; it’s about creating places where people can enjoy a fuller quality of life.
- Are You Not Entertained?
Before the pandemic, experiential retail was all the rage. Going into 2025, the new trend is experiential everything. In CRE sectors like office, multifamily, hospitality and others, property owners are developing strategies to ensure end users are fully immersed in and engaged with their surroundings. Examples run the gamut from office tenant goat yoga and ball pit conference rooms, to multifamily podcasting studios and performance lobbies, to mixed-use projects with “after 5” on-site attractions like concert venues and ice rinks. Additionally, both general contractors and architects have seen a rise in entertainment work, with some firms creating new divisions to ride the recreation wave.
- RTO Movement Redefines ‘We’ Space
With 1 in 5 Americans impacted by loneliness, owners, operators and occupiers of office buildings are evolving their approach to collaborative spaces. The goal: to improve connections while boosting productivity. While this focus on “we” space over “me” space has led to smaller individual workstations, there is more overall square footage per person in many offices, reversing a yearslong trend. What does this look like, exactly? For one, the C-suite has been evicted from corner offices, with perimeters reserved instead for collective work hubs. These changes have also spilled into lobbies, where conference tables, conversation pits and dining areas are strategically placed to facilitate spontaneous team huddles and casual client meetings. Corporate tenants have responded positively to these layouts, so expect an increased focus on reimagined communal spaces as more companies roll out return-to-office mandates in 2025.
IMAGES: Click HERE to view images that accompany this release via Dropbox.