The Three Trends Shaping the CRE Outlook

What’s Shaping the 5-Year Commercial Real Estate Outlook? ​​

Demographics Will Fuel Space Demand Across Property Types ​

• The U.S. has some of the most favorable demographics in the world, with over 70 million Baby Boomers, Millennials and Gen Zs ​

• Baby Boomers are fueling medial office and seniors housing demand, while Millennials and Gen Z spur demand for rental and owner-occupied housing​

• Retail and industrial demand also supported by spending across generations ​

Construction Activity Faces Long-Term Slowdown ​

• Elevated construction costs will inhibit substantial supply additions across each property type over the long-term ​

• Key factors driving rising construction expenses include the high cost of debt capital, rising materials and labor costs, rising land costs and increased administrative fees ​

• The construction slowdown amid positive demographic gains is expected to bolster the financial performance of real estate assets in the years to come ​

Capital Flows Into Commercial Real Estate Remain Strong ​

• Real estate capital flows have steadily increased — 2007’s initial-record deal count was exceeded in 2014 and has been surpassed in every year after ​

• Increased CRE data availability, professional management, lending liquidity, and the emergence of broad-based syndication have helped make commercial real estate a more mainstream investment option ​

• Aging Baby Boomers and the Silent Generation will transfer an estimated $84 trillion to younger generations, likely sparking additional capital flows into commercial real estate investment ​

*As of 2024​
Sources: Marcus & Millichap Research Services, U.S. Census Bureau​

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