• Hurt by higher interest rates, commercial real estate should see a modest rebound in 2025.
• Lingering inflation, however, could complicate the recovery by pushing up long-term interest rates.
• Industrial warehouses, a star of the sector, is poised to stand out in 2025.

The commercial property sector has had a bruising few years as rising interest rates pushed down values, complicated refinancing deals for hundreds of billions of dollars of expiring mortgages, and stymied investment.

In the office market, the situation was even more severe as hundreds of millions of square feet of space across the nation face accelerated obsolescence. Employees have embraced hybrid and remote work as a permanent offshoot of the pandemic, sapping demand for lesser quality space.

In recent months, however, the industry has felt relief from three successive rate cuts by the Federal Reserve that have shaved a percentage point off the fed funds rate — a benchmark for short-term lending rates. More cuts are expected in 2025. Resilient economic growth, meanwhile, has propelled demand for commercial space, including apartments, warehouses, retail stores, and hotel rooms. Some developers have even grown bullish on top-tier office projects as tenants flock to high end space.

In 2025, commercial real estate experts have signaled cautious optimism that the sector's rebound will continue, while also highlighting the challenges that could stymie growth.

Here are three trends for the industry to watch in 2025:

While the Fed has cut rates, relief hasn't arrived for the majority of loans

Of the roughly $4.7 trillion of total outstanding commercial real estate debt, about two-thirds is tied to long-term interest rates benchmarked against the 10-year Treasury yield, according to an estimate by the Mortgage Bankers Association. After dipping in the third quarter, long-term interest rates have jumped back up to the mid-4% range, close to where rates were before the Fed began cutting and far higher than where the 10-year was in recent years. The 10-year Treasury rate dipped below half a percentage point in 2020, its lowest level ever.

In 2025, observers expect long-term rates to hold steady, even if the Fed continues to trim short-term rates.

"The 10-year Treasury yield, that's really driven less now by anticipation of what the Fed might do and more by long-term expectations about economic growth and inflation and federal budget deficits," Jamie Woodwell, the MBA's head of commercial real estate research, said.

That could continue to complicate commercial real estate sales and refinancing deals.

The MBA projects that $570 billion of commercial real estate loans will mature in 2025, with banks holding about 38% of the overall inventory of outstanding debt in the sector.

Tomasz Piskorski a professor of real estate at Columbia Business School, said that 14% of commercial loans overall are tied to distressed assets that are now worth less than their debt and that 43% of commercial real estate loans "may face significant cash flow and refinancing issues." He has warned there could be tens of billions of dollars of potential losses for the banking sector and other lenders.

The real estate services giant CBRE, meanwhile, has forecast a modest 7.5% increase in investment sales activity, predicting about $410 billion of transactions in 2025. More sales would help buyers and sellers discover asset pricing and is considered a positive sign for a market recovery.

Richard Barkham, CBRE's chief economic economist, warned of lingering higher long-term interest rates that could dampen the rebound.

"Over the next four or five years we're likely to get upside shocks in inflation," Barkham said. "That points to an era of interest rates higher for longer."

Incoming Trump administration has generated optimism

Some of President-elect Donald Trump's campaign promises to enact tariffs on foreign goods, pressure the Fed for lower short term interest rates, and deport undocumented immigrants from the labor supply could spur inflation, reigniting problems in the commercial real estate financing market.

Nonetheless, the industry has been largely positive on the incoming administration.

Investors "expect better tax issues, they expect less regulation, they expect some real estate specific stuff like opportunity zones will get a bit of a boost," said Jim Costello, the co-head of real assets research at the data firm MSCI, referencing the opportunity zone program from President Trump's first term in office. Opportunity zones allowed real estate investors the chance to defer and avoid capital gains taxes if they reinvested investment proceeds in property projects in designated zones around the country.

President Trump has also sought to hire real estate executives in his administration, meaning that top officials could have an familiarity with the real estate business and its priorities. Howard Lutnick, a Wall Street billionaire who is also chairman of the large commercial real estate services firm Newmark Group, for instance, has been picked by Trump to lead the Commerce Department.

After a rocky 2024, industrial is still a darling

Industrial warehouse space boomed during the pandemic as American shoppers migrated online, boosting the need for logistics spaces that served e-commerce and also to onshore storage for a disrupted global supply chain.

A record total of roughly a billion square feet of industrial space was absorbed on balance by occupiers in 2022 and 2023, according to Craig Meyer, president of JLL's industrial leasing group in the Americas. That activity was enough to fill a vast pipeline of new space that was being added to the market. In 2022 and 2023, 1.1 billion square feet of new industrial space was delivered, according to JLL — also a record.

In 2024, however, demand could no longer keep pace with surging supply – stalling rental growth and pushing up vacancy.

About 375 million square feet of new space was added to the industrial market in 2024 – the third highest year on record after 2022 and 2023. But only about 111.3 million square feet of space has been absorbed on net, the lowest year of absorption in more than a decade. Vacancy has jumped to 6.8% from 4.9% a year ago. In the second quarter of 2022, vacancy had fallen as low as 3.3%.

Meyer said that the first half of 2024 was the nadir of the dip and expects a resurgent 2025.

"We had a contentious election coming up," Meyer said. "People were uncertain where interest rates were going."

In 2025, Meyer and other experts, including Barkham, CBRE's economist, see a strengthening industrial market as new supply dwindles and demand picks back up.

"The sectors that are big and improving and likely to lead investor interest are multifamily and industrial," Barkham said.

Some 268.9 million square feet of industrial space is presently under construction, according to JLL, the smallest pipeline since 2019. E-commerce, one of the biggest drivers of warehouse demand, continues to grow. According to CBRE, online sales are expected to absorb 30% of consumer spending by the end of the decade, up from 23% today, adding tailwinds to the segment.

After a very rocky start to life, Gilbert the pit bull now lives a life of luxury and even gets hand fed Thai takeout.

Western equipment has slotted in to Ukraine's embattled, Soviet-era military throughout the war, including long-range missiles and advanced fighter jets.

The project will continue construction in 2025, despite Republican critics questioning its costs and viability.

A vet visit revealed the dog had a heart murmur, arthritis and a falling heart.

• Netflix has produced some of the most captivating and divisive shows of 2024.
• It hooked viewers with a mystery in "Fool Me Once," and stoked controversy with "Baby Reindeer."
• Here are the nine most talked-about shows on Netflix in 2024.

2024 has been a huge year for Netflix, with the streamer's shows sparking huge conversations.

Here are the nine most talked-about shows on Netflix in 2024.

Kharkiv is under massive rocket fire" with "ballistic missiles heading towards the city" mayor Igor Terekhov warned.

Dozens of people are feared dead after a passenger plane crashed in Kazakhstan on Wednesday.

• Dr. Michael Roizen is a longevity expert who claims to have reversed his age by 20 years.
• There are a few bare minimum things you can do to live longer, he said.
• These include getting vaccinated, playing brain-training games, and eating salmon.

It can be tough to find the time to take care of our health. But a doctor who claims to have reversed his age by 20 years said that focusing on six basics could help us stay healthy for longer.

Dr. Michael Roizen, 78, the chief wellness officer at Cleveland Clinic, told Business Insider his "biological age" is 57.6, based on the health of his organs and his risk of chronic disease. (There's no agreed definition of biological age or how it can be measured).

Roizen is all about finding lifestyle changes that can help people live healthily for as long as possible. But he said "there are small things and easy things to do that make a big difference" to longevity, even if people can't overhaul their lifestyles.

Below are the six things he thinks everyone should do to live longer.

Walk more

Roizen tries to do 10,000 steps a day as part of his weekly workout routine, and thinks that everyone should "try to walk a little more."

To add movement to his commute, for instance, he parks his car as far away from his work as possible and walks the rest of the way.

Walking fewer than 10,000 steps — a somewhat arbitrary number with its origins in marketing — still has benefits. One 2023 study by researchers at the University of Cambridge, UK, found that people who walked 75 minutes or less a week had a lower risk of dying from any cause or developing cardiovascular diseases and cancer.

Eat avocado, salmon, and olive oil

BI previously reported on the seven foods Roizen eats for longevity. But just eating three of these — avocado, salmon, and olive oil — will still merit health benefits, he said. Studies have linked all three to a lower risk of cardiovascular disease.

Have strong relationships

Nurturing friendships is a "fun" way to boost your health and longevity, Roizen said. Plus, "it's always better to do things with other people," he said.

Rose Anne Kenny, professor of aging and lead researcher on The Irish Longitudinal Study on Ageing at Trinity College Dublin, said that having strong social connections is just as important for longevity as a healthy diet and getting enough exercise, BI previously reported.

Play speed of processing games

Roizen recommended playing speed of processing games, which are brain-training games that research suggests might help improve how quickly your brain works. Roizen recommended two: Double Decision and Freeze Frame.

Referencing a 2017 study published in Alzheimer's & Dementia, Roizen said that practicing these games could reduce the risk of dementia. The study found that older adults who played 10 sessions of these games over an initial six-week period, and then did top-up sessions 11 and 35 months later, had a 29% lower risk of dementia after 10 years.

Roizen recommended playing these games for two hours a week for five weeks to try to replicate the study results.

Take a multivitamin

Research is mixed on whether taking multivitamins is beneficial for longevity.

Roizen cited studies that found that the risks of cancer, cardiovascular disease, and dementia were reduced in people who took multivitamins for years.

But, recent research has suggested that these findings aren't necessarily indicative that multivitamins are as effective outside study conditions. For example, a large study on over 390,000 people published in JAMA Network Open earlier this year concluded that taking a multivitamin wasn't linked to longevity. And the US Preventive Services Task Force doesn't recommend the general public take multivitamins because there's not enough evidence to show that it has any benefit.

Roizen said that he takes a multivitamin anyway to keep the overall levels of vitamins in his body stable.

Get your flu shot

The Centers for Disease Control and Prevention recommends that everyone aged six months and above should get a flu vaccine every season.

But Roizen also takes it for the potential healthy aging benefits. A 2022 review of studies published in Ageing Research Reviews suggested that vaccinating older people against the flu could also help prevent dementia, possibly because it decreases inflammation in the brain.

• The top researcher for a major study on guaranteed basic income says the findings are "nuanced."
• The study, backed by Sam Altman, gave $1,000 a month to 1,000 low-income participants.
• Elizabeth Rhodes says while the study showed benefits, it's not a quick fix for economic insecurity.

The lead researcher for Sam Altman's basic-income study says guaranteed no-strings payments are not a silver bullet for issues facing lower-income Americans.

Elizabeth Rhodes, the research director for the Basic Income Project at Open Research, told Business Insider that while basic-income payments are "beneficial in many ways," the programs also have "clear limitations."

Universal basic income, or UBI, typically refers to making recurring cash payments to all adults in a population, regardless of their wealth or employment status, and with no restrictions on how they spend the money.

Rhodes headed up one of the largest studies in the space, which focused specifically on those on low incomes rather than making universal payments to adults across all economic demographics.

The three-year experiment, backed by OpenAI boss Altman, provided 1,000 low-income participants with $1,000 a month without any stipulations for how they could spend it. The study aimed to explore how unconditional cash payments influence various aspects of recipients' lives.

The initial findings, released in July, found that recipients put the bulk of their extra spending toward basic needs such as rent, transportation, and food. They also worked less on average but remained engaged in the workforce and were more deliberate in their job searches compared with a control group.

But Rhodes says the research reinforced how difficult it is to solve complex issues such as poverty or economic insecurity, and that there is "a lot more work to do."

The Altman-backed study is still reporting results. New findings released in December showed recipients valued work more after receiving the recurring monthly payments — a result that may challenge one of the main arguments against basic income payments. Participants also reported significant reductions in stress, mental distress, and food insecurity during the first year, though those effects faded by the second and third years of the program.

"Poverty and economic insecurity are incredibly difficult problems to solve," Rhodes said. "The findings that we've had thus far are quite nuanced."

She added: "There's not a clear through line in terms of, this helps everyone, or this does that. It reinforced to me the idea that these are really difficult problems that, maybe, there isn't a singular solution."

UBI and Silcion Valley

Universal basic income has garnered significant support within Silicon Valley.

The programs have long been a passion project for high-profile tech leaders, including Twitter cofounder Jack Dorsey, Meta CEO Mark Zuckerberg, and Tesla chief Elon Musk. Some argue advancements in AI, which could pose a threat to some worker's job security, have made the conversion more urgent.

Like many of his tech contemporaries, Altman has long supported UBI and even suggested an idea that involves sharing compute of a future iteration of an OpenAI GPT model, something he referred to as "universal basic compute."

Rhodes first applied for the lead researcher job in 2016 after seeing a blog post from Altman, then the president of Y Combinator, in which he announced his plan to support a study of universal basic income. At the time, she was just finishing up her Ph.D. and had never heard of Altman or Y Combinator.

"I started working on this with Sam in 2016 and at that time, so I was finishing up graduate school in social work and political science, and very outside the California Bay Area community," she said. "There was not much going on in this space, in the US. Basic income or cash transfers were still somewhat of a fringe idea."

The global interest in the study's results was somewhat surprising, Rhodes said, as the team never saw the experiment as a policy suggestion.

"It was never designed to be a policy referendum on UBI or any specific policy. It was an opportunity to really ask the sort of big, open-ended questions, you know, what happens when you give people unconditional cash to better understand the lived experiences of lower-income Americans and the challenges they were facing," she said.

If your regular trash day falls on Christmas 2024, expect a reschedule—typically a one-day delay.

Cher Fletcher offered a comforting reminder to parents in the thick of it that brighter, easier days are ahead.

The bald eagle finally became America's official national bird after a bill was signed by President Joe Biden on Christmas Eve.

Be sure to keep your "Wordle" win streak going—or start a new one—while enjoying today's holiday festivities.

After you've opened your presents from Santa, don't forget to do the daily 'Connections' puzzle.

Jimmie Johnson, now juggling a return to NASCAR with family concerns, revealed how the high risks of IndyCar racing deeply affected his wife, Chandra.

Tony Stewart reflects on stepping away from the sport and opens up on what he misses the most.

The Boston Red Sox and Pittsburgh Pirates reportedly discussed an offseason trade that would have sent Pirates pitcher Jared Jones to Boston.

Biden signed 50 bills into law on Christmas Eve, including a proposal backed by Paris Hilton and a measure seeking to curb campus hazing.

Michael Jordan's 23XI Racing and Front Row Motorsports are challenging NASCAR's recent appeal in the antitrust lawsuit.