Property Markets to Show Resilience Amid Economic Uncertainty: Cushman & Wakefield

Although there are challenges presented by higher tariffs and policy uncertainty, property markets are expected to be resilient before gaining more momentum in 2026 as a stronger growth backdrop emerges, according to Cushman & Wakefield’s Midpoint 2025 Outlook.

“The commercial real estate (CRE) sector entered 2025 on relatively solid ground, with certain segments even gaining momentum,” says Rebecca Rockey, deputy chief economist and global head of forecasting at Cushman & Wakefield.  “Even now, amidst the uncertainty, the capital markets are continuing to thaw, capital is plowing back into the property sector, and leasing fundamentals are largely holding up well. With property, the devil is always in the details, and of course, risks have shifted to the downside given the macro uncertainty, but we are still seeing healthy trends in the data.”    

Key takeaways:

• Investment activity remains below historical averages, but momentum is building as long-term interest rates remain range-bound and the pricing gap between buyers and sellers continues to narrow.
• The outlook for net operating income (NOI) is slated to improve in coming years as fundamentals inflect and the construction pipeline thins across most property subtypes.
• Although the volume of distressed sales remains low, the market is preparing for potential opportunities as refinancing challenges mount for some over-leveraged assets.
• The industrial sector continues to normalize from record-setting years and faces near-term headwinds amidst trade tensions. Demand is expected to remain cyclically challenged in 2025; however, the once-overheated development pipeline is now cooling at a healthy pace. After the current wave of supply delivers, there is not much behind it, setting the stage for more of snap-back recovery in 2026-27.
• Longer-term, the industrial sector will continue to benefit from structural demand drivers, including e-commerce expansion, supply chain restructuring, and onshoring/nearshoring strategies.
• Select markets that experienced aggressive development cycles are seeing short-term oversupply, in some cases, resulting in lower rents. These conditions will not last long but are opportunities for tenants seeking relief after several years of double-digit rent growth.
• Retail continues to show resilience, with steady consumer spending underpinning performance. A lack of development will buttress markets as demand navigates the shifting tariff environment.
• Bifurcation remains a key theme: necessity-based and experiential retail outperform, while mid-tier and department store formats lag.
• Foot traffic in urban and lifestyle centers is returning to pre-pandemic levels in many markets, driven by tourism and changing consumer preferences.
• Vacancy rates have stabilized or declined in prime locations, and occupiers are increasingly focused on optimizing store portfolios for both physical and digital engagement.

“Thus far, the property sector has remained extremely resilient against an avalanche of uncertainty”, says Kevin Thorpe, global chief economist. “Although 2025 will undoubtedly be a choppier year, CRE was positioned for continued recovery and our assessment midway through the year is that those fundamental forces are still in play.”