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"role": "user",
"content": "The global economy faced extraordinary challenges in 2025. Tariffs rose to levels we haven’t seen in nearly a century. Immigration limits tightened labor markets. Geopolitical tensions flared in multiple regions. And policymakers everywhere seemed locked in a constant debate ov... |
[
{
"role": "user",
"content": "From Resilience to Optimism Looking ahead to 2026, the tone is shifting—from resilience to optimism. Policy uncertainty is easing. Central banks have started to lower rates. The cost of debt is coming down. Inflation has moderated in most economies. Capital is flowing aggressiv... |
[
{
"role": "user",
"content": "Labor Market • GDP growth outperformed expectations in 2025 and is on pace to register a respectable 1.9%."
},
{
"role": "assistant",
"content": "In 2026, we expect similar growth of 1.7%."
}
] |
[
{
"role": "user",
"content": "• The AI boom is now contributing to growth in a meaningful way via capital investments in data centers, computing equipment, and a surging stock market. We estimate that more than half of the GDP growth in 2025 is attributed to AI-related investments. GDP Growth • Inflation re... |
[
{
"role": "user",
"content": "• Upside risks cannot be discounted either. The AI boom is generating new outlets for investors and occupiers to capitalize on. Moreover, the potential for a real productivity boom could positively impact the macroeconomy and benefit most CRE asset types. Risks & CRE 2026 ECONO... |
[
{
"role": "user",
"content": "• On the plus side, office-using employment has turned positive and will contribute to employment gains going forward. Average hourly earnings are also outpacing consumer inflation, allowing for modest gains in real income. 7 ECONOMY CPI, Y/Y % Fed Target , Tariffs are Inflatio... |
[
{
"role": "user",
"content": "9 U.S. Economic Policy Tariffs Trade policy took center stage in 2025 and continues to be a headwind to economic growth. This is driven by both the taxation impacts of tariffs and the uncertainty surrounding the path forward, including ongoing Supreme Court deliberations on the... |
[
{
"role": "user",
"content": "Federal Reserve Policy shifts have made the Federal Reserve’s job of assessing progress toward its dual mandate of full employment and 2% inflation more challenging. Since first cutting rates in September 2024, the Fed has cumulatively lowered its policy rate by 150 basis point... |
[
{
"role": "user",
"content": "What to Watch Each of these sources of policy uncertainty will not magically go away, but we believe policy will become less disruptive in 2026 for several reasons: 1) Tariffs are causing a temporary price-level increase, after which inflation will normalize as supply chains ad... |
[
{
"role": "user",
"content": "• The 10-year Treasury yield has remained within a 4.0–4.3% range for the past three months, and our baseline expects it to stay toward the upper end of this range over the next two years, influenced by competing forces—upward pressures such as inflation and deficits and modest... |
[
{
"role": "user",
"content": "16 Light Is Growing Brighter Now The light at the end of the tunnel for office leasing is growing brighter with each passing quarter. In Q3, half of U.S. markets posted overall positive net absorption, with Class A space experiencing two consecutive quarters of sustained demand... |
[
{
"role": "user",
"content": "Sentiment Matters Leasing and the capital markets do not operate in isolation, and improved sentiment on either side will reinforce the other. Both are moving in the right direction, albeit gradually. According to the Q3 2025 Cushman & Wakefield office brokerage survey, more ma... |
[
{
"role": "user",
"content": "Supply (msf) Demand (msf) Vacancy, % (RHS) Cushman & Wakefield Baseline Forecast – Industrial Source: Upside Surprise Industrial demand surprised to the upside in Q3 2025 with its strongest quarter in over a year, totaling 45 msf and bringing the YTD totals in line with the sam... |
[
{
"role": "user",
"content": "Development Ramping Down The development pipeline will peak in 2025 and the pipeline ahead suggests below-trend deliveries through 2028. From we forecast that 230 msf will be brought to market per year, which is half the average rate from . Build-to-suit deliveries are rising i... |
[
{
"role": "user",
"content": "E-commerce the Mainstay Although consumer spending is under pressure, e-commerce continues to capture a growing share of retail sales, which is a plus for warehouse demand. E-commerce as a share of retail sales (excluding gas, autos, and restaurants) is nearly 30% now and risin... |
[
{
"role": "user",
"content": "Occupancy > Rent Rent growth is softening as most apartment owners adopt defensive leasing strategies focused on preserving occupancy rather than growing rents. Much of that weakness is concentrated on new leases, while renewal rents remain comparatively resilient. With the sup... |
[
{
"role": "user",
"content": "Q1 Severely delinquent credit cards, % of total (LHS) Consumer confidence index, 100=1985 (RHS) Source: Conference Board, Federal Reserve Board of Governors, Moody’s Analytics The ‘K-shaped’ Economy The concept of a “K-shaped” economy has become a central narrative for consumer... |
[
{
"role": "user",
"content": "Retail tenants largely followed through on expansion plans for 2025 despite macro headwinds, but the brunt of tariff impacts may ding profit margins as tariffs pass through and spending becomes more fragmented. Industry forecasts project holiday retail sales to moderate from 20... |
[
{
"role": "user",
"content": "Built-To-Rent Demand remains strong due to unaffordable homeownership and demographic trends, while supply is easing—setting the stage for a healthy recovery in occupancy and rent growth."
},
{
"role": "assistant",
"content": "• Focus on the long term: Prioritize re... |
[
{
"role": "user",
"content": "• Follow the people: Target markets with strong population growth, high concentrations of prime-age workforce, as well as desirable locations for retirees, as these dynamics drive CRE demand and long-term growth. • Capitalize on supply constraints: Trophy office vacancy is tigh... |
[
{
"role": "user",
"content": "The Future of CRE in 2025 U.S. Research Report A year ago, economists debated the chances of a mild recession in 2024 and speculated on when the Fed would begin cutting rates — many anticipated it would happen early in the year. However, the U.S. economy was notably resilient t... |
[
{
"role": "user",
"content": "in 2025 Inflation to Bottom in 2025: Because the recent slowdown in the core PCE deflator indicates a loss of momentum, inflation may not fully return to the Fed’s 2% target in 2025. Moreover, economists caution that President-elect Trump’s planned immigration restrictions and ... |
[
{
"role": "user",
"content": "Consumers have maintained spending habits despite recent economic headwinds, fueled by a combination of savings from prior fiscal stimulus measures, ongoing improvements in job market conditions, and a wealth effect from rising 401k and home values."
},
{
"role": "assis... |
[
{
"role": "user",
"content": "Labor Force to Tighten: With the unemployment rate steady at just over 4% and an aging Baby Boomer workforce edging into retirement, president-elect Trump’s proposed immigration curbs could further strain an already tight labor market. Labor-intensive industries like constructi... |
[
{
"role": "user",
"content": "According to Placer.ai, office visits are still 34% below pre-pandemic levels. However, return-to- office mandates from companies like Amazon and Goldman Sachs have gradually boosted occupancy rates. While net absorption turned positive for the first time in two years during th... |
[
{
"role": "user",
"content": "Insurance Challenges Persist: Commercial property insurance costs are projected to rise another 80% by 2030, according to a recent Deloitte study, a significant challenge for property owners. Insurers are becoming increasingly selective, often imposing stringent requirements, s... |
[
{
"role": "user",
"content": "Vacancy: The office vacancy rate hit a record high of 17.7% in 2024 and is projected to rise another 100 basis points, to near 19% by the end of 2025. However, the pace of vacancy growth is expected to slow by 2026 as certain markets begin to recover and the pipeline of new con... |
[
{
"role": "user",
"content": "Demand: Net absorption is anticipated to stay flat over the near term as the nation’s uneven recovery unfolds."
},
{
"role": "assistant",
"content": "Demand will likely stagnate in the first half of the year as companies cautiously evaluate economic conditions and f... |
[
{
"role": "user",
"content": "in 2025 Smaller Warehouses, Bigger Opportunities: Warehouse developers will position themselves for the next development cycle, with a growing number of construction starts expected by late 2025 in markets where supply and demand balance has returned. Although elevated construc... |
[
{
"role": "user",
"content": "Nearshoring & Reshoring to Continue: In the wake of the pandemic, U.S.-China trade tensions, and high inflation, supply chains have been reorganized, leading to a surge in nearshoring to Mexico and reshoring of advanced manufacturing to the United States. Expected to continue i... |
[
{
"role": "user",
"content": "Demand: After nine consecutive quarters from late 2020 to 2022 when net absorption exceeded 100 million SF per quarter, demand has slowed, averaging 38 million SF per quarter in 2024. A recent increase in leasing activity and lease proposals is expected to boost net absorption ... |
[
{
"role": "user",
"content": "“Balance is expected to return to the U.S. industrial market in 2025, with vacancy rates peaking as new supply and tenant demand reach equilibrium and rent growth stabilizes. While some markets are already ahead of the curve, others will follow suit in the coming year as the ma... |
[
{
"role": "user",
"content": "Prioritization of Value: Consumers are becoming increasingly selective, driven by financial concerns continuing into 2025. Forty-seven percent feel pessimistic about finances, while record-high credit card debt and soaring interest rates are driving more deliberate spending."
... |
[
{
"role": "user",
"content": "Vacancy: Vacancy rates are forecast to remain steady throughout 2025, demonstrating the market’s resilience. Less new retail construction is balancing supply with consistent demand. However, in specific segments, particularly freestanding retail locations, vacancy rates may ris... |
[
{
"role": "user",
"content": "Demand: Demand for retail space is expected to remain strong because of the ongoing need for strategic physical locations. Net absorption may decline slightly but is still likely to stay positive for both malls and shopping centers. This dip reflects the reduced number of new r... |
[
{
"role": "user",
"content": "EXECUTIVE SUMMARY EXECUTIVE SUMMARY 1 JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY HOUSING RECOVERY SCORECARD By many measures, the US housing market has recovered sub- stantially from the crash. According to CoreLogic estimates, nominal home prices were back within 6... |
[
{
"role": "user",
"content": "RENTAL MARKET STRENGTH The rental market continues to drive the housing recovery, with over 36 percent of US households opting to rent in 2015—the largest share since the late 1960s. Indeed, the number of renters increased by 9 million over the past decade, the largest 10-year ... |
[
{
"role": "user",
"content": "Housing cost burdens also expose renters to the risk of eviction, with all its damaging impacts on household finances, employ- ment prospects, and school performance. Meanwhile, about renters had been threatened with eviction in the previous three months, with nearly eight out ... |
[
{
"role": "user",
"content": "HOUSING MARKETS 7 JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY After a mixed year in 2014, the national housing recovery gained traction in 2015. Residential construction continued to climb as single-family starts revived. On the multifamily side, all key construction... |
[
{
"role": "user",
"content": "GROWING INCOMES BUT GROWING INEQUALITY Low incomes also prevent young adults from living on their own, so the recent pickup in income growth is good news for housing demand. With employment rising for the 67th consecu- tive month in April 2016, job growth has slowly translated ... |
[
{
"role": "user",
"content": "The persistent decline reflects the lack of growth in the number of homeowner households at a time of robust growth in the number of renter households. According to the Housing Vacancy Survey, the number of renter households hit 42.6 million last year, an increase of 1.4 millio... |
[
{
"role": "user",
"content": "A DECADE OF BROAD-BASED DEMAND As measured by the Housing Vacancy Survey, the number of renter households soared by nearly 9 million from 2005 to 2015—the largest increase over any 10-year period on record. Moreover, 2015 marked the largest single-year jump in net new renter ho... |
[
{
"role": "user",
"content": "HOUSING CHALLENGES 31 JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY PREVALENCE OF COST BURDENS After three consecutive years of declines, the total number of housing cost-burdened households (paying more than 30 per- cent of income for housing) ticked up to 39.8 millio... |
[
{
"role": "user",
"content": "But even after seven consecutive years of growth, new residen- tial construction in 2016 was well below the 1.4–1.5 million unit annual rates averaged in the 1980s and 1990s. In fact, coming on the heels of the most prolonged and pronounced downturn since the Great Depression, ... |
[
{
"role": "user",
"content": "Millennials will thus continue to fuel the growing diversity of neighborhoods across the country. In 1990, nearly one-half (47 percent) of the nation’s census tracts were more than 90 percent white. By 2015, that share was down to one-fifth. Meanwhile, the share of majority-min... |
[
{
"role": "user",
"content": "The magnitude of growth in older households will place new demands on the housing stock. Millions of homeowners will face the challenge of keeping their homes safe and accessible as they age. However, many may not have the resources to retrofit their homes with universal design... |
[
{
"role": "user",
"content": "Many property owners have taken advantage of years of strong financials to make improvements deferred during the downturn. The National Apartment Association (NAA) reports that capital spending per unit increased 13 percent annually from 2010 to 2015 in real terms. Community-wi... |
[
{
"role": "user",
"content": "Homeownership rates among young adults today are even lower than in 1988, and the share of cost-burdened renters is significantly higher. Soaring housing costs are largely to blame, with the national median rent rising 20 percent faster than overall inflation in 1990– 2016 and ... |
[
{
"role": "user",
"content": "Relatively low headship rates among millennials also contribute to lower projected household growth. Despite the recent pickup in incomes, adults under age 35 are still not forming households at rates as high as previous generations at that age. This suggests that other forces ... |
[
{
"role": "user",
"content": "DEMAND SHIFT FROM RENTING TO OWNING After a decade of soaring rental demand, US households are edging their way back into the homebuyer market. Growth in the number of renter households slowed from annually on average in 2005–2015 to just in 2015–2017, while the number of owner... |
[
{
"role": "user",
"content": "THE OUTLOOK By many metrics, the housing market is on sound footing. With the economy near full employment, household incomes are increasing and boosting housing demand. On the supply side, a decade of his- torically low single-family construction has left room for expansion of... |
[
{
"role": "user",
"content": "3 DEMOGRAPHIC DRIVERS 13 JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY MILLENNIALS PROPPING UP HOUSEHOLD GROWTH The latest Census Bureau data point to moderate household growth in 2017. The Housing Vacancy Survey, the most consistent source of estimates, puts the incre... |
[
{
"role": "user",
"content": "Even so, millennials are not forming households at the same rates as past generations at the same ages. In fact, household headship rates among young adults are still declining, albeit more slowly than after the recession. Indeed, 26 percent of adults aged 25–34 were living wit... |
[
{
"role": "user",
"content": "1 / EXECUTIVE SUMMARY 1 JOINT CENTER FOR HOUSING STUDIES OF HARVARD UNIVERSITY CONTINUING SHORTFALL IN SUPPLY Just as the recent housing downturn was longer and deeper than any other since the Great Depression, the residential construction rebound has been slower. Since reachin... |
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