Supply, Demand And A Recovering Office Market: Global CRE Outlook For 2025

As 2024 comes to a close and the industry looks ahead to a new year, what are commercial real estate brokers predicting for 2025? What are some of the greatest challenges they face, particularly in the industrial and office markets? And what trends do they think will dominate their market? 

To answer these questions, Bisnow spoke with members of CORFAC International, a global network of independently owned CRE brokerages. These CRE professionals are based around the world, from Switzerland to Dubai, and offered their insights into the state of the market in their parts of the world. 

Colin Mackenzie, founder of MC2/CORFAC International in Scotland, said there has been limited new industrial development in Scotland, leading to reduced availability in key distribution zones around the motorway networks. In particular, there is increased demand for last-mile distribution hubs and larger data centers, he said. 

Discussing Scotland’s office market, he said while work-from-home policies continue to negatively impact demand, companies are beginning to show a renewed interest in high-end offices. 

“A lack of supply of top-tier space is leading to a window of opportunity to bring forward refurbished offices in strong locations,” he said. “Rental growth is underway to reflect higher build costs, quality and a supply shortage of best space.” 

Daniel Shindleman, president of Bridgemer Ltd./CORFAC International, Switzerland, and 2025 President of CORFAC International, said that while top properties earn a premium in his market, other inventory has demand and supply issues.

“Below-capacity utilization in manufacturing — as well as challenging economic situations in export country destinations — have slowed demand for industrial space,” he said. “Interest rate reductions have helped in some sectors, but the export-focused industries require improved product demand to expand their footprint.” 

Office space continues to go through a period of price discovery, he said. However, there is a silver lining in his market.

“As more companies require office attendance to foster a cohesive company culture and better collaboration, we see that demand is strengthening,” he said. “In fact, after a low period of office construction starts, we see new projects progressing.”

A growing market coupled with strong support for international investment in a stable location will enable Switzerland to remain an attractive destination for investors worldwide, Shindleman said. 

Francisco Navarro, CEO of CDL/CORFAC International, Costa Rica, said that due to the nearshoring phenomenon — in which companies delegate a portion of their production to third-party entities in foreign countries — and a national focus on industrial sectors such as life sciences, Costa Rica and Chile have a competitive industrial environment. 

“Chile shows a 5% general industrial market vacancy rate, with no available spaces in the northern and eastern regions of Santiago,” he said. “Due to the lack of supply in the mentioned regions, there are currently over 5.4M SF under construction and 13.3M additional SF planned.” 

He said the office market has been recovering in the Chilean and Costa Rican markets as more companies bring employees in several days a week.

“Most transnational companies in Costa Rica, such as Amazon, Procter & Gamble, Citi and 3M, to mention a few, jumped from twice-a-month office visits to once or twice a week,” he said. 

Marina Kukharenko, director of Bright Rich/CORFAC International, Dubai, said there is an imbalance between demand and supply in the Dubai office market.

“As of the end of Q3 2024, the average vacancy in the quality office real estate market is at a mere 7.1%,” she said. “The shortage is driven by the surge in international companies establishing offices in Dubai. The growing demand for quality offices, coupled with limited supply and rising rental rates, created favorable conditions for further expansion.” 

As for the industrial market, speculative leasing of warehouses is limited, she said, adding that warehouse users typically negotiate directly with government agencies, bypassing brokers.

Other market challenges she cited include nonexistent private landownership, which hinders competition and creates challenges for the sector, and the fact that many large distribution centers are being constructed in neighboring Saudi Arabia, affecting Dubai's supply and demand.  

Despite these challenges, Kukharenko said development in Dubai may accelerate in 2025, driven by the construction of new office and warehouse projects and the emergence of new brokers and developers.

Global CRE markets may be facing serious headwinds as they move into 2025, but there are bright spots on the horizon, particularly for the beleaguered office market. As more companies bring employees back to the office, the demand for top-tier space may continue to rise.

This article was produced in collaboration between CORFAC International and Studio B. Bisnow news staff was not involved in the production of this content.

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