Investing in our cities: a Q&A on the 2025 global investment landscape

What trends are influencing commercial real estate investment in your region the most right now (positive or negative or neutral)? Which are creating the most positive momentum?

Marion Jones (U.S.): In the U.S., headwinds from tariff negotiations are certainly having a significant impact across sectors and markets. But the good news is we’re really starting to see more momentum and significant opportunity on the buy side here. Investors are recognizing the opportunity right now to buy assets and be in acquisition mode at this moment in the cycle. There is far more debt capital available this year versus 2024, enabling opportunistic buyers who see today’s pricing as a discount.

James Nelson (U.S.): But the U.S. investment sales market is also still trying to find its footing. In the 1^st Half of 2025, annualized sales volume across all asset classes was $365 billion, only 48% of 2021’s prior cycle peak of $757 billion. Multifamily investment led the way, accounting for 35% of sales volume followed by industrial with 25%. Office still has room to run with only 17% of the dollar share.

Amy Erixon (CA): In Canada, liquidity has remained strong, aided by interest rate reductions and strong fundamentals. Even office is trading, despite historic vacancy levels. Private buyers, users and governments are dominating the market as institutions have been rebalancing away from real estate toward other sectors including agriculture, timber and infrastructure. To date, tariffs (and tariff threats) have been more impactful than other factors (such as slow return to office) in terms of increasing difficulty of decision making.

Marie-Claire Laflamme-Sanders (CA): Beyond the impact of U.S. tariffs, a major trend impacting Canada’s CRE investments has been slowing demographic growth. For years, Canada had one of the fastest growing populations among OECD countries. With government caps on immigration and visa allocations taking effect in 2025, we’ve seen a dramatic slowdown across the country. The first CRE sector to be hit was multifamily investments, where rental growth dropped dramatically across the country, but especially in gateway markets, like Vancouver, Toronto and Montreal. We expect this to impact other CRE asset classes in coming months, with industrial and office investments depending on companies accessing labour and retail investments depending on strong consumer spending. Reliable, long-term, and positive demographic growth is a foundational element to supporting real estate activity.

Chris Cheap (U.K.): In the U.K. we are seeing some downward pressure on interest rates which is translating to steady but unspectacular improvements in investment markets. Deal volumes remain low though as pricing discovery is still a challenge. There is liquidity but capital is gravitating towards prime product with long secured income. Office and industrial occupational markets are standing up well with good levels of demand in London and across key regional markets. The challenge is a lack of stock in the market due to development viability issues.

Helen Collins (U.K.): U.K.’s living sector remains resilient with activity in student, co-living, single family and affordable housing leading the way. Whilst fundraising continues to face headwinds, the fundamentals remain strong: supply and demand mismatch, continued demand from international and domestic students, aging populations, the reinvention of city and urban rented sectors, and affordability. The U.K. Government’s ambition to boost new homes supply is backed with substantial funding. The June Spending Review also announced an unprecedented ten-year grant programme and rent policy for social and affordable housing – providing certainty for investors, developers and landlords to gear up to build significantly more new homes. Accordingly, we see great potential for social, affordable and single-family investment.

Chris Pilgrim (U.K.): The U.K. remains the most actively invested market from international capital globally. U.S. Private equity leads the charge, but there is significant capital in Asia Pacific looking to deploy into the market as stabilisation returns. The lower interest rate environment across major central banks creates a compelling time to invest and secure trophy or stabilised assets across a deep, established and diversified market.

Are any cities in your region catching notable interest? Why?

Marion (U.S.): For the U.S., Dallas is a standout to me. Last year Dallas had top transactional volume in the U.S. and it’s actually become a leading destination for international capital. We’ve got eyes on a few other markets too. New York City is again leading the rebound in market recovery and south Florida remains very strong. Both are seeing large dollar transactions close at a more rapid clip than other gateway cities…for now. We’ve also seen an incredible uptick with leasing in the San Francisco office market and want to keep watch on that market as well.

James (U.S.): Miami, DC, and New York City have been the top three return to office cities based on Avison Young’s Busyness Index. We have found that when people come back to the office, multifamily and retail also benefit. For example, in NYC, the multifamily vacancy rate is below 2% while retail vacancy is dropping below 2019 pre-pandemic levels in some high street corridors. 

Amy (CA): Calgary and Edmonton, Alberta, have been leading conversions of office to residential, with more than 30 projects completed in the last year. Calgary, Winnipeg, and Halifax, Nova Scotia have been performing well in recent years due to in-migration, both domestic and international. These cities are relatively cheap today and have been attracting investor interest as the recovery is taking hold. Perennial investment targets Toronto, and Vancouver has seen strong sales volumes as well. 

Marie-Claire (CA): In my home province of Quebec, we’ve seen strong interest in suburban markets, which offer the advantages of proximity to major metropolitan areas, without the regulatory headaches and higher competitive pressure these often present. We’ve seen renewed interest in Western Canada – namely Alberta, but also Manitoba – as oil prices have returned to more sustainable levels, and pro-business regulatory frameworks make doing business there more attractive than in other major markets. The Atlantic provinces have seen some of the fastest growth rates across the country and are particularly attractive to private investors looking for higher yields. 

Chris C. (U.K.): In the U.K., the central London market remains somewhat insulated due to higher values and strong international demand, however even this market has suffered from lower deal volumes over the last two years. Manchester is the only other U.K. city which comes close in terms of market activity and investor appeal due to strong occupational story across all sectors.

Helen (U.K.): The regulatory and cost challenges of delivering U.K. multi-family tall buildings, combined with a more muted private housebuilding market, has driven a shift to low rise, lower amenity affordable build-to-rent (BTR) and sub-urban single-family properties with bulk deals remaining a feature of the market. In a tight market core cities remain the primary focus but there is also opportunity to asset manage first gen BTR and student housing.

Chris P. (U.K.): In the U.K., London office investment is resurgent with a broad range of global capital deploying into this sector. On a relative basis London office looks ‘good value’ and with confidence returning to the occupational markets, capital is looking at a range of value add and core strategies. This demand in London will drive further diversification into other major regional U.K. cities, including Birmingham and Manchester and other U.K. asset classes.

What innovations or policies related to climate or sustainability (i.e. green leases, adaptive reuse, embodied carbon tracking, etc.) are making a big impact in your region? Any standout projects showcasing this work? Incentives?

Marion (U.S.): While a specific project doesn’t come to mind, I am very interested to see how larger investment funds are approaching this in current times here in the U.S., with any retooling or repacking of impact or ESG big picture. How things will unfold in real time is a space worth watching, as people look with fresh eyes on how to best leverage capital into investments that promote sustainability and advise toward environmental best practices.

James (U.S.): NYC’s Economic Development Corporation is making a big push with the “blue highway.” The city is planning to better utilize the rivers and waterfronts to deliver goods as opposed to relying on trucking which leads to congestion and pollution.

Amy (CA):  The private sector in Canada adopted carbon tracking, reporting and green leases more than 15 years ago, so it has long been “table stakes” to build environmental sustainability into portfolio strategy. The Government of Canada recently repealed the carbon tax on individuals (it remains in effect for businesses). Otherwise, the government is playing catch-up with major initiatives ahead, building grid integration across Canada, carbon sequestration and new green energy projects. Adaptive reuse in Alberta is a success story in part thanks to a $75 per square foot subsidy in Calgary to assist with office to residential conversion costs.

Marie-Claire (CA): We’ve seen most institutional real estate investors commit to decarbonizing their portfolios to meet zero-carbon guidelines, with some launching various impact or green funds to allocate specifically to environmentally and social sustainable projects. We’ve also witnessed growing collaboration between private enterprise and public organizations that are beginning to yield strong results. The former brings financial support along with real estate and business acumen (often through an “impact fund”), while the latter offer socially accepted community-based projects, along with strong social and political stakeholder capital, that general real outcomes to communities.

Chris C. (U.K.): Most larger U.K. occupiers across all sectors are signed up to net zero commitments – most linked to 2030. This is influencing all real estate decisions. Landlords are aware of this and are working with occupiers through their approach to ‘green leases’ and via energy usage and procurement. NABERS (energy rating) as a carbon assessment vehicle in new build offices is now seen as the kite mark and the right route map for landlord and tenant to jointly reduce carbon. The U.K. is seeing a lot of retro fit happening in light of the pending Minimum Energy Efficiency Standards (MEES) – this is largely linked to electrification but also updated construction materials. Power is a major development barrier in the U.K. and the search for renewables continues. Most major industrial development will have photovoltaics and a combined heat and power technology as standard.

Helen (U.K.): In the U.K. the government is implementing a range of policies to increase the energy efficiency of existing and new homes. Existing homes are required to be brought up to Energy Performance Certificate (EPC) rating of C (or higher) by 2030, and the Future Homes Standard will mandate solar panels and heat pumps on new homes from 2027. Social landlords are piloting retrofit of older stock at scale, using government funding, and there is innovation in new homes around the Zero Bills concept.

Chris P. (U.K.): From my perspective, global capital is adapting how it allocates capital to real estate depending on the market and commitments which it has made in this regard. We are seeing far more funds either with specific green or off-set strategies and investors actively looking to understand the climate impact on an investment both at purchase but across the business plan for the asset and the hold term.

What asset classes or strategies are working well right now – and conversely which are proving challenging? How are companies adapting?

Marion (U.S.): Despite headwinds from tariff negotiations, industrial continues to be a bright spot although ground up opportunities, through concerns around oversupply, have become a bit harder to finance. And multifamily is going through a moment of re-valuation relative to debt maturities and debt

financing, but we see good fundamentals across most major markets.

James (U.S.): Multifamily continues to make green building advancements. Passive developments are becoming more prevalent which provide great savings in energy usage and cost. Meanwhile, last mile distribution continues to be problematic in big cities. NYC has now made last mile logistic buildings greater than 50k SF only available by special permit. This could very well only add more pressure to pushing logistic centres further out causing more traffic and congestion.

Amy (CA): Existing older apartments and retail are popular value-add plays in Canada. Additionally, well-leased industrial is always liquid, and office as well as hotels are slow but moving. Development is exceptionally difficult between supply chain disruptions, high land costs and development charges, skilled labour shortage, and tariffs on major inputs such as HVAC equipment. Interest rates and uncertainty are also dampening interest in new construction. The condo market shows signs of rolling over following a strong 3-year run.

Marie-Claire (CA): Core+ multifamily assets, which we define as stabilized and cash flowing investments with little future capex, but still a rental gap-to-market, have proven exceptionally popular given the current macro-economic insecurity. We’ve also seen a strong interest in net-lease assets, which allows for an investor to buy into a covenant with a better yield than what would be achieved in the public markets while still offering long-term income security. Finally, there is renewed interest in office investments, both for Class A office and office-to-residential conversions. Back-to-work mandates and overallocation to other asset classes mean appetite for Class A office investments is rising; conversely, the rising number of successful office-to-residential (or to other uses) conversions are serving as valuable blueprints to other investors looking to acquire Class B and C office buildings.

Chris C. (U.K.): All sectors have a deep understanding of sustainability as you cannot operate in a market or legal compliance context in the U.K. without some practice. The likely implementation of the Minimum Energy Efficiency Standards (MEES) has the potential to leave some secondary and tertiary office assets stranded due to retrofit being unviable in the context of rental profile. This is especially a problem in some less established U.K. regional markets.

Helen (U.K.): Student, single family and co-living assets are working well, and we expect an uptick in social and affordable supply at scale on the back of long-term grant funding and other incentives.

Chris P. (U.K.): Building off what Helen has shared, global capital is increasing its allocation towards the U.K. Living Sector. Outside of hotels, there is a drive to acquire quality income generating multifamily product as this sector becomes more established and grows throughout the U.K. The BPSA strategy is also providing strong returns for investors willing to invest in both Russell Group and non-Russell Group university cities. The largest challenge for many of these asset classes is availability of delivered investment grade stock with capital still cautious on development risk and risks associated with development such as construction cost and supply chain challenges.

How do you see the role of CRE evolving to meet a broader mission of building more resilient, equitable and low-carbon, social and environmentally friendly cities?

Marion (U.S.): CRE professionals are increasingly tasked with looking at investments through a more holistic lens, including social and environmentally friendly strategies. Part of our role and responsibility as advisors is to guide our clients through shifting dynamics as it relates to best practices and good stewardship of assets, which inherently includes developing energy efficient and environmentally-sound buildings.

James (U.S.): It’s a complicated question. Carbon neutral cities should no doubt be a goal, but how to get there will require greater thoughts as to how we generate power. Cities that have mandated all electric developments without having the necessary power on their grids will face challenges to accomplish without considering alternative power sources.

Amy (CA): I expect AI will take a front seat in freeing up planners to dream vs being swamped by perfunctory planning and permitting checks. As developers, investors and financiers we already need to ensure that the projects we undertake meet today and tomorrow’s requirements, hosting the capacity for evolution and upgrading as technology and work, play and live needs evolve. Affordability, in my view, is the great frontier across the spectrum—especially when it comes to housing. 

Marie-Claire (CA): Ultimately, these thorny issues need to be at the heart of decision-making at all levels of CRE. They are not going to be resolved by a single silver arrow solution. It is going to be by putting forth a matrix of different solutions that we can build livable cities that support and enrich the lives of those who live, work, grow, play, study, and do business in them.

Chris C. (U.K.): I think we are pretty evolved already here in the U.K. through both legislation and an occupational market keen to explore their own carbon reduction journey. A CRE advisor, developer or investor cannot perform effectively in any sector within U.K. markets without having a deep understanding of sustainable development and the net result is an evolving built environment. Like others have highlighted we have some infrastructure issues and growing concern about the cost of delivering net zero – both require careful navigation.

Helen (U.K.): I agree with Chris – in the U.K. we have seen a wave of social impact investors coming into the social and affordable and wider living sector space. The long-term social and economic impact of creating new homes and retrofitting older is very powerful – from alleviating hardship and poverty through creating of training and jobs, to community and neighbourhood impact through the creating of vibrant and safe new places.

Chris P. (U.K.): It’s an integral role for anyone across the capital stack within commercial real estate. From advisor to the equity, understanding the ability to future proof an existing or new asset and at the same time driving returns on parity or outperforming assets which are not as well positioned in this space. Adapting and understand these changes is important for the asset and also the finance (equity and debt) in this space, and we continue to speak to clients seeking green loans to further enhance their own credentials as well as the asset and environment around them.

If you could offer one priority for CRE investors to act on in 2025, what would it be and why

Marion (U.S.): I would just reiterate it’s a great time to buy. And because there are so many groups shifting strategies right now, it’s truly an incredible moment to explore a new landscape and make some smart buying decisions.

James (U.S.): Get off the sidelines. Since mid-2022, the CRE investment sales market has been operating at well below the 10-year average as buyers and sellers have been on the sidelines. With the unprecedented increase in interest rates, many investors have now been trying to wait for a better interest rate environment. They should realize that the 10-year treasury is within range of the historical average, so there might not be further compression. As mentioned above, increased demand for cities should lead to rent growth and upside in valuations.

Amy (CA): If you see a great deal, jump on it, the markets always reward those who find courage in uncertain times. 

Marie-Claire (CA): With the speed at which the world is changing, it is more important than ever to adapt, to be willing to change your investment paradigms, and to modify your heuristics to seize upon opportunities others may not be seeing. Stay flexible. Stay curious. Seize opportunities.

Chris C. (U.K.): Take good local advice. There is opportunity and value out there, but you need to understand the market and the occupational picture to find it. Work closely with your partners, be nimble and clinical.

Helen (U.K.): If there has ever been a time to invest in U.K.’s living sector, it is now – with housing policy and supply being elevated alongside health, defence and infrastructure. And with significant funding and reforms? There’s a platform for growth.

Chris P. (U.K.): 2025-2026 is a time to be bold. Those who take advantage of the upward cycle today will reap the return rewards over the coming years.