Investors Favor CRE Amid Uncertainty: ValTrends Report 1Q 2025

Investor sentiment toward commercial real estate (CRE) improved in the first quarter, with the asset class increasingly viewed as a safe haven following rapid-fire federal policy announcements and equity market chaos. That’s according to the latest ValTrends report, “Fog on the Tracks,” SitusAMC’s proprietary analysis of key trends in the economy, CRE sectors, capital markets and the investment environment. Download our free 25-page report for 1Q 2025 here. 

“The quarter’s findings illustrate a CRE market in flux,” said Peter Muoio, PhD, Head of SitusAMC Insights, co-author of the ValTrends report. “Investors are prioritizing resilience and stability as they navigate an uncertain market environment. Apartments stand out as a favored asset class thanks to limited supply and sustained demand. Meanwhile, office continues to struggle, though early signs of stabilization are appearing in some sectors.”  

Overall deal activity has slowed, down 3.9% in March, as investors await the potential  economic fallout of recent policy changes. The Economic Uncertainty Index hit an all-time high in May after rising more than 50% month-over-month in April – and now stands 30% higher than COVID-19 levels. Investor recommendations to hold CRE jumped 14 percentage points to 70% while the preference to buy fell 10 percentage points to 23%.  

“March saw the slowest month in a year for transaction activity, as investors take a cautious, wait-and-see position,” said co-author Jen Rasmussen, PhD, Vice President, SitusAMC Insights. “But early signs of recovery are emerging. Select CRE sectors are showing improving returns and tapering supply, setting the stage for potential rebound in rent growth. 

For example, apartments surged to the top of investor rankings with the strongest sentiment recorded in over a decade, buoyed by low new supply and consistent returns. Apartment has seen four consecutive quarters of positive returns. In second place was retail, where returns have been in the black for five consecutive quarters and remain among the highest since 2022. 

“Fog on the Tracks,” includes in-depth assessment performance data for all CRE property types, including total return, occupancy change, and rent growth, as well as anonymized commentary from institutional investors, to help market participants make informed decisions for their investments. Download the report here.