5 Trends to Watch

Here are five trends to keep an eye on this month in the context of your commercial real estate investing portfolio:

1. DISTRESSED OFFICE INVESTORS BET BIG

One of the most successful investors in distressed retail real estate—who previously made significant gains by acquiring and repositioning zombie malls—is now placing a major bet on empty office buildings. The strategy mirrors past success in retail, focusing on deeply discounted assets in secondary markets with high upside potential. These investors believe that selective repositioning, creative leasing strategies, and adaptive reuse will unlock long-term value.

This contrarian bet is not without risks. The fundamentals of office demand remain uncertain, with hybrid work arrangements continuing to shape occupancy trends. However, opportunistic capital is stepping in, particularly in cases where assets can be acquired below replacement cost. Investors with experience in turnaround strategies may find compelling opportunities in properties ripe for mixed-use conversion or alternative uses, including residential, life sciences, or education facilities. Our latest Vantage Point offers our perspective on office investments in the current market.

2. TRADE WAR ESCALATES

The United States has officially imposed new tariffs on Canadian and Mexican goods, triggering immediate retaliatory measures from both countries. The latest round of trade restrictions follows months of rising tensions as President Trump aims to renegotiate trade agreements and reduce dependence on foreign imports. Key industries affected include automobiles, agriculture, and consumer goods, with supply chain disruptions expected to ripple across North America. Canada and Mexico both have responded with retaliatory tariffs.

For commercial real estate investors, industrial and logistics properties could see increased volatility, particularly those reliant on cross-border trade. Companies operating near key port and border logistics hubs, such as Laredo, Texas, and Detroit, Michigan, may need to restructure operations to manage higher costs. Meanwhile, foreign direct investment into U.S. CRE could slow as international uncertainty grows. Investors should monitor the long-term implications of trade disputes on tenant stability, supply chain adjustments, and economic growth.

3. FEDERAL PROPERTY SELL-OFF PROPOSED

The Trump administration has unveiled plans to sell off 443 federally owned properties across the United States, citing the need to cut maintenance costs and shrink the federal real estate footprint. The move is part of a broader strategy to reduce government expenditures and shift to leased private market spaces instead of owned assets. High-profile properties on the chopping block include government office buildings in Washington, D.C., New York, and Chicago, as well as underutilized federal campuses in secondary markets.

For CRE investors, this represents a once-in-a-generation opportunity to acquire prime real estate at potential discounts. However, challenges remain, including the bureaucratic complexity of government asset sales, zoning restrictions, and potential oversupply in certain office markets. The extent of investor demand will likely depend on how the General Services Administration (GSA) structures the bidding process and whether private buyers can reposition assets for modern uses, such as mixed-use conversions or data centers.

4. $2 BILLION FOR AI DATA CENTER

Developers have successfully secured a $2 billion construction loan to build a 100-acre AI-focused data center campus in West Jordan, Utah. As artificial intelligence models require exponentially more processing power, data center developers are racing to expand infrastructure capable of handling high-density workloads and cooling requirements. The new facility is expected to feature next-generation liquid cooling technology and ultra-high-speed fiber connections, making it a premier location for AI-driven companies and cloud providers.

This deal signals growing institutional interest in digital infrastructure assets. The demand for data centers continues to outpace supply, leading investors to view them as a resilient and high-growth sector within commercial real estate. As traditional office space faces headwinds, many institutional investors are pivoting toward alternative asset classes, including logistics, life sciences, and digital infrastructure. CRE investors should monitor data center investments as a key component of modernizing portfolios to align with long-term technological trends.

5. LIFE SCIENCES POISED FOR A REBOUND

After a period of slowing investment, the life sciences real estate sector is showing early signs of a comeback. Reduced new construction, coupled with increasing demand from biotech and pharmaceutical firms, has set the stage for a rebound in lab space absorption and rent growth. Over the past year, venture capital funding for life sciences firms has stabilized, leading to renewed leasing activity in major research hubs such as Boston, San Diego, and Raleigh-Durham.

For investors, this rebound represents a shift from the overheated expansion phase seen in 2021-2022, when speculative development outpaced demand. Moving forward, selective investment in well-located lab spaces with strong tenant demand will be key. Markets with strong university and medical research anchors are expected to recover the fastest, while secondary life sciences hubs may take longer to absorb excess supply. Investors should look at conversion opportunities, particularly in underutilized office spaces that can be repurposed for life sciences use.