Although AI adoption is still in its early stages within the commercial real estate industry, McKinsey Global Institute (MGI) predicts that generative AI could contribute up to $180 billion in additional value to the sector.

Companies at various stages of their AI journey, from early adopters to more advanced users, have identified these key uses in Deloitte’s 2025 survey:

1. Accounting and reporting
2. Financial planning and analysis
3. Risk management and internal audit
4. Property operations

While it’s easy to turn to technology for automating repetitive tasks, the real game-changers in CRE are those embracing advanced tech like large language models (LLMs) and automation to gain a competitive edge. 

Remote Work is Reshaping Property Demand

Office spaces are losing their shine. With hybrid and remote work now the norm for many companies, real estate investors have lost confidence in this once-profitable sector. In fact, it is predicted that this sentiment will continue in the near future. 

Instead, investors are shifting their focus to:

• Industrial spaces 
• Digital economy hubs
• Multifamily housing

Industrial and Manufacturing spaces

The e-commerce industry is showing no signs of slowing down. With this, comes the increased demand for industrial real estate like distribution centers, warehouses, and logistics terminals. 

Digital Economy Hubs 

The rise of AI, Big Data, Blockchain, and IoT (Internet of Things) is increasing demand for digital economy properties, especially data centers. At the same time, the environmental impact of data centers can’t be ignored, given AI’s enormous power needs. The commercial real estate industry must rethink energy efficiency and focus on greener solutions for these properties.

Multifamily units

In the US, the demand for multifamily units remains strong. The rise in demand for this type of property is being fueled by immigration, a shortage of affordable housing, and younger generations postponing homeownership.

Sustainability Is Essential in the Commercial Real Estate Market

Sustainability is not just another commercial real estate trend. The future of the industry is increasingly shaped by sustainability and Environmental, Social, and Governance (ESG) concerns. 

“Buyers and investors are prioritizing environmentally friendly and socially responsible practices,” shares Monica May-Dunn.

A recent study by Deloitte shows over 61% of respondents placing high to extremely high priority on Building Performance Standards (BPS) with another 34% placing it as a moderate priority. Now is the perfect time for real estate companies to transition from “brown” to “green” by greening and retrofitting properties. 

This type of active property management will not only improve sustainability and meet climate goals, it will help boost market value by appealing to eco-conscious tenants and investors.

Insights from CCIM 2025 Real Estate Outlook

To offer a well-rounded view of the commercial real estate landscape, we’ve highlighted a few key takeaways from the CCIM half-day conference that AEF leadership attended on January 17. Keynote speaker Danny Court, Partner, Senior Economist at Elliott D. Pollack & Company shared several interesting insights in his presentation titled, Threading the Needle to a Soft Landing IREM | CCIM Economic Forecast. Insights shared include:

• Arizona’s CRE: Growth, Opportunity, and a Little Balance

Arizona is seeing rising investments with significant CAPEX increases pointing to strong infrastructure and development growth. While short-term oversupply in multifamily units may lead to lower rents, long-term growth potential remains strong as demand catches up.

• Moderation Leads the Way

The latest IREM CCIM report echoes insights from Deloitte and Reuters—recent moderation in GDP growth and Federal Reserve rate cuts point to a more stable economy, but caution is key. 

• Shifting Gears in Washington

The new administration’s policies could shake up commercial real estate. While promises of further rate cuts could boost the market, factors like tariffs and immigration policies may create new challenges that offset these gains.

• Inflation Stabilized, Recession Dodged

Inflation has cooled, and a recession has been avoided—for now. Investors can breathe easier, though caution is still key as economic conditions remain unpredictable.

• Calmer Inflation Means More Confidence for CRE

With inflation showing signs of stabilization, lower mortgage rates are on the horizon, making financing more affordable for both investors and buyers. This indicates a more favorable environment for commercial real estate. However, borrowing costs are still higher than pre-2022 levels.

• Signals Point to Optimism

A positive treasury spread and strong ISM Manufacturing New Orders Index signal growing confidence in the market—an outlook echoed by other sources in this article.

• Delinquencies Tell the Story

CMBS delinquency rates reveal a stark contrast—office spaces face the highest rate (8.4%), while multifamily (3.3%) and industrial (0.3%) remain the most stable. This aligns with investor sentiment in Deloitte’s survey, reinforcing the need to be strategic about property types in 2025.

The outlook for commercial real estate in 2025 shows optimism as market sentiment has shifted from cautious hopefulness to growing confidence. 

To thrive in this evolving landscape, adaptability is key. As AEF CEO Monica May-Dunn emphasizes, “Staying ahead will require agility and a willingness to embrace change.” 

Arizona Escrow & Financial is committed to being your trusted partner in this journey. With nearly 50 years of expertise in business sales and commercial real estate escrow, we’ll ensure your transactions are seamless and your investments are well-supported. 

Reach out to us today to discover how we can help you close your next commercial real estate transaction.