REcap: Q2 2025

Key takeaways:

• Multifamily housing: There was a massive surge in new apartments between 2021 and 2024. Now, with higher financing costs and other expenses across the board, the pace of new construction has slowed sharply. As a result, the supply pipeline is drying up, vacancies are stabilizing, and rents — particularly in mid- and lower-tier apartments — are poised to pick up again later this year.
  
  
• Student housing: The student housing sector rebounded in 2024 following a slowdown in 2023, which, as in other asset classes, was largely driven by tightening in the capital markets. Sector fundamentals remain solid in 2025, with both portfolio and one-off transactions on pace with 2024. The 12-installment lease structure has become the industry standard, replacing traditional academic-year or nine-month leases, providing more predictable and consistent cash flow.
  
  
• Office: The office sector was stable in the second quarter despite volatile macroeconomic conditions. Leasing volumes and office visitation continued to stabilize, with prime office spaces in major cities outperforming struggling Class B and C assets. With new optimism around increased transaction activity, a much-needed market reset for troubled assets may be in store.
  
  
• Retail: The outlook for retail landlords has become slightly less favorable, though income streams are expected to remain stable due to sustained high occupancy levels across most retail centers. Tariffs continue to be a key source of uncertainty for the retail sector, with the coming months — particularly the back-to-school shopping season — expected to offer critical insights into how both retailers and consumers respond.
  
  
• Industrial: In the second quarter, the industrial real estate market showed resilience amid shifting economic conditions and is trending towards efficiency and modernization, with companies investing in automation and advanced inventory systems. Looking forward, industrial is expected to remain the most active and favored asset class as demand for flexible, high-quality logistics space continues.
  
  
• Capital markets: Capital markets remain tight. However, sustained transaction activity has shown that bid-ask spreads have narrowed and investors are becoming more comfortable with pricing. While distress continues to rise, it remains manageable, and fundamentals across most sectors are strong enough to support extensions or other creative solutions in many cases. Capital is available and ready to be deployed, and we remain confident heading into the remainder of the year.