Commercial Leasing in the USA: 2025 Outlook and Future Trends

"Aerial view of Dallas–Fort Worth commercial district with modern office towers and retail centers,

The commercial real estate leasing market in the United States is at a pivotal moment. After the pandemic-driven disruptions and a period of high interest rates that dampened activity, industry sentiment is cautiously optimistic heading into 2025. Market players anticipate a gradual recovery across most property sectors, even as they remain realistic about lingering challenges. This report provides a comprehensive overview of the commercial leasing outlook in the U.S. – spanning office, industrial, retail, and multifamily sectors – and compares regional dynamics, forecasts for 2025–2030, and key factors like vacancy rates, cap rates, technology disruption, and stakeholder perspectives (investors, tenants, and professionals).

Economic and Investment Climate: Turning the Corner

Macroeconomic conditions are setting the stage for a potential rebound in commercial real estate. After aggressive Federal Reserve rate hikes in 2022–2023, inflation has cooled and the Fed is expected to begin cutting rates in 2024–2025, signaling a peak in financing costs. While borrowing costs remain elevated compared to the ultra-low rates of the 2010s, the prospect of rate cuts has improved industry sentiment. In a Deloitte survey, 68% of respondents believed financing will become less expensive and easier to obtain in 2025. Lower interest rates should help “unlock” transactions by narrowing the bid-ask gap between buyers and sellers, after investment sales volumes plunged in 2023. Indeed, global property valuation declines have been slowing, and more buyers and sellers are starting to agree on pricing, suggesting the market may be near bottom.

However, “be careful what you wish for”: falling interest rates often coincide with slower economic growth, which could soften tenant demand. Many commercial tenants are sensitive to job growth and consumer spending, so a cooler economy in 2025–2026 might temper rent growth even as financing improves. Real estate executives are keeping an eye on refinancing risks as well. A “wall of maturities” looms, with roughly $600 billion in U.S. commercial mortgages coming due in 2024 and nearly $500 billion in 2025. Loans originally underwritten at low interest rates face much higher refinancing costs, posing default risks for highly leveraged owners. Lenders have pulled back – bank CRE lending was down over 50% from pre-pandemic levels by 2025 – and credit remains tight, especially for office properties. This environment has investors seeking alternative financing (private credit, mezzanine debt) and real estate professionals working through restructuring and loan extensions to avert foreclosures.

Investor sentiment nonetheless has improved from the pessimism of the prior two years. Nearly 90% of real estate owners and investors surveyed by Deloitte expect their company’s revenues to increase in the coming year, and most have shifted from cutting costs to cautiously increasing budgets – with 81% planning to boost spending on data and technology to modernize operations. Capital deployment is poised to pick up: many investors who sat on the sidelines during the volatility are now looking for opportunities, especially if price discovery settles. Indeed, cap rates (property yields) appear to have stabilized in late 2024 after rising sharply earlier in the cycle. According to CBRE, “repricing has ended for most sectors” – all-property cap rates held steady in the second half of 2024. Interestingly, industrial and multifamily cap rates even compressed slightly during that period as investors gained confidence in those sectors’ income growth prospects, whereas office cap rates continued to climb due to ongoing distress. Many market participants believe cap rates are at or near their peak for this cycle, with the majority of investors expecting little to no further increase in yields over the next six months. This implies that property values, after falling ~20–25% from 2021 peaks on average, may be bottoming out for favored sectors. Investor strategies are becoming more selective – focusing on geographies and property types with solid fundamentals – as the cycle transitions from a defensive phase to identifying growth opportunities.

Office Leasing: High Vacancies and Adaptive Reuse

The office sector remains the most challenged segment of commercial real estate. The rise of remote and hybrid work has caused a structural shift in office space demand, leading to record-high vacancy rates and falling rents in many markets. Nationally, office vacancy hit about 19.6% in early 2025, the highest level on record. Major cities that once had tight office markets have seen dramatic spikes in empty space – for instance, San Francisco’s office vacancy averages around 22.6% (Q1 2025), and even New York City, while showing some recent positive absorption, still has over 14% of office space vacant. Tenant demand for office space remains roughly one-third below pre-pandemic levels, as companies have embraced flexible work arrangements and learned to do more with fewer square feet per employee (the average space per office worker is down ~23% since 2019).

Flight to Quality 

One notable trend in the office market is a bifurcation between high-quality modern buildings and older, less desirable stock. Occupiers are gravitating to newer or newly renovated offices that offer abundant amenities, wellness features, and energy efficiency (“flight to wellness”). Many Class A towers with prime locations and state-of-the-art features are maintaining decent occupancy, whereas older Class B/C buildings – especially those with outdated designs or located in weaker submarkets – are struggling with even higher vacancies and steep rent discounts. In gateway cities, top-tier assets in prime locations are performing better (some downtown markets have seen a modest uptick in leasing for premium space), but secondary quality buildings in both central business districts and suburbs face an uphill battle. In fact, distressed sales have started to occur for some aging offices, with cap rates for lower-grade properties reaching the low teens – a sign of extremely depressed values. By contrast, trophy offices in resilient markets might trade at cap rates around 7–8%, reflecting investor caution but also a belief that best-in-class offices will eventually recover.

Corporate tenants are using this environment to their advantage, negotiating more flexible leases, shorter terms, and generous concessions. Many large employers continue to recalibrate their office footprints, often downsizing or adopting hub-and-spoke models (maintaining a primary HQ and smaller satellite offices, or using coworking space) to accommodate hybrid work. Notably, flexible workspace operators and coworking providers are expanding again – flexible offices account for a growing share of new lease transactions, and 65% of real estate investors expect demand for flex space to rise by 2025 as tenants seek agility. Real estate professionals (brokers, landlords) are having to get creative to backfill vacant offices – through aggressive lease incentives, amenities upgrades, or even contemplating conversions of offices to alternative uses (residential, lab space, etc.) where financially feasible. Some cities have introduced incentives or zoning changes to encourage office-to-housing conversions, though challenges (costs, design limitations) mean this is not a panacea but it will gradually chip away at the glut of obsolete office space.

The financial outlook for the office sector is cautious. Office property values have fallen sharply – estimates show U.S. office values down ~14% in 2024 and projected to decline further (perhaps another 25% in 2025 in some scenarios) before finding a floor. Lenders and investors remain wary; in industry surveys, office is ranked as the least favorable property type for investment heading into 2025. Vacancy rates may continue rising in 2025 in many markets as a wave of new office construction (started before the pandemic) is still being delivered, adding supply at the worst time. Tenant market power is evident – with so much available space, many tenants can upgrade to better offices for equal or lower rent, or not lease at all. Forecast to 2030: Over the longer term, the office sector is expected to eventually stabilize at a new equilibrium. By 2030, total occupied office space in the U.S. will likely be permanently lower than pre-2020 levels due to efficiency gains and remote work. The sector will probably have a smaller overall footprint, concentrated in high-quality, modernized buildings. Older buildings that cannot be economically upgraded may be repurposed or face demolition. Office landlords who invest in retrofitting properties with advanced air filtration, collaborative spaces, and smart-building tech could capture outsized share of the reduced demand. Markets with diverse economic drivers (tech, life sciences, creative industries, etc.) and population growth should see healthier office leasing than those reliant on a single shrinking sector. Even as challenges persist, the office sector’s narrative by 2030 may be one of transformation – a leaner, greener office inventory supporting new ways of working, with rents and vacancies stabilized for the right product.

Industrial Leasing: From Pandemic Boom to New Growth Cycle

The industrial real estate sector (warehouses, distribution centers, manufacturing space) has been a standout performer in recent years and remains a favored asset class, though it is experiencing a healthy correction after the frenetic pandemic-era expansion. The surge in e-commerce and supply chain reconfiguration during 2020–2022 drove industrial vacancies to historic lows (sub-4% nationally) and sent rents soaring. Developers responded by adding record new supply of warehouse space. By 2023–2024, this construction wave led to a partial easing of the once-tight market. Vacancy rates have ticked up from their floor – rising to about 6.7% by late 2024, up roughly 1.5 percentage points over the year. Importantly, the vacancy increase has been most pronounced in markets that saw heavy speculative development, such as Austin, Phoenix, and Las Vegas, where vacant new big-box facilities pushed local industrial vacancies into the double digits. In contrast, many established distribution hubs still have low vacancy (half of U.S. industrial markets remain under 6% vacant) and smaller infill facilities (under 100,000 sq. ft.) remain extremely tight at around 3–4% vacancy. This split underscores that demand fundamentals for industrial space remain strong, but the supply pipeline overshot in certain locales and size segments.

Crucially, by late 2024 the industrial market appeared to be nearing peak vacancy and beginning to stabilize. The pace of new construction has started to slow markedly – Q4 2024 saw 85 million sq. ft. of industrial completions, the lowest quarterly delivery since 2021, as developers pulled back on starts. Net absorption (space leased minus vacated) is still positive: the U.S. absorbed ~135 million sq. ft. of industrial space in 2024, which is lower than the record-breaking 2021–2022 levels but still a healthy expansion, indicating tenants are continuing to grow into new space. In fact, demand picked up in late 2024 (Q4 absorption was up 10% quarter-over-quarter). Forecasts for 2025 suggest that absorption will rebound further, likely outpacing new supply, which would bring vacancy rates down again after this short-term bump. Rents are still rising modestly in most markets – nationally industrial rents were up about 5% year-over-year – though rent growth has cooled from the double-digit spikes seen at the height of the boom.

Key drivers underpinning the industrial sector’s strength are expected to persist through 2030. E-commerce continues to grow (albeit at a more normalized mid-single-digit pace), fueling demand for distribution centers and “last-mile” logistics facilities near major population centers. Supply chain reconfiguration is another structural force: companies are implementing “nearshoring” and “on-shoring” strategies to bring manufacturing and inventory closer to U.S. consumers, partly in response to the pandemic-era disruptions. This has boosted requirements for factory space and warehouses in North America. For example, since the passage of the USMCA trade agreement and the U.S. CHIPS Act, there’s been a notable uptick in manufacturing investments – semiconductor firms increased their leasing by 33% after the 2022 CHIPS Act to expand domestic production. Major firms from automakers to retailers are opening new plants or distribution hubs in the U.S. and Mexico, which drives multi-year demand for industrial real estate. Additionally, third-party logistics (3PL) providers and retailers are expanding warehouse footprints to improve delivery times, especially as consumer expectations for fast shipping remain high. All these trends point to robust tenant demand for industrial space well into the future.

From an investor perspective, industrial properties remain “darlings” of commercial real estate. In surveys, investors consistently rank industrial as a top sector for acquisition due to its strong fundamentals. Cap rates for industrial assets had risen somewhat in early 2023 with interest rates, but as of late 2024 they have stabilized or even started to compress again given the positive outlook for income growth. Prime logistics facilities in core markets still trade at low cap rates (often in the 5%–6% range or even lower for coastal infill properties), reflecting high valuations, whereas secondary market or specialized industrial (e.g. cold storage) might be higher. Challenges for the sector include potential overbuilding in certain nodes (which is being corrected as developers scale back new projects), rising construction costs, and infrastructure constraints (e.g. limited land or power in some markets for mega warehouses or data centers). By 2030, industrial real estate is expected to benefit from further technological integration – such as automation and robotics within warehouses – and continued evolution of retail supply chains (omnichannel retail blurring lines between retail and industrial space needs). The sector’s long-run prospects remain bright, with vacancy likely oscillating at relatively low levels (perhaps in the mid-single-digits) and rent growth tracking economic and retail sales growth. Near-term (2025–2026), the industrial market is in a period of absorption and normalization, moving past the pandemic-era volatility into a steadier growth trajectory.

Retail Leasing: Resilience and Reinvention of Brick-and-Mortar

The retail real estate sector has undergone significant upheaval in the past decade due to e-commerce competition and changing consumer habits, but it has demonstrated surprising resilience recently. After the pandemic-induced shakeout (which saw a number of store closures and some retail bankruptcies), brick-and-mortar retail has been recovering, especially in segments that offer convenience or experiences that online shopping can’t easily replicate. As of 2024, national retail vacancy has fallen to around 4.2% – the lowest level since 2007. In other words, about 96% of retail space is occupied, a testament to how the sector has right-sized: very little new retail space is being built, and obsolete properties have, in many cases, already been weeded out or repurposed. The limited construction pipeline (new retail construction remains subdued) means that even moderate tenant demand is enough to tighten vacancies. Indeed, certain categories of retail are in high demand – especially neighborhood shopping centers, grocery-anchored centers, and other “daily needs” retail. Landlords of open-air shopping centers anchored by supermarkets or essential services are reporting strong leasing and rent growth. Retail rents nationally are rising ~3% annually on average, and closer to 4–5% in high-performing segments like grocery-anchored centers.

Investors and landlords are noting that physical retail is far from “dead” – rather, it’s evolving. PwC’s Emerging Trends report highlights that “physical retail is rebounding with low vacancies and rising rents”. Shoppers have largely returned to stores post-pandemic, and retailers have adjusted their strategies to integrate omnichannel models (using stores as fulfillment centers, offering in-store pick-up for online orders, etc.). In fact, many e-commerce brands have opened brick-and-mortar locations to enhance their presence. Retail formats seeing growth include discount stores, off-price apparel, dollar stores, and fast-casual dining, as well as experiential concepts like entertainment venues or fitness uses taking mall space. At the same time, class-B malls and power centers that lost major department store anchors continue to be redeveloped into alternative uses (such as mixed-use lifestyle centers, apartments, or fulfillment centers). The ongoing churn has a silver lining: even when chain retailers close underperforming stores (e.g. some big-box chains rationalizing their fleet), those vacancies often present redevelopment opportunities for savvy owners – such as adding medical offices, grocery stores, or other uses that can drive traffic.

Regional and demographic trends also shape retail leasing. Sun Belt and suburban markets – benefiting from population growth – have seen strong retail demand, especially for new grocery stores, restaurants, and services catering to growing communities. In contrast, some urban downtown retail corridors (particularly in cities where office worker and tourist traffic is still below pre-pandemic levels) are lagging; for example, shops in San Francisco’s Union Square or Manhattan’s Midtown have faced headwinds due to reduced foot traffic from work-from-home. Nevertheless, even those markets are gradually recovering as tourism rebounds and cities adapt. Retailers (the tenant side) are being selective, favoring locations with solid population density and growth, and often opting for smaller store footprints optimized for both shopping and online order processing. Leasing terms have become more tenant-friendly in weaker locations (shorter leases, more kick-out clauses), whereas prime centers with waitlists of tenants are seeing landlord-favorable terms.

Looking ahead to 2025–2030, the retail sector is expected to remain stable overall, with vacancy rates in the low-to-mid single digits nationally. Because developers are unlikely to massively build new retail (given investor wariness and high construction costs), supply will remain constrained. Thus, as long as consumer spending stays healthy, retailers will have to compete for existing quality space, sustaining rental rates. Cap rates for retail assets have been relatively stable – neighborhood/community center cap rates might range ~6–7%, and high street urban retail or trophy malls (for the few that thrive) could be lower. Investors have warmed again to retail, especially necessity-based retail: in a higher interest rate environment, the stable cash flows of grocery-anchored centers are attractive. The caveat is that retail is a very location- and format-specific sector – asset quality and tenant mix are critical. By 2030, expect more shopping centers to incorporate mixed uses (such as adding healthcare, residential, or entertainment components) to bolster their relevance. Technology will also further integrate into retail leasing; data analytics guide retailers to the best store locations, and digital sales channels will coexist with physical stores in a complementary way. In summary, U.S. retail real estate’s trajectory is one of cautious optimism – the sector has endured a purge of oversupply and is reinventing itself, with the survivors (well-located, service-oriented retail properties) thriving in the new landscape.

Multifamily (Apartment) Leasing: Strong Demand Meets High Supply

The multifamily residential leasing sector (rental apartments) has been on a roller coaster: booming in 2021, moderating in 2022–23 as supply caught up, yet it remains fundamentally resilient due to America’s housing shortage and demographic trends. As of late 2024, the U.S. rental apartment market is absorbing a record amount of new supply. Developers delivered an estimated 550,000+ new multifamily units in 2024, the highest annual volume in decades. This wave of new construction – concentrated in fast-growing metro areas like Austin, Dallas, Miami, Phoenix, and others – has pushed the national vacancy rate up slightly, into the 5–6% range. Fannie Mae estimated the national multifamily vacancy at around 6.25% in early 2025, up from ~4.5–5% a couple years prior, but projected it would dip back to ~6.0% by end of 2025 as the market rebalances. For context, a 6% vacancy is roughly in line with long-term historical averages – indicating a balanced market overall (neither extremely tight nor overly soft).

Despite the influx of new apartments, demand has kept pace remarkably well. Apartment absorption (the number of units leased) has been very strong – 2024 saw an annualized net absorption of over 550,000 units, far above 2023’s level. This surge in rental demand stems from multiple factors: robust job growth and wage increases (more young adults forming households), high mortgage rates and home prices (which keep would-be homebuyers in the rental market longer), and population shifts (e.g. continued migration to Sun Belt metros, as well as a bounce-back in urban rentals as city life normalized post-COVID). Certain metros that experienced frenzied apartment construction – like Phoenix, Austin, and Raleigh – did see rent growth turn negative in 2023–24 due to temporary oversupply. In contrast, more supply-constrained cities (e.g. many in the Midwest or Northeast) saw above-average rent gains. On the whole, national asking rents flattened in late 2024 (even declining slightly quarter-over-quarter), but expectations for 2025 are for modest rent growth (~2% nationwide) to resume as the economy improves and the construction pipeline tapers off. Rents have already started to tick up again in many markets by mid-2025 as leasing activity stayed positive.

From an investor and development standpoint, multifamily remains a highly favored sector. In Deloitte’s 2025 outlook survey, residential rental properties (including multifamily) were among the most optimistic in terms of expected improved leasing conditions. Similarly, PwC/ULI’s report notes “multifamily resilience”, citing that demographic trends (e.g. the large millennial cohort and now Gen Z entering their renting years) and lifestyle shifts continue to bolster rental housing demand. Many households are choosing renting over owning for flexibility or affordability reasons, keeping occupancy high. Cap rates for apartment properties did rise in 2022–23 with interest rates, but they remain relatively low (an indicator of strong valuations). By late 2024, cap rates for stabilized multifamily assets had actually inched down again on average, reflecting investors’ view that the worst of the rate-driven repricing was over and future NOI growth prospects are solid. Typically, quality multifamily assets in primary markets trade at cap rates in the 4.5%–5.5% range, while secondary markets or older product might be in the 6%–7% range. These yields, combined with the prospect of rent growth, make apartments an attractive inflation-hedged investment. Indeed, institutional investors such as pension funds and private equity have been upping allocations to multifamily, sometimes at the expense of office exposure.

One notable trend within multifamily is the rise of “build-to-rent” single-family communities and other alternatives. Investors are expanding beyond traditional urban apartments into rental subdivisions, suburban garden apartments, and niche segments like student housing and senior housing. The Emerging Trends 2025 report specifically highlights senior housing as an area of undersupply given the aging U.S. population – by 2030, the wave of baby boomers entering their 80s will sharply increase demand for senior apartments and assisted living, presenting growth opportunities for that niche. Meanwhile, the affordable housing shortage remains acute in many cities, creating public and private sector impetus to develop more units (via tax credit programs, etc.). Multifamily developers in the latter part of the decade may shift focus from luxury Class A towers (which dominated the 2010s construction) toward more affordable and workforce housing, as well as NIMBYism and high costs make luxury projects harder to pencil.

Outlook to 2030: The multifamily sector is expected to navigate the peak of its supply boom by 2025–2026, after which construction should moderate (2024 was likely a high-water mark in deliveries). If economic growth continues and job formation stays positive, absorption will keep up and vacancy should edge down to comfortable levels (perhaps in the 5% range nationally). Rent growth will likely track inflation plus a bit more (maybe 2–4% annually, varying by market). By 2030, the U.S. will have welcomed millions of new renter households, particularly among younger and older age groups. Technology will also influence multifamily leasing – with online tours, AI-driven property management, and smart-home features becoming standard to attract tech-savvy tenants. Overall, multifamily is positioned as a long-term stable performer, supported by the fundamental need for housing. Short-term fluctuations aside, it remains the “bedrock” of many real estate portfolios, often outperforming during economic down cycles and providing steady income.

Regional Trends and Top Markets to Watch

The geography of commercial real estate opportunity in the U.S. has been shifting, with the Sun Belt region (the South and West) squarely in focus. According to the PwC/ULI Emerging Trends in Real Estate 2025 rankings, Sun Belt cities dominate the top markets for overall real estate prospects. Dallas–Fort Worth has ascended to the #1 spot in the nation, dethroning Nashville (which led for three years prior). In fact, Texas and Florida feature prominently: Miami and Tampa are both in the top five markets, and Houston made a strong debut in the top ten. These rankings reflect powerful migration and business trends – job growth, population influx, and pro-development environments in these metros have attracted both investors and corporate relocations. For example, Dallas has seen an 11% employment increase since 2020, and it continues to benefit from corporate headquarters moves and a diverse economy. Florida’s resurgence is attributed to continued in-migration, tax advantages drawing companies and wealthy individuals, and even a post-pandemic tourism rebound that lifts retail and hospitality real estate.

Sun Belt markets like Atlanta, Charlotte, Raleigh-Durham, Austin, and Phoenix have also been consistently highly ranked in recent years’ reports. While Phoenix and Nashville were “dethroned” from the very top, they remain among the top-tier markets, just with slightly tempered outlooks as their explosive growth cools to a more sustainable rate. The “movers and shakers” noted for 2025 include some perhaps unexpected names: Orlando, buoyed by a diversifying economy beyond tourism; St. Louis, offering value and logistics advantages; Richmond, VA, with steady government and tech growth; and even a rebound of interest in New York’s Manhattan (investors can’t ignore the nation’s largest real estate market forever, and some see upside in its post-COVID recovery). Indeed, institutional investors are cautiously re-approaching select coastal gateway cities like New York, Washington D.C., and Los Angeles – but often with a focus on specific sectors (e.g. life science campuses in Boston, or port-related industrial in Southern California) rather than broad market bets. Those gateways are generally seen as having more headwinds (high costs, slower growth) compared to Sun Belt, but they still possess deep pools of demand in certain niches.

Regional vacancy and rent patterns reflect these trends. Many Midwest markets (e.g. Kansas City, Indianapolis) and smaller Northeastern cities (Hartford, Cleveland) have relatively low overall commercial vacancies – some even below 5% – in part because they haven’t overbuilt and aren’t as exposed to the office glut. On the other hand, tech-heavy West Coast markets (San Francisco, Seattle, Portland) are working through office vacancies and saw outsized corrections in property values, though their industrial and multifamily sectors remain strong. Coastal resilience: The New York metro, for instance, has huge challenges in its office sector but its multifamily occupancy is very high and retail in affluent neighborhoods is performing well. Similarly, Los Angeles industrial real estate is among the nation’s tightest (vacancy <2% in some submarkets) even as LA’s office market struggles with ~25% vacancy in Downtown. These intra-market dichotomies mean local expertise is key – investors and corporate tenants are targeting the right submarkets within metros.

Importantly, climate and resiliency factors are increasingly part of the regional outlook. Markets in hurricane-prone, flood-prone, or fire-prone areas (coastal Florida, Gulf Coast, parts of California) face rising insurance costs and stricter building codes, which could dampen net operating income or new development in those areas. For example, property insurance in Florida has spiked, and some investors worry about long-term climate risk to South Florida real estate. Nevertheless, the sheer growth in these Sun Belt areas has so far outweighed those concerns, with newer buildings being designed with resilience features (elevated structures, backup power, etc.) to mitigate risk. By 2030, we may see climate risk considerations more explicitly pricing into real estate (higher cap rates for risk-exposed markets unless mitigated), potentially redistributing some investment towards more climate-stable regions or prompting significant investment in resilience.

Overall, regional performance through 2025–2030 is expected to continue this narrative: high-growth southern and western regions leading in development and demand, while older northeastern and midwestern markets focus on reinvention and specialized strengths. Investors are pursuing geographic diversification, often pairing Sun Belt assets for growth with select investments in resilient pockets of the gateway markets for stability. Corporate tenants likewise are choosing to expand in business-friendly Sun Belt cities (many companies moved or expanded operations to Texas, Florida, Tennessee, Arizona etc., to tap into lower costs and skilled labor inflows). Meanwhile, the big coastal cities will continue to be important, but with growth rates that are slower and heavily dependent on how they adapt (e.g. San Francisco’s ability to revive its downtown will be crucial for its office sector by 2030).

Technology Disruption and Evolving Practices in Leasing

Technology is transforming how commercial real estate is developed, leased, and managed – a trend that will only accelerate toward 2030. PropTech (property technology) innovations are enabling greater efficiency and new business models in the leasing landscape. For instance, the use of digital listing platforms, virtual tours, and AI-driven analytics has streamlined the leasing process for both landlords and tenants. Prospective tenants can now tour spaces via virtual reality and use online data (like foot traffic analytics for retail sites) to inform site selection. Landlords employ AI tools to optimize pricing and identify prospects. According to Deloitte, commercial real estate firms in 2025 are sharply increasing their tech investments – 81% of industry executives plan to focus spending on data and technology capabilities in the near term. The emergence of generative AI is seen as an opportunity to enhance decision-making, whether in underwriting deals or automating lease administration.

Smart buildings and the Internet of Things (IoT) are another disruptive force. Office and multifamily properties increasingly feature intelligent building systems – IoT sensors that monitor HVAC, lighting, security, and space utilization. These technologies allow for better energy efficiency and occupancy comfort, which not only reduce operating costs but also appeal to tenants’ desires for wellness and sustainability. Newer office buildings boasting advanced air filtration, touchless entry, and app-based amenity booking have a competitive edge (“flight to tech-forward buildings”). However, as Deloitte notes, the proliferation of connected devices also introduces cybersecurity risks, and real estate owners are now having to prioritize cyber defenses as part of tech upgrades.

The rise of remote work is itself enabled by technology (video conferencing, cloud collaboration tools) – a disruption that directly affects office leasing as discussed. But it also creates new opportunities: flexible workspace platforms (like WeWork’s model or newer startups) use tech to let companies book desks or suites on demand, effectively “leasing by the day or hour.” Many landlords are partnering with flex-space operators or launching their own flex offerings, supported by reservation apps. For corporate occupiers, technology helps optimize their real estate use – e.g. sensors that track office utilization can inform downsizing or reconfiguring space to fit actual usage patterns.

In the industrial sector, technology and automation are key. High-tech warehouses use robotics for fulfillment, requiring properties with higher power capacity and clear heights. This can influence leasing, as tenants seek modern facilities that can accommodate automation. Additionally, the growth of e-commerce has forced retail and industrial real estate to integrate – retailers now demand spaces that double as distribution hubs, and data analytics help determine the best locations for such hybrid facilities (e.g. a closed mall turning into a local fulfillment center).

Data analytics and AI also improve market transparency and decision-making. Investors and real estate professionals now have access to real-time market data (through platforms like CoStar, Trepp, etc.) to analyze trends in vacancies, rents, and even foot traffic. This reduces asymmetry and can make leasing markets more efficient – but it also pressures owners to be more competitive on pricing since tenants can benchmark options easily.

The years 2025–2030 will likely bring further tech-driven shifts: perhaps widespread use of digital leases and blockchain for property transactions, more AI in predictive maintenance (preventing building system failures), and advanced simulation tools to model market scenarios. One anticipated shift is streamlined lease negotiations – with standardized smart contracts, negotiating a lease might become faster and more automated, reducing legal friction. Real estate professionals who embrace these tools can operate more efficiently and provide better service to clients, while those sticking to old methods may fall behind. The industry is also watching technologies like 5G and edge computing which could enable new services inside buildings (like ultra-precise occupancy tracking or AR/VR experiences in retail stores).

Overall, technology is both a disruptor and an enabler: it disrupts traditional demand patterns (like enabling remote work, hence reducing office need) but also opens new frontiers (like making buildings healthier and more flexible, thereby adding value in leases). The firms that invest thoughtfully in tech – avoiding “shiny object” syndrome and focusing on improvements with clear ROI – are poised to gain a competitive advantage in the leasing market. For example, a landlord who can offer an app-based tenant experience (from adjusting climate controls to booking conference rooms) might attract higher occupancy and rents. Thus, tech adoption in CRE is no longer optional – it’s becoming central to leasing strategy, property management, and even property design.

Comparative Outlook by Sector: Winners and Laggards

Bringing the pieces together, the comparative outlook across commercial leasing sectors shows distinct trajectories:

• Industrial and Multifamily: These sectors are broadly viewed as the most resilient and attractive going forward. Both enjoy strong demand tailwinds – e-commerce and supply chain shifts for industrial, and housing needs for multifamily. Vacancy rates for industrial (currently ~6-7% and likely peaking) and multifamily (~6% and stabilizing) are expected to either hold steady or decline over the next couple of years. Rent growth in both sectors should outpace inflation slightly. Investors favor these sectors; in surveys, industrial and residential were top picks for near-term opportunity. Cap rates reflect this strength: they have plateaued or compressed for quality assets, indicating high values. By 2030, industrial and multifamily are likely to have expanded their footprint (new development following demand), but still balanced given strong absorption. The main challenge for industrial will be managing the development cycle to avoid oversupply in pockets, while for multifamily it will be addressing affordability and absorbing the big 2020s delivery wave. Yet, relative to other sectors, these two are poised to lead the recovery and generate stable income.

• Retail: The retail sector occupies a middle ground. Certain subtypes of retail (essential retail, well-located centers) are thriving with record-low vacancies ~4% and solid rent increases, whereas others (outdated malls) continue to struggle. Overall, retail has surprised on the upside – physical retail proved its staying power and adaptability. Investors have renewed interest in retail, but selectively: grocery-anchored centers and experiential retail are in demand, while poor-performing malls are being avoided or repositioned. We expect retail fundamentals to remain steady; consumer spending and confidence will be key variables. One advantage retail has is the lack of new supply, which should keep occupancies high. Cap rates for retail assets are generally higher than for apartments/industrial (reflecting a bit more risk), but with the rebound, many retail cap rates have held steady and even compressed for top-tier assets because of limited alternatives for investors seeking yield. Retail’s outlook to 2030 is cautiously positive: expect evolution rather than expansion – the total footprint of retail space might shrink modestly, but the productivity and rents of the best centers will grow. As a sector, retail is not the high-growth story it once was, but neither is it a sinking ship; it’s a stable ship that’s changing course toward new formats.

• Office: Office is clearly the laggard and will take the longest to recover. With nearly 20% vacancy nationally and higher in many CBDs, the office market faces a multi-year workout. Most industry analysts do not foresee office vacancies returning to pre-pandemic norms this decade – instead, a “new normal” of lower occupancy is anticipated. Rental rates are under pressure; tenants have leverage in most markets, which will persist until excess inventory is removed. Cap rates for offices have blown out (8-10%+ for many assets), reflecting low investor appetite; pricing is deeply discounted relative to replacement cost for older buildings. Investors who are pursuing office are either very selective (prime assets in innovation-driven markets) or looking at distressed situations hoping for long-term upside. Forecasting to 2030, the office sector will likely undergo significant consolidation – some estimate that 10-20% of office stock in the U.S. may be permanently removed or repurposed eventually to equilibrate supply with the reduced demand. The offices that remain and get leased will be higher quality on average (since those are the ones tenants choose). If the economy grows, there could be some recovery in net absorption of office space later in the decade, but probably not enough to fill all the empties. So, office owners and city planners have a challenge: how to creatively reuse excess office space (converting to residential, hotels, educational use, etc.) and how to entice companies and workers back. The sector’s performance will also vary widely by region and micro-location. But in any case, office is expected to trail other sectors in rental growth and occupancy for the foreseeable future.

These dynamics mean that investors are recalibrating portfolios – many are overweighting industrial and residential, maintaining or selectively adding retail, and underweighting office exposure. Lenders too are focusing on multifamily and industrial loans while pulling back on office. Corporate tenants, for their part, are benefitting in sectors like office (lower rents, more flexibility) but might face tougher negotiations in industrial (where landlords have more leverage in tight markets). This comparative view also suggests that construction activity will be concentrated in industrial and residential (where demand justifies new builds), whereas few new office towers will start in the next several years (except in niche markets or build-to-suit projects).

Stakeholder Perspectives: Investors, Tenants, and Professionals

The evolving commercial leasing landscape has different implications for various stakeholders:

• Investors & Owners: For real estate investors, the priority is on portfolio resilience and upside positioning. Many institutional investors are reallocating capital toward sectors with strong fundamentals (industrial, multifamily, specialized properties like data centers or life sciences) and away from structurally challenged segments (office, unless at a steep discount). They are also more geographically selective, favoring high-growth Sun Belt markets that promise better rent growth and liquidity. Investors anticipate that total returns from commercial real estate over the next 5 years will be driven more by income (cash flow) than by rapid appreciation, given the higher interest rate environment. Thus, asset management is key – squeezing operating efficiencies, embracing technology to cut costs (for example, using PropTech to lower energy bills or automate processes) and amenitizing properties to keep occupancy up. Investors are also wary of ESG (Environmental, Social, Governance) factors – properties that meet sustainability standards and social expectations may command premium rents and avoid regulatory penalties. For instance, cities like New York and Boston have carbon emission laws for buildings; owners who invest in retrofitting their buildings for energy efficiency could be better positioned by 2030, whereas laggards might incur fines or lost tenants. Overall, investors see a period of “adjustment and opportunity” – the adjustment being dealing with near-term pain (e.g. refinancing issues, value drops), and the opportunity being to acquire quality assets at discounted prices during the trough and reap gains as the market recovers.

• Corporate Tenants (Occupiers): Companies leasing commercial space are taking a strategic approach to their real estate. Office occupiers in particular are rethinking the purpose of their offices – many are downsizing footprints due to hybrid work, but simultaneously flight-to-quality means they might move to a nicer building as they shed excess space. They are leveraging the tenant-favorable market to get better lease terms: more flexibility (termination options, contraction rights), higher TI (tenant improvement) allowances, and turn-key buildouts by landlords. Workplace strategy is now a C-suite issue, as the office is used to attract talent and foster culture, not just to house people. This leads tenants to favor buildings with great amenities (fitness centers, outdoor space, etc.) and locations that employees find appealing (transit-accessible, vibrant neighborhoods). Industrial tenants, such as retailers or 3PLs, are focusing on supply chain optimization – they may lease additional smaller warehouses to be closer to customers (last-mile delivery) even as they rationalize large distribution center networks. They also demand features like high ceiling heights, plenty of loading docks, and advanced racking systems. Retail tenants are adjusting formats – e.g. big-box retailers opening smaller urban stores, and direct-to-consumer brands opening showrooms. Many retailers prefer shorter initial lease terms with more renewal options, given the fast-changing retail environment. Flexibility is a common theme: occupiers want the ability to scale space up or down as their needs change, which is why flexible office operators and short-term industrial leases (in some cases) have gained traction. By 2030, corporate tenants may treat real estate more like a service (the “space-as-a-service” model), expecting turnkey solutions and on-demand scalability from landlords. This challenges landlords to adopt more hospitality and service-oriented approaches to keep tenants satisfied.

• Real Estate Professionals: This broad group includes brokers, property managers, leasing agents, and developers. Brokers and leasing agents are having to adapt their practices – using digital marketing, virtual tours, and data-driven pitches to attract tenants in a competitive environment. With slower deal volume in some sectors, brokerage firms are diversifying services (offering more consulting, workplace strategy advice, etc.). Property managers are incorporating tech for smart building management; their role in retaining tenants is heightened as tenant experience (from reliable Wi-Fi to rapid response to maintenance issues) can make or break renewals. Many firms are upskilling staff to handle new tech tools and to understand evolving tenant needs (for example, training property managers in cybersecurity basics as buildings deploy more connected systems). Developers and builders, for their part, are pivoting to where the demand is – a notable trend is some office developers switching to residential or industrial projects. When they do pursue office or retail development, it’s often with heavy pre-leasing and a clear niche (like a medical office building 80% pre-leased to a hospital system, or a mixed-use center anchored by entertainment). The development community is also increasingly focused on entitlements and public-private partnerships to make projects viable, especially conversions (e.g. getting city incentives to turn an old office into housing).

Importantly, all professionals in the CRE industry are coping with a market that requires more innovation and agility than in the past. The easy gains of cap rate compression and leverage (when debt was cheap) are gone; now value creation comes from real improvements – leasing up a difficult space, repositioning an asset, or tapping into new tenant categories. Professional services firms (like architectural and planning firms) are seeing rising demand for adaptive reuse expertise, sustainability consulting, and redesigning spaces for post-pandemic preferences. In sum, the 2025–2030 period is pushing real estate professionals to broaden their skill sets, embrace collaboration across disciplines, and be proactive problem-solvers for clients in an environment that is both challenging and full of new possibilities.

Conclusion: Outlook Through 2030 – Challenges and Opportunities

As the U.S. commercial leasing market emerges from a turbulent few years, the path forward is one of measured optimism with clear divergences by sector. By 2025, most indicators suggest the industry will be on a recovery footing: interest rates easing, transaction activity picking up, and many fundamentals (like occupancy and rent growth) improving in sectors outside of office. “The skies are finally clearing… even if some dark clouds still linger,” as the Emerging Trends 2025 report aptly put it. Better times are ahead for commercial real estate, but the healing will take time and will not be uniform.

Looking out to 2030, we can envision a commercial real estate landscape that has been reshaped by the crucible of the 2020s:

• The office sector will likely be smaller and more experiential – a focus on collaborative, high-tech, sustainable workplaces for the proportion of work that occurs in person, while a portion of outdated office stock will have been converted to new uses. Office vacancy may settle at a higher baseline than historically, but the surviving inventory should be healthier and more attuned to tenant needs.

• Industrial real estate is poised to remain a backbone of the economy, adapting to new logistics paradigms and technologies (like autonomous vehicles or drone delivery perhaps) that could emerge late in the decade. Warehouses might increasingly incorporate green features too (solar rooftops, electric vehicle infrastructure) as ESG factors grow.

• Retail real estate in 2030 will probably be a showcase of “adaptive reuse” and experience – many malls will have transformed into mixed-use community hubs, and successful retailers will have integrated digital and physical retail seamlessly. Vacancy in retail should remain comparatively low, as retailers by then will have right-sized to only the most productive store locations, making each store count.

• Multifamily housing will continue to play a critical role in providing homes for a growing and aging population. We may see the rental housing market bifurcate further into lifestyle luxury rentals vs. affordable/workforce housing, with strong demand for both. Policymakers and developers might collaborate more on housing solutions given affordability pressures, which could shape the multifamily landscape (e.g. more public-private partnerships for mixed-income developments).

• Niche sectors (like data centers, life science labs, medical offices, self-storage, senior living, student housing) will likely command a larger share of attention and capital by 2030, as investors seek diversification and as these niche needs expand. For instance, data centers have booming demand due to the digital economy (with long-term leases and high rents), making them a notable part of the commercial leasing universe now.

Macro risks such as geopolitical conflicts, future pandemics, or economic recessions are wildcards that could of course alter these trajectories. But barring major shocks, the trend is toward recovery and renewal – not a return to the old normal, but the emergence of a new one. Real estate is a cyclical industry, and it appears we are at the inflection of a cycle: the excesses of the 2010s (perhaps an overabundance of mediocre office space, overshooting in some developments) are being corrected, and the 2020s are ushering in a period of recalibration. For those investors, tenants, and professionals who can adapt to the new realities – embracing technology, prioritizing sustainability and resilience, and focusing on the human experience that commercial spaces provide – the latter half of this decade holds substantial opportunity. As one industry outlook noted, the winners will be those who “adapt quickly in the right markets” and asset types.

In conclusion, commercial leasing in the USA is set on a cautious upward trajectory. The ingredients for a rebound are falling into place (improved financing conditions, steady economic growth, and pent-up demand in some areas), yet success will depend on strategic pivots – repurposing underused spaces, aligning with shifting tenant preferences, and deploying innovation in an age-old industry. The period from 2025 to 2030 will likely be remembered as a transformative era for commercial real estate, one that redefined how and where we work, shop, and live. Stakeholders who recognize the nuances in each sector and region – and plan accordingly – will navigate this evolving market and thrive in the new landscape of commercial leasing.

Sources:

• Deloitte 2025 Commercial Real Estate Outlook

• PwC/ULI Emerging Trends in Real Estate 2025 The Kaplan Group – Commercial Real Estate Stats 2025

• ServiceTitan Industrial Market Report (Feb 2025)

• Fannie Mae Multifamily Outlook (Jan 2025)

• CBRE Cap Rate Survey H2 2024

• CRE Daily – ULI/PwC Emerging Trends Summary

• PrimeStreet – Top Markets for Investors 2025

• Deloitte Insights – Interest Rate/Capital Markets Commentary

• PwC/ULI Emerging Trends – Regional and Sector Insights