AriZona Real Estate insider!

In 2025, the commercial real estate landscape is poised for significant changes. According to a recent article in the Wall Street Journal, several key trends are expected to shape the industry this year.

1. Office Market Getting Stable: The office market is expected to become more stable, with a 5% increase in office leasing. This is because there will be fewer new office buildings and more companies looking to expand their space.

2. Rise of Tech Properties: Properties like data centers, cold storage facilities, and battery plants are becoming more popular because they are essential for new technologies.

3. Better Workplaces: Companies are focusing on making their offices more enjoyable, with spaces that promote community and collaboration.

4. Retail Rent Going Up: With fewer new retail buildings, the rent for retail spaces is expected to rise. Retailers will want to secure good locations for longer periods.

5. Changes in Life Sciences: Advances in technology and new medicines mean that life sciences companies will need to rethink their space needs.

6. Demand Near Borders: There will be more demand for industrial buildings near the U.S.-Mexico border due to changes in trade policies. Cities like San Antonio and Dallas will see increased activity. An area that I would look into if I was thinking of investing or considering outside the box, and maybe I am a little biased because I grew up there, is Nogales, Arizona. The produce trade is huge there and drives the local economy. Real estate is fairly inexpensive, making it an attractive option for investment.

7. Managing Noise: As more employees return to offices, managing noise has become important. Offices will use sound-proofing and private booths to create a better environment.

8. More Team Spaces: Companies are creating more collaborative workspaces to encourage teamwork and casual meetings.

These trends show how commercial real estate is changing and the opportunities and challenges ahead. For more detailed insights, you can read the full article on the Wall Street Journal website.

What stands out is the stabilization of the office market. This sector, which took a significant hit during COVID as more people worked from home, seems to be on the mend. There have been numerous reports of office spaces being offered at below-market prices, particularly in areas like Phoenix and throughout the USA. Some of these spaces have even been converted to industrial use. One in particular was an office building around Washington and 48th St that was purchased for around $11.25M, torn down, and looks to be an industrial building going in the space. The trends predicted for 2025 could signify a return to normalcy for commercial real estate, bringing renewed stability to the market.