4A — April 2025 — Spring Preview — M id A tlantic Real Estate Journal
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Resilience emerges amid market volatility and shifting trade policies WCRE First Quarter 2025 Report: CRE Markets Holds Ground Amid Economic Shifts
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to 2024 and signs of resilience despite persistent headwinds. Transaction volumes and asset valuations remain under pressure due to elevated fi - nancing costs and tight credit conditions. Yet, core fundamen - tals are beginning to stabilize, supported by a solid macroeco - nomic backdrop and a notice - able shift in investor strategies. In Q4 2024, real GDP grew at an annualized rate of 2.4%, driven by robust consumer spending and a resilient labor market. Although inflation - ary pressures have resulted in higher delinquency rates
and tempered consumer ac- tivity, household finances remain relatively steady— supporting demand across several CRE sectors. Looking ahead, 2025 presents both opportunities and uncer - tainties. The aftermath of the 2024 election brings potential policy shifts in areas such as regulation, taxation, trade, and immigration-all of which could significantly influence CRE dynamics. While short-term expectations include continued inflation and moderate growth, longer-term proposals like tax cuts and regulatory easing may
spur economic activity and boost demand. Supply-side risks are also in focus. Potential tariffs could raise material costs and disrupt construction supply chains, while stricter immigration poli- cies may worsen labor short - ages in the building trades-par - ticularly in the multifamily and industrial sectors. Combined with elevated borrowing costs, these pressures are likely to suppress new project starts in the near term. Despite these challenges, in- vestor sentiment is improving. A recent global CRE survey
indicates that 70% of investors plan to increase capital de- ployment in 2025, with strong interest in multifamily, indus- trial, healthcare, and logistics properties. Value-add and core-plus investment strategies are gaining traction as inves - tors seek steady returns amid market volatility. “The commercial real estate industry is showing signs of adaptability and resilience,” said Jason Wolf , managing principal of WCRE. “While challenges remain, there is clear opportunity for those who stay agile, data-driven, and aligned with long-term trends in demographics, technology, and sustainability.” Select highlights from the report: • With the “flight to quality” trend driving leasing activity, the office sector continues to show signs of long-awaited stabilization. • Regional developers and private buyers dominated the Philadelphia retail sales mar - ket as the ongoing impact of high interest rates, coupled with economic uncertainty, kept large institutional inves - tors on the sidelines. • Retail fundamentals across New York remained resilient through Q1 2025, though the sector now faces headwinds from a rising wave of retailer bankruptcies and large-format store closures. • Southern NJ’s industrial sector entered 2025 with mo - mentum, particularly in Bur - lington County where leasing surged, pushing net absorption to 3.1 million s/f compared to the 1.9 million s/f of newly de - livered space. • For the first time in five years, the Philadelphia of - fice market has experienced positive annual net absorption, with tenants occupying 1.1 mil - lion s/f over the past year The quarterly report also covers notable transactions across property types and markets. For the first quarter, these include: • Faropoint acquired a portfolio of 10 fully occupied industrial properties across Northern NJ, totaling 770,000 s/f, for $144.5 million at a 6.7% cap rate. These properties, which were primarily built in the 1970s, are valued based on their strategic positioning and abundant parking. • The trend of owner-user continued on page 30A
ARLTON, NJ — WCRE CORFAC International
(WCRE) has released its Q1 2025 Mar - ket Report, offering in- sights into the state of the commercial real estate (CRE) sector
Jason Wolf
as it navigates a complex eco - nomic and policy environment. The report reflects a market entering Q2 with cautious opti - mism, buoyed by a strong finish
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