The Top Commercial Real Estate Themes of 2025

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• Tariff Turmoil and Industrial Market Moderation
• Mixed Recovery in Gateway Office Markets, with DFW and NYC leading the way
• Focus on Small Bay Industrial: Small Bay Emerges as a Strong Investment Class
• Demand For Quality Built-outs: TI Reaches New Peak as Costs and Demand for Quality Office Space Rise

1. Tariff Turmoil and Industrial Market Moderation

1. Tariffs Continue to Suppress Trade

• U.S. imports from China totaled $242B YTD in 2025, down 24.7% YoY, as tariffs remain elevated at ~47% after peaking above 127%–135% earlier in the year.

2. Industrial Rents Are Resetting From the Peak

• The CompStak Industrial Rent Index is down 4.7% from late-2023 levels after three consecutive quarterly declines, signaling market moderation.

3. Vacancy Is Rising Faster Than Last Year

• Industrial vacancy climbed to 4.4% by Q3 2025, with year-over-year increases accelerating compared with 2024 as the market normalizes. 

Download the report here for more insights.

2. Mixed Recovery in Gateway Office Markets, with DFW and NYC leading the way

1. NYC & DFW Lead the Recovery

• New York City and Dallas–Fort Worth are the only gateway markets showing strong recovery across both Class A and Class B/C space

2. Gateway Rents Are Rebounding

• The Gateway Office Starting Rent Index rose 4.7% from Q1 2024 lows, reaching a new high in Q2 2025

3. Recovery Remains Uneven Elsewhere

• Most gateway markets are split by asset class, with strength in either Class A or Class B/C, not both 

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3. Focus on Small Bay Industrial: Small Bay Emerges as a Strong Investment Class

1. Small-Bay Commands a Rent Premium

• Small-bay industrial has consistently leased at higher rates than bulk, with a 22% average rent premium in 2023 and double-digit premiums sustained over time

2. Shorter Leases Create Repricing Advantage

• Small-bay leases average ~37% shorter than bulk, allowing landlords to reset rents more frequently

3. Single-Tenant Deals Drive Higher Rents

• Single-tenant small-bay leases achieve higher rents than multi-tenant, with premiums persisting through market moderation

Get more insights in the CompStak and Faropoint partnership report.

4. Demand For Quality Built-outs: TI Reaches New Peak as Costs and Demand for Quality Office Space Rise

1. TI Levels Are at a Cyclical Peak

• Tenant improvement allowances have increased 112% since 2016, reaching their highest level on record in 2025, even as year-over-year growth has slowed.

2. Rising Construction Costs Are Driving the Gap

• New tariffs enacted in April 2025 are pushing construction costs higher, with the Producer Price Index for nonresidential construction inputs rising for eight consecutive months, widening the disconnect between TIAs and actual build-out costs.

3. Limited New Supply Is Intensifying Competition for Quality Space

• Office construction is at its lowest level in over a decade, with 31.0 million square feet delivered in 2024 — 42.2% below 2019 levels, increasing competition for high-quality space and reinforcing elevated TI demands.

Download the full CompStak x Savills report here.