• Greater economic stability as trade concerns ease. While growth remains subdued, major markets are expected to see continued economic expansion in 2025. The outlook for next year is more positive, supported by lower average interest rates and a more predictable global trading environment.

• Global real estate markets remain resilient through the third quarter. Pent-up industrial demand is building, with activity rising in several markets. Retailers continue to expand in core locations, while global office leasing in 2025 is at its highest level in six years.

• Investor sentiment is improving notably, resulting in a more competitive transactional market. Direct investment volumes growth continues to rebound and accelerated during the third quarter, signaling investors’ increased confidence in the market.

Office leasing demand continued to increase moderately from the previous year during Q3. Expansionary demand in North America pushed take-up higher, while longer deal timelines in Europe and Asia Pacific contributed to lower activity. Following on from a strong first half, global volumes over the first nine months of the year were at their highest level since 2019.

Consumer sentiment has become increasingly mixed across markets, creating a multi-speed retail environment as high-income consumers drive spending growth. Retail fundamentals continue to be resilient across regions; U.S. absorption rebounded in Q3, with store openings now outpacing closures for the year. In Europe and higher-growth or tourism-oriented economies in Asia Pacific, retailer demand remains healthy for premium central space amid limited availability. 

Future trends: Stable fundamentals as expansionary demand tempered by limited supply

Short-term: Resilient market performance is likely to be sustained through 2026 as retailers continue to expand despite subdued consumer sentiment and labor markets. The impacts of trade policy on prices are expected to feed through gradually, with inflation set to rise moderately in the United States but decline elsewhere. Limited new supply will support fundamentals but hold back expansionary demand as retailers remain selective on location and quality.

Long-term: Dining, essential goods and experiential retailers are set to continue expanding. Elevated living costs following several years of high inflation are boosting demand for value, while higher-income consumers drive a greater share of spending growth. Rents are likely to remain on a gradual recovery path in most mature markets but remain below replacement costs, which will keep new construction subdued.

The living sector is on track for a strong 2025, with investment volumes on course to reach pre-Covid averages. The U.S. is leading the way with the third quarter notching the highest deal activity of the year. Volumes have also risen strongly in Europe and Asia Pacific , where strong demand for purpose-built student accommodation (PBSA) assets has been evident.

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