2025 Watchlist — The Top Ten
January 14, 2025 • Happy New Year! We are excited to share some of the things we see for 2025 (and beyond) and look forward to working with you over the coming year to maximize the value of your real estate portfolio.
NYC Congestion Pricing imposes a toll on all vehicular traffic south of 60th Street in Manhattan.
1. Artificial Intelligence. AI is a constant refrain and getting up to speed on how it can improve your bottom line should be on every real estate professional’s to-do list. I recommend building an on-ramp by experimenting with low-cost, off-the-shelf tools, including ChatGPT and Microsoft’s Co-Pilot.
2. RTO Mandates. 2025 is poised to be the year that ushers back in-office work. Amazon, Salesforce, IBM, Dell, Southwest Airlines, and JP Morgan are just a few of the private sector employers that have issued RTO mandates. The federal government, with over 3M employees, may issue its own RTO in the coming weeks. Whether this trend will make a dent in the 14% national office vacancy rate remains to be seen, but it’s a hopeful sign.
3. State and Local Regulations. In NYC alone, two major regulatory changes that could significantly impact real estate markets in 2025 recently went into effect. Congestion Pricing, which imposes a toll on all vehicular traffic in the Congestion Relief Zone south of 60th Street, started on January 5th, and the City of Yes for Housing Opportunity rezoning, which is intended to create 80,000 additional residential units across the city over the next few years was enacted in December.
4. Retail Markets. 2025 should be a year of continuing growth: in jobs, wages, consumer demand, retailer demand for space, and even the demand for new retail construction that we are beginning to see across the Sunbelt and SMILE states. However, external shocks such as the imposition of widespread tariffs and mass deportations could bring some clouds into this sunny outlook.
5. Transformative Development. 2025 may represent a turning point for the transformation of obsolete malls into thriving mixed-use communities. Of the remaining malls that are still operating, more than half are ripe for change. Master-planned developments like Baltimore Peninsula and Suffolk Downs in Boston could be a roadmap for monetizing the inherent potential of these struggling but well-located properties.
6. Right Sizing vs Maximizing. The folly of overestimating market boundaries, rents, and potential revenue has come home to roost in trade areas ranging from SoHo to 5th Avenue in NYC. In 2025 beware of making investment decisions based on inflated market projections.
7. Infill vs Over the Horizon. Instead of looking over the horizon for value-creation opportunities, look down the block. Take advantage of in-fill locations and enhance the existing infrastructure, history, vibe, and community in neighborhoods you are already intimately familiar with.
8. Think Global, Focus Local. The challenges and trends that we are grappling with in the Northeast are also playing out in other regions throughout the U.S. and around the world. Take advantage of ICSC, ULI, and other real estate groups that foster connections between local, national, and global real estate professionals and capitalize on their value-add educational and networking opportunities.
9. Process Is Important. In the fast-moving, volatile business climate that will likely characterize 2025, meet the moment by re-evaluating and modifying the underlying processes that supported your success in the past. Don’t sacrifice quality and the long game for quick, but unsustainable wins.
10. Give Up the Ghosts. As we move forward into 2025, don’t let the muscle memory honed by ghosts of markets past rule. Give up the “this is how we always do it” response to challenges that require an up-to-date approach.
Let us know what’s on your watch list for 2025 so we can work together to consistently achieve best-in-class, high-performance value-creation goals.