May 13, 2025

Real Estate Gains Are Positive, But Are They Sustainable?

The real estate market has been hurting substantially due primarily to the major shifts in demand, interest rates, skyrocketing insurance, and the overall inflationary environment we find ourselves in. Even though gross revenues in certain cases have increased, the effect on the bottom line has fluctuated substantially.

Supply and Demand

The outcome has been a major bifurcation of supply and demand and in results depending on which side of the equation property owners found themselves on. For example, looking at 2023 versus 2024 overall was on a downward trend, however results couldn’t have been more mixed depending on what sector you are in. As the office sector continued to get inundated, the industrial sector still saw modest gains. Residential real estate saw some modest increases in topline, but bottom lines have struggled due to the economic conditions.

Perpetual Shifts

Supply and demand for real estate has always been split as the need for real estate is perpetual, it just shifts substantially based on the related economic conditions and trends. This did not change over the past few years and in turn has driven the fundamentals of each of the subsectors. For instance, as the shift to online shopping trended, retail had a lull, giving rise to the industrial boom. Similarly, as office work style has shifted, so have certain demands for space, including urban versus suburban space, and the ability to work from home. Lastly, demand for housing has also shifted as the need for affordable housing (or lack thereof) has grown.

Future Challenges

Looking into the remainder of 2025, as we predict continuing to see major fluctuations, the challenge will be landing on the right side of the equation from a property standpoint and taking advantage of opportunities that arise as a result of the last several years of a hectic market.

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