370. Unwrapping Commercial Real Estate Property Types in 2025: Market Surprises, Year-End Takeaways & More

The TreppWire Podcast, Ep. 370: Unwrapping Commercial Real Estate Property Types in 2025

Release Date: December 24, 2025
Hosts: Hayley Keen, Lonnie Hendry (Chief Product Officer), Steven Bushbaum (Research Director)

Overview

In this year-end episode, the TreppWire team provides a sector-by-sector review of the commercial real estate (CRE) landscape in 2025, highlighting major headlines, unexpected trends, and key data across office, multifamily, retail, lodging, industrial, and structured finance markets. The discussion focuses on notable market bifurcation, resilient asset classes, the interplay between capital markets and fundamentals, policy impacts, and prospects for 2026.

Key Themes and Discussion Points

1. CRE Market Overview – Bifurcation and Selective Strength

[01:14 – 03:18]

The market remains "bifurcated," with clear "haves and have nots" in each property sector.
Strength:
- Industrial demand was steadier than forecast.
- Multifamily showed post-supply wave rebalancing.
- Necessity-based retail centers displayed surprising resilience.
Areas of Weakness:
- Office stress is acute, with refinancing risk rising due to higher-for-longer interest rates.
- Similar stress is seen in some lodging pockets and assets with rollover or capex risk.
Distress is now “idiosyncratic”—asset- and market-specific rather than sector-wide.

"Distress is becoming more idiosyncratic. It's less about this entire sector being broken, and more about this specific asset, in this market, with this sponsor and basis, is in trouble." — Steven [02:30]

Looking Ahead:

Scrutiny is on which sectors can drive sustained NOI (net operating income) growth and how fast the market will clear on valuations and refinancing.

2. Economic Backdrop and 2026 Outlook

[03:18 – 07:02]

Strong GDP print at 4.3% annualized (vs. 3.3% expected) surprised markets—good for tenant demand but pushes rate cut expectations further out.
High borrowing costs continue to pressure valuations, expand the bid-ask spread, and exacerbate refinancing challenges.
Expect “selective strength” in logistics, data centers, and grocery-anchored retail for 2026.
Anticipation that visible CRE distress and forced selling may finally materialize as refinancing windows close.

"I think the CRE distress we've all talked about since 2020 actually starts to take shape here in 2026..." — Lonnie [06:48]

3. Banking Sector & Office Loan Exposure

[07:02 – 09:27]

Office loans at many banks have largely been worked through, especially at large and public banks.
Remaining "trouble loans" may be with private and non-traditional lenders or held in life insurer portfolios, especially large urban office loans.

"Some of these non-traditional lender types might be where you start seeing some real movement..." — Lonnie [08:06]

Life insurers are likely well-protected by conservative underwriting but could see issues if property values drop further.

4. Creativity & Capital Structure in 2026

[11:04 – 11:42]

The hosts anticipate a wave of creative solutions around business plans and capital structures for heavily stressed assets.
Setting a new, lower basis through asset sales and recapitalizations could be critical to starting the next growth cycle.

Deep Dives by Property Type

5. Office Sector: Market-by-Market Performance

[11:42 – 22:30]

New York City

[12:02 – 13:44]

Profound resurgence: "Creme de la creme. Gold star."
Leasing and sales activity at pre-pandemic levels; $1B+ office trades; CMBS originations near $20B.
Positive sentiment magnified by bustling city activity, packed sidewalks, and retail comeback.

"Creme de la creme, I think, is a really apt banner... it feels like New York City has definitely turned the corner." — Lonnie [13:19]

San Francisco

[14:00 – 17:55]

“Upward trajectory” driven by an AI-led tech boom—25% of lease deal count but 80% of leased square footage by AI/tech in 2025.
10.2M SF of leases, the best since 2019; challenges remain but recovery is underway.
Concentration risk is noted, but improvements in quality of life and selective hotel asset trades are supporting the market.

"On a leased square footage basis, over 80%. I mean, the skewness in that is massive. Absolutely phenomenal." — Steven [16:02]

Chicago

[18:23 – 22:30]

Mixed signals: notable trades at steep discounts, some forward movement, but not yet at “critical mass.”
Concerns over the city’s budget deficit and subsequent tax/CRE pressures.
Political and governmental decisions play a major role—“G for government” in value drivers.
Overall tone: cautious, with potential threats from municipal finance decisions.

"There are so many other things that actually positively or negatively impact a local marketplace... government action puts immense pressure on CRE operators." — Lonnie [23:13]

6. Multifamily & Apartments: Housing Costs, Policy, and Investment

[24:58 – 35:55]

2025 saw record multifamily supply, bringing some relief to sky-high housing costs, but affordability issues persist.
High mortgage rates and interest rates shift more demand to rentals.
The "Road to Housing" Act may influence supply, but impact remains unclear.
Controversies over rent control: New York City’s proposed rent freeze and the new COPPA regulation (right of first refusal for nonprofits) may dampen investor confidence.
Major transactions show continued investor appetite (e.g., Cortland/EIM $1.6B, Naftali Group $810M).
Caution about over-regulation and local controls impeding further development.

"Affordability is driven by availability and availability is driven by supply... rent stabilization fails every time." — Lonnie [27:27]

Observations about persistent rental demand even in economic downturns.

"Let us not forget that occupancy rates increased following the 2008 crisis." — Steven [31:58]

Market juxtaposition: "Bifurcation" persists between owners with low-rate debt and those priced out as both buyers and renters.

7. Retail: Resilience Amid Closures and E-Commerce Pressure

[35:55 – 45:01]

Institutional capital is returning to select retail sectors (e.g., necessity/grocery-anchored centers, Sunbelt open-air centers).
Major portfolio deals (Ares/Goldman $1.8B, Big 5/Equity Street $1.2B) signal strategic, not just opportunistic, investment.
Simultaneously, retail bankruptcies and closures hit record levels (JoAnne Fabrics, Forever 21, Rite Aid, Party City, et al.).
- Net loss of ~9,200 stores for 2025.
Well-located spaces often quickly refilled by expanding retailers—even as underperforming sites lag.

"I'm still bullish on brick and mortar though... every instance of bankruptcy, they all backfilled almost immediately..." — Lonnie [39:31]

Case Study: NorthPark Center Mall, Dallas

[41:09 – 45:01]

$900M loan, 1.9M SF, $1.6B valuation, very high inline sales ($1,600/SF).
Example of premium, luxury retail center performance—but high leverage generates some bear-case concerns for downside risk.

"At $1,700 in sales and a 74, 75% LTV, the bear in me comes out to play." — Steven [43:44]

8. Lodging and Hotels: Cautious Recovery and Regulatory Headwinds

[46:13 – 51:17]

2025: Stable but not explosive growth, tempered by selective capital and uneven market performance.
Major transactions:
- Hyatt’s acquisition & asset flip of Playa Hotels ($2.6B purchase, $2B asset sale).
- Heightened scrutiny on hidden fees—new FTC rules, and Booking.com’s $9.5M settlement.
- Vegas preferred equity deals and CMBS delinquency tick-ups.
High-end resorts, lifestyle and luxury properties still attract investment; select and limited service under more pressure.

"Bifurcation seems to be where it's at here. The super high end resort style lodging deals are still... getting traction." — Lonnie [50:53]

9. Industrial & Data Centers: Core Growth and Normalizing Fundamentals

[51:17 – 53:27]

2025: Strong institutional demand, especially logistics and data centers (driven by AI/cloud).
Significant transactions:
- EQT Real Estate’s 25-property logistics portfolio (largest industrial deal by square footage in 2025).
Fundamentals are stabilizing—vacancy is up, new supply is normalizing the market.
Trend: Shift away from legacy warehouses toward modern, specialized buildings.

"Data centers and modern logistics core to growth while macro headwinds and evolving occupier needs temper broader expectation." — Steven [51:41]

Notable Quotes & Memorable Moments

“The market is still pretty bifurcated... Distress is becoming more idiosyncratic.” — Steven [01:14, 02:30]
“For the haves, you could argue they’ve had a banner year... For the have nots, the refi risk, the rollover, the maturities, all of those things are problematic.” — Lonnie [03:18]
“If you’ve extended and pretended twice at this point, the current constraints are probably not going to change...” — Lonnie [10:14]
“25% of all deals, so on a deal count basis, AI was 25% of volume, but on a leased square footage basis, over 80%.” — Steven [16:02]

Funny Retail Segment:

“I definitely don’t fit in when I go to this mall... What’s this Fort Worth boy doing out here in Dallas?” — Lonnie [44:12]
“Can I get that chicken soup without the shaved truffle?... No soup for you.” — Steven [46:01]

Timestamps for Important Segments

[01:14] CRE Market Overview & Bifurcation
[03:18] Economic Backdrop, Fed Actions, GDP, 2026 Outlook
[07:02] Banking Sector, Office Loan Exposure, Lender Dynamics
[12:02] Office Deep Dive: NYC
[14:13] Office Deep Dive: San Francisco
[18:23] Office Deep Dive: Chicago & Government Impact
[24:58] Multifamily Market: Affordability, Supply, Policy
[35:55] Retail Market: Institutional Reentry, Closures, Case Study (NorthPark Center Mall)
[46:13] Hotels/Lodging: Major Headlines, Regulatory Factors
[51:17] Industrial Market: Data Centers, Portfolio Deals

Takeaways & 2026 Preview

2026 may finally see the logjam of distressed CRE assets begin to clear, with new bases established for future growth.
Certain sectors (industrial/data centers, necessity-retail, select multifamily) retain strong tailwinds, but broader caution and selectivity are the norm.
Complexity, creativity, and adaptability in capital structuring will be essential for asset managers and investors.
Policy and government action are increasingly pivotal in asset performance—especially in multifamily, where regulatory headwinds could reshape the sector.
Vibrant “bifurcation” remains a dominant feature, shaping both risks and opportunities for market participants in the new year.

For more data and insights, tune in to the next episode or request Trepp's Year End magazine for all 2025 CRE trends in written form.

The TreppWire Podcast, Ep. 370: Unwrapping Commercial Real Estate Property Types in 2025

Release Date: December 24, 2025
Hosts: Hayley Keen, Lonnie Hendry (Chief Product Officer), Steven Bushbaum (Research Director)

Overview

Key Themes and Discussion Points

1. CRE Market Overview – Bifurcation and Selective Strength

[01:14 – 03:18]

The market remains "bifurcated," with clear "haves and have nots" in each property sector.
Strength:
- Industrial demand was steadier than forecast.
- Multifamily showed post-supply wave rebalancing.
- Necessity-based retail centers displayed surprising resilience.
Areas of Weakness:
- Office stress is acute, with refinancing risk rising due to higher-for-longer interest rates.
- Similar stress is seen in some lodging pockets and assets with rollover or capex risk.
Distress is now “idiosyncratic”—asset- and market-specific rather than sector-wide.

"Distress is becoming more idiosyncratic. It's less about this entire sector being broken, and more about this specific asset, in this market, with this sponsor and basis, is in trouble." — Steven [02:30]

Looking Ahead:

Scrutiny is on which sectors can drive sustained NOI (net operating income) growth and how fast the market will clear on valuations and refinancing.

2. Economic Backdrop and 2026 Outlook

[03:18 – 07:02]

Strong GDP print at 4.3% annualized (vs. 3.3% expected) surprised markets—good for tenant demand but pushes rate cut expectations further out.
High borrowing costs continue to pressure valuations, expand the bid-ask spread, and exacerbate refinancing challenges.
Expect “selective strength” in logistics, data centers, and grocery-anchored retail for 2026.
Anticipation that visible CRE distress and forced selling may finally materialize as refinancing windows close.

"I think the CRE distress we've all talked about since 2020 actually starts to take shape here in 2026..." — Lonnie [06:48]

3. Banking Sector & Office Loan Exposure

[07:02 – 09:27]

Office loans at many banks have largely been worked through, especially at large and public banks.
Remaining "trouble loans" may be with private and non-traditional lenders or held in life insurer portfolios, especially large urban office loans.

"Some of these non-traditional lender types might be where you start seeing some real movement..." — Lonnie [08:06]

Life insurers are likely well-protected by conservative underwriting but could see issues if property values drop further.

4. Creativity & Capital Structure in 2026

[11:04 – 11:42]

The hosts anticipate a wave of creative solutions around business plans and capital structures for heavily stressed assets.
Setting a new, lower basis through asset sales and recapitalizations could be critical to starting the next growth cycle.

Deep Dives by Property Type

5. Office Sector: Market-by-Market Performance

[11:42 – 22:30]

New York City

[12:02 – 13:44]

Profound resurgence: "Creme de la creme. Gold star."
Leasing and sales activity at pre-pandemic levels; $1B+ office trades; CMBS originations near $20B.
Positive sentiment magnified by bustling city activity, packed sidewalks, and retail comeback.

"Creme de la creme, I think, is a really apt banner... it feels like New York City has definitely turned the corner." — Lonnie [13:19]

San Francisco

[14:00 – 17:55]

“Upward trajectory” driven by an AI-led tech boom—25% of lease deal count but 80% of leased square footage by AI/tech in 2025.
10.2M SF of leases, the best since 2019; challenges remain but recovery is underway.
Concentration risk is noted, but improvements in quality of life and selective hotel asset trades are supporting the market.

"On a leased square footage basis, over 80%. I mean, the skewness in that is massive. Absolutely phenomenal." — Steven [16:02]

Chicago

[18:23 – 22:30]

Mixed signals: notable trades at steep discounts, some forward movement, but not yet at “critical mass.”
Concerns over the city’s budget deficit and subsequent tax/CRE pressures.
Political and governmental decisions play a major role—“G for government” in value drivers.
Overall tone: cautious, with potential threats from municipal finance decisions.

"There are so many other things that actually positively or negatively impact a local marketplace... government action puts immense pressure on CRE operators." — Lonnie [23:13]

6. Multifamily & Apartments: Housing Costs, Policy, and Investment

[24:58 – 35:55]

2025 saw record multifamily supply, bringing some relief to sky-high housing costs, but affordability issues persist.
High mortgage rates and interest rates shift more demand to rentals.
The "Road to Housing" Act may influence supply, but impact remains unclear.
Controversies over rent control: New York City’s proposed rent freeze and the new COPPA regulation (right of first refusal for nonprofits) may dampen investor confidence.
Major transactions show continued investor appetite (e.g., Cortland/EIM $1.6B, Naftali Group $810M).
Caution about over-regulation and local controls impeding further development.

"Affordability is driven by availability and availability is driven by supply... rent stabilization fails every time." — Lonnie [27:27]

Observations about persistent rental demand even in economic downturns.

"Let us not forget that occupancy rates increased following the 2008 crisis." — Steven [31:58]

Market juxtaposition: "Bifurcation" persists between owners with low-rate debt and those priced out as both buyers and renters.

7. Retail: Resilience Amid Closures and E-Commerce Pressure

[35:55 – 45:01]

Institutional capital is returning to select retail sectors (e.g., necessity/grocery-anchored centers, Sunbelt open-air centers).
Major portfolio deals (Ares/Goldman $1.8B, Big 5/Equity Street $1.2B) signal strategic, not just opportunistic, investment.
Simultaneously, retail bankruptcies and closures hit record levels (JoAnne Fabrics, Forever 21, Rite Aid, Party City, et al.).
- Net loss of ~9,200 stores for 2025.
Well-located spaces often quickly refilled by expanding retailers—even as underperforming sites lag.

"I'm still bullish on brick and mortar though... every instance of bankruptcy, they all backfilled almost immediately..." — Lonnie [39:31]

Case Study: NorthPark Center Mall, Dallas

[41:09 – 45:01]

$900M loan, 1.9M SF, $1.6B valuation, very high inline sales ($1,600/SF).
Example of premium, luxury retail center performance—but high leverage generates some bear-case concerns for downside risk.

"At $1,700 in sales and a 74, 75% LTV, the bear in me comes out to play." — Steven [43:44]

8. Lodging and Hotels: Cautious Recovery and Regulatory Headwinds

[46:13 – 51:17]

2025: Stable but not explosive growth, tempered by selective capital and uneven market performance.
Major transactions:
- Hyatt’s acquisition & asset flip of Playa Hotels ($2.6B purchase, $2B asset sale).
- Heightened scrutiny on hidden fees—new FTC rules, and Booking.com’s $9.5M settlement.
- Vegas preferred equity deals and CMBS delinquency tick-ups.
High-end resorts, lifestyle and luxury properties still attract investment; select and limited service under more pressure.

"Bifurcation seems to be where it's at here. The super high end resort style lodging deals are still... getting traction." — Lonnie [50:53]

9. Industrial & Data Centers: Core Growth and Normalizing Fundamentals

[51:17 – 53:27]

2025: Strong institutional demand, especially logistics and data centers (driven by AI/cloud).
Significant transactions:
- EQT Real Estate’s 25-property logistics portfolio (largest industrial deal by square footage in 2025).
Fundamentals are stabilizing—vacancy is up, new supply is normalizing the market.
Trend: Shift away from legacy warehouses toward modern, specialized buildings.

"Data centers and modern logistics core to growth while macro headwinds and evolving occupier needs temper broader expectation." — Steven [51:41]

Notable Quotes & Memorable Moments

“The market is still pretty bifurcated... Distress is becoming more idiosyncratic.” — Steven [01:14, 02:30]
“For the haves, you could argue they’ve had a banner year... For the have nots, the refi risk, the rollover, the maturities, all of those things are problematic.” — Lonnie [03:18]
“If you’ve extended and pretended twice at this point, the current constraints are probably not going to change...” — Lonnie [10:14]
“25% of all deals, so on a deal count basis, AI was 25% of volume, but on a leased square footage basis, over 80%.” — Steven [16:02]

Funny Retail Segment:

“I definitely don’t fit in when I go to this mall... What’s this Fort Worth boy doing out here in Dallas?” — Lonnie [44:12]
“Can I get that chicken soup without the shaved truffle?... No soup for you.” — Steven [46:01]

Timestamps for Important Segments

[01:14] CRE Market Overview & Bifurcation
[03:18] Economic Backdrop, Fed Actions, GDP, 2026 Outlook
[07:02] Banking Sector, Office Loan Exposure, Lender Dynamics
[12:02] Office Deep Dive: NYC
[14:13] Office Deep Dive: San Francisco
[18:23] Office Deep Dive: Chicago & Government Impact
[24:58] Multifamily Market: Affordability, Supply, Policy
[35:55] Retail Market: Institutional Reentry, Closures, Case Study (NorthPark Center Mall)
[46:13] Hotels/Lodging: Major Headlines, Regulatory Factors
[51:17] Industrial Market: Data Centers, Portfolio Deals

Takeaways & 2026 Preview

2026 may finally see the logjam of distressed CRE assets begin to clear, with new bases established for future growth.
Certain sectors (industrial/data centers, necessity-retail, select multifamily) retain strong tailwinds, but broader caution and selectivity are the norm.
Complexity, creativity, and adaptability in capital structuring will be essential for asset managers and investors.
Policy and government action are increasingly pivotal in asset performance—especially in multifamily, where regulatory headwinds could reshape the sector.
Vibrant “bifurcation” remains a dominant feature, shaping both risks and opportunities for market participants in the new year.

For more data and insights, tune in to the next episode or request Trepp's Year End magazine for all 2025 CRE trends in written form.

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Summary

The TreppWire Podcast, Ep. 370: Unwrapping Commercial Real Estate Property Types in 2025

Overview

Key Themes and Discussion Points

1. CRE Market Overview – Bifurcation and Selective Strength

Looking Ahead:

2. Economic Backdrop and 2026 Outlook

3. Banking Sector & Office Loan Exposure

4. Creativity & Capital Structure in 2026

Deep Dives by Property Type

5. Office Sector: Market-by-Market Performance

New York City

San Francisco

Chicago

6. Multifamily & Apartments: Housing Costs, Policy, and Investment

7. Retail: Resilience Amid Closures and E-Commerce Pressure

Case Study: NorthPark Center Mall, Dallas

8. Lodging and Hotels: Cautious Recovery and Regulatory Headwinds

9. Industrial & Data Centers: Core Growth and Normalizing Fundamentals

Notable Quotes & Memorable Moments

Timestamps for Important Segments

Takeaways & 2026 Preview

Summary

The TreppWire Podcast, Ep. 370: Unwrapping Commercial Real Estate Property Types in 2025

Overview

Key Themes and Discussion Points

1. CRE Market Overview – Bifurcation and Selective Strength

Looking Ahead:

2. Economic Backdrop and 2026 Outlook

3. Banking Sector & Office Loan Exposure

4. Creativity & Capital Structure in 2026

Deep Dives by Property Type

5. Office Sector: Market-by-Market Performance

New York City

San Francisco

Chicago

6. Multifamily & Apartments: Housing Costs, Policy, and Investment

7. Retail: Resilience Amid Closures and E-Commerce Pressure

Case Study: NorthPark Center Mall, Dallas

8. Lodging and Hotels: Cautious Recovery and Regulatory Headwinds

9. Industrial & Data Centers: Core Growth and Normalizing Fundamentals

Notable Quotes & Memorable Moments

Timestamps for Important Segments

Takeaways & 2026 Preview