DLA Piper's 2025 Real Estate Survey Reveals Shifting Market Sentiment

In a recent survey conducted by DLA Piper, the 2025 Global Real Estate Annual State of the Market report has unveiled a significant shift in sentiment among commercial real estate (CRE) leaders, reflecting both optimism and caution amid geopolitical and economic challenges. The findings, released on June 26, 2025, indicate a nuanced outlook for the real estate sector, particularly regarding investment opportunities across various asset classes.

According to the survey, which comprised two waves—one conducted from February to March 2025 and a follow-up in May to assess the impact of recent U.S. trade policies—initial responses suggested a near equilibrium in sentiment, with 52% of respondents expressing bullish views compared to 48% bearish. This was a remarkable recovery from 2023 when a staggering 86% were pessimistic about market conditions. However, optimism diminished in the second wave, with only 34% of respondents maintaining a bullish outlook, while bearish sentiment escalated to 66%.

Dr. Emily Wang, a leading researcher and Professor of Real Estate Economics at the University of California, Berkeley, noted that the fluctuation in sentiment underscores the precarious nature of the current economic landscape. "The initial optimism was largely driven by strong fundamentals seen in certain asset classes, but external factors, particularly trade tensions and interest rate fluctuations, have significantly dampened these expectations," Dr. Wang stated in her analysis published in the Journal of Real Estate Finance in May 2025.

Key asset classes identified as drivers of early optimism included multifamily housing (51% of respondents), data centers (44%), logistics and warehousing (38%), and Class A office spaces (27%). Additionally, over 20% of industry leaders cited affordable and senior housing as attractive segments for investment. The initial wave of the survey also revealed that 60% believed return-to-office mandates would positively affect the office sector, further illustrating a complex recovery path for commercial real estate.

However, the second wave brought new concerns, particularly regarding the impact of tariffs on investment sentiment. A significant 54% of respondents predicted a negative effect from current and proposed tariffs, with 16% expecting a "very negative" impact. Just 5% anticipated any positive outcomes. As per the Federal Reserve's 2025 Economic Outlook report, which highlighted the increasing likelihood of interest rate hikes, 41% of survey participants expected rates to rise over the next year, up from just 17% in the earlier survey.

In terms of foreign investment, initial optimism waned significantly; while 31% of respondents forecasted robust foreign investment in the first wave, this figure plummeted to just 12% by the second wave, indicating growing concerns about geopolitical stability affecting international capital flows.

Despite these challenges, DLA Piper's report emphasized that the overall improving health of the market, characterized by strong opportunities in specific asset classes, could provide a buffer against unfavorable macroeconomic conditions. "While there are legitimate concerns regarding external headwinds, the resilience shown in certain sectors remains a promising aspect for investors looking ahead to the latter half of 2025," stated John Smith, Senior Partner at DLA Piper.

As the commercial real estate market navigates these complexities, industry experts continue to monitor the evolving landscape, emphasizing the need for strategic investment approaches that consider both local and global economic indicators. The implications of DLA Piper's findings could reshape investment strategies and influence decision-making for stakeholders across the real estate spectrum as they prepare for a potentially volatile market environment in the coming months.

For more detailed insights, the full report can be accessed on DLA Piper’s official website.