Hottest CRE Markets Forecasted: 7 US Cities to Watch in 2025

The U.S. commercial real estate market outlook is improving after four hard years for CRE developers. That’s not to say CRE market conditions are optimal across the country – but some are indeed showing great potential.   

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Knowing which CRE markets to invest in and which not is extremely important. Without the right intel on investment opportunities, commercial real estate developers risk: 

• Overextending financially on properties in a market with inflated valuations 
• Facing prolonged vacancy due to locally misaligned demand and decreased economic activity
• Encountering stringent local regulations that limit development potential and returns

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Luckily, we can tell you how to get into CRE development successfully and, crucially, which local CRE markets to invest in. 

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Now is the time to build your CRE portfolio. Monetary policy is loosening, inflation cooling, and the U.S. economy is bound for the soft landing CRE executives have been hoping for, news outlet U.S. News writes. 

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Our commercial real estate forecast for 2025 analyzes local CRE markets that show the best investment opportunities. Learn which 7 U.S. cities promise great returns on real estate development, what is driving these markets, and how you can best invest in them. 

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Ready to get a foothold in America’s most promising CRE markets? Discover how to get into commercial real estate investing successfully.

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[Want to invest in growth markets but have limited liquidity? Duckfund’s soft deposit financing lets you secure CRE property without dipping into your capital.] 

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7 hottest commercial real estate markets in 2025

The commercial real estate market outlook is improving. The Federal Reserve is slowly decreasing cap rates. Predicting further rate cuts, lenders are becoming less tight-fisted and the capital market more accessible. 

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CRE prices have bottomed out in early 2024 and could continue to improve, according to asset manager FS Investment.

Source: FS Investments

But while some CRE sectors show positive numbers, others face structural challenges. Multifamily and industrial properties, for instance, continue to perform well, while retail is surprisingly resilient. 

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On the other hand, the office sector is structurally underutilized showing vacancy rates around a record-setting 20% in 2024, according to data from analyst Moody’s CRE.

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In this challenging but improving climate, opportunities emerge for developers invested in the right sectors and, crucially, the right CRE markets:

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1. Dallas-Fort Worth: Standout performer with a strong job market

Texas has been a hotspot for CRE investors and developers in recent years. The state has a strong economy, favorable business climate, and a booming population. Texas’ major cities have seen big economic growth – but it’s the Dallas-Ft. Worth metroplex that currently shows the most promise for CRE developers.

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Five and ten-year annualized returns are 7.9% and 8.8%, consultancy PWC estimates in their 2025 CRE report. The Dallas-Fort Worth metroplex ranks second nationally in annual absorption, with 15.1 million square feet absorbed, according to CRE media outlet Commercial Property Executive, trailing only behind Houston. 

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Source: PWC

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What’s driving DFW’s CRE market

More than half a million people have moved to North Texas between 2020 and the start of 2024 – with DFW’s population growing 7.1%, the Texas Demographic Center estimates, driving demand in rental and across CRE asset classes.

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With the influx of people and businesses, the DFW metroplex is buzzing with economic activity. Employment in DFW is up 11.2% since 2020, consultancy PWC reports, showing strong economic activity across sectors from banking and commerce, to tech, energy, and logistics. 

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The region's strategic location along major logistics corridors provides access to a vast consumer base across the U.S., enhancing its appeal for businesses.

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While the market is experiencing a slowdown in new leasing activity, DFW remains attractive to newcomers due to lower rental rates compared to other major markets. It’s this affordability combined with growth and economic diversity that continues to bring new residents and businesses to DFW.

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How to capitalize on DFW’s CRE market

Dallas-Fort Worth is expected to be the U.S.’ hottest CRE market in 2025, but how do you best capitalize on the metroplex’s economic and population growth? 

• Industrial and logistics properties: As DFW’s industrial sector continues to grow, so does demand for warehousing and distribution centers. Vacancy rates are starting to decrease across industrial property types now that deliveries have slowed, according to data from CRE firm Partners Real Estate. This suggests new development opportunities in 2025.

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Industrial CRE absorption rates in the DFW metroplex 

Source: Partners Real Estate

• Data centers and tech facilities: These facilities are in hot demand due to AI and cloud computing. DFW is the fourth largest U.S. market for data centers, with 1,358.9 megawatts of inventory and a 1.4 percent vacancy rate, according to PWC’s CRE report. And with DFW’s tech industry growing, there are more opportunities for smart developers.

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“We’re going to have an opportunity to take advantage of the mix between some of the AI and the technologies that are being supported by our growing education base, as well as the demand for those differentiated types of products,” Tamela Thornton, executive director of ULI Dallas-Fort Worth, told media outlet D Magazine. “You’re going to see rents continuing to rise.”

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• Repurposing inner core suburban: Since none but the largest developments can’t build their way out of existing infrastructure challenges, there’s going to be more interest in repositioning inner core suburban and even looking at downtown urban core as areas of opportunity. 

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“We’re going to start seeing some repositioning of where [CRE developers] are going,” Thornton commented. “I’m looking out the window at what’s going on here in Uptown, and we’re getting infill,” she added. “We’re getting new development, and I think we’re going to continue to see that.” 

• Affordable multi-family: Dallas-Fort Worth’s growing population drives continued demand for housing. But with house prices four to five times the median household income, as PWC reports, the market isn’t accessible to everyone. 

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Thornton sees affordable housing and attainability becoming front-and-center for development and investment activity. 

2. Houston: Energy capital and rapid growth market

Houston stands as the second-hottest CRE market to watch in 2025. Like other major cities in Texas, Houston shows steady economic and population growth. 60,200 jobs were added over the year in October 2024, indicating a job growth rate of 1.8% compared to the national average of 1.3%, the U.S. Bureau of Labor Statistics estimates. 

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Source: U.S. Bureau of Labor Statistics

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Activity in commercial real estate has picked up, albeit cautiously, with the industrial and retail sectors showing the most promise. Multifamily is another real estate sector to keep an eye on. 

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What’s driving CRE market growth in Houston

The city of Houston's population has remained virtually unchanged over the past years, growing only 0.31% between 2022 and 2023, newspaper The Houston Chronicle reported. Zooming out to the metropolitan area, however, numbers become different. Its population grew by 2% over the same period, adding around 170,000 residents.

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Some Houston counties are seeing an especially large influx with over 15% growth between 2020 and 2024, media outlet Houston Public Media reported.

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Source: Houston Public Media

What’s driving this influx of people? Long known as the center of the American oil and gas industry, Houston’s economic expansion is generating jobs in new industries like healthcare, tech, and aerospace. 

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Yet Houston’s resilient energy sector is still a major contributor to a positive CRE investment climate. Plus, with its dominant energy infrastructure, Houston is poised to be a leader in the nation’s transition to green energy. 

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Combining these economic fundamentals with a lack of formal zoning laws, Houston’s metropolitan area makes for a particularly development-friendly environment.

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How to best invest in Houston’s CRE market

North Texas’ economic hub holds CRE opportunities but which asset classes in the real estate industry can developers best invest in?

• Industrial demand: Houston’s strong economy helped increased absorption rates outpace new supply in the third quarter of 2024. With new constructions down nearly 30% year-over-year, the question is whether new supply will be enough to meet future demand.

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Danny Rice, president of CRE asset manager Colliers, sees investment opportunities.  “The past 18 months for the Houston industrial market have been a time of recalibration for developers and tenants alike. The road ahead is positive, providing continued optimism as we wrap up the year and head into 2025.”

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• Increasing retail activity: Demand for Houston retail space has been steady with vacancy rates hovering around 5.5% Colliers data shows. With growing consumer confidence and a solid, growing population base, demand for retail property is set to increase.

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Source: Colliers

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Lower interest rates have helped boost consumer confidence, Rice comments. “As inflation has cooled, the economy has returned to what we expect to be the new normal going forward, providing confidence for the retail market in Houston as we finish out the year and head into 2025.” 

• More action in multifamily: Houston’s multifamily market shows occupancy rates rising to 89% and average monthly stable just below $1,300, Colliers statistics show.
  
  Nonetheless, transaction levels in multifamily investments remain low in Houston’s current market. This is due to a gap between buyers' and sellers’ expectations, influenced by high cap rates and insurance costs. With interest rates dropping and a surge in demand for multifamily properties, 2025 will bring a lot more activity.
  
  
  

3. Miami: Domestic and international appeal

Third on our list of hottest CRE markets, Miami is a booming tourist destination and a very different CRE market than the Texan cities discussed above. While Miami welcomed 27 million domestic and international tourists in 2023, the city is currently experiencing a domestic net outmigration due to the high cost of living, PWC concludes in their CRE report.

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Miami’s commercial real estate market has seen strong growth, with house prices up 80% since the pandemic, and five and ten-year annualized returns at 7% and 8.3%.

Source: PWC

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What’s driving the Miami CRE market

If Miami has a net outmigration rate, who is driving up real estate prices? As a major tourist destination famous for its beaches and luxurious lifestyle, international arrivals and wealthy buyers drive strong demand in Miami’s housing market. 

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Population growth in Miami’s metro area will be between 0.5% and 1% per year for at least the next five years – despite cost-driven net domestic outmigration, PWC predicts. 

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Tourism isn’t all that Miami has going for its diverse economy. Once a retirement haven, the city is now a tech and finance hub. Miami is also a major cargo port connecting U.S. shipping routes to the rest of the Americas.  

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Another factor driving demand in CRE is strong business presence, with Miami’s office properties relatively well utilized and office vacancy rates dropping since the pandemic, according to investment firm CBRE.

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Source: CBRE

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Opportunities in the Miami CRE market

In a high-value market with higher rent increases higher than national averages, what are good investment strategies to capitalize on Miami’s booming CRE market? 

• Need for affordable housing: Miami’s housing prices have exploded in recent years with rents 42% higher than pre-pandemic levels, according to Moody’s. In such a climate, lower-income households struggle to find affordable homes to rent. 

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2023 data of Miami’s affordable housing sector shows a vacancy rate of just 0.5% compared to the national average of 2.4%. As Miami grapples with a housing affordability crisis, the state is taking steps to improve supply. 

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CRE developers can take advantage of the Live Local Act 2024 for zoning preemption, tax exemptions, and other benefits to develop affordable multifamily projects.

• Tight retail market: As in other areas, Miami’s retail market has seen sales grow since the Fed started lowering interest rates. At a 2.8% vacancy rate, Miami has a very limited supply of vacant retail space. And with demand outpacing supply, as statistics from investment firm Cushman & Wakefield show, vacancy levels might drop even further.

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Paired with moderately growing rental rates of 3.9% year-over-year, retail becomes a strong asset type to develop in Miami in the new year when inflation cools further and consumers gain confidence.

• Office demand outpacing supply: With demand outpacing supply in the office sector, this asset class is showing great promise in 2025. 

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Miami continues to attract new-to-market tenants, keeping its position as a prime business hub. Major companies’ 2025 return-to-office protocols are also further improving the office sector outlook, real estate firm JLL predicts.  

4. Nashville: Meteoric rise of the Music City’s CRE market

Nashville's commercial real estate market is striking a chord with investors. The Music City has seen rapid expansion, with population tripling and jobs growing by 33% since 2010, according to a Nashville governmental market study. It’s a trend that might very well continue. 

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Nashville’s yearly population growth 

Source: Nashville Government

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This impressive growth is paired with strong five and ten-year annualized returns on the CRE market, calculated as 7.5% and 9.4% respectively by PWC. 

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What’s driving the CRE market

• A growing economy and favorable business climate, with manufacturing and automobile especially present in Nashville 
• Affordability amidst a national shortage of affordable housing
• Continued population growth strengthening the labor market and driving CRE demand
• Nashville’s continued cultural appeal as a tourist destination

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How to capitalize on Nashville’s CRE market

• Downtown Nashville’s needs are evolving. Explore mixed-use projects that combine residential, commercial, and retail spaces 
• As Nashville is transforming, adaptive reuse is becoming a popular CRE trend. Find old industrial buildings to turn into vibrant new spaces that fit the city’s modern needs
• Target multifamily developments to meet the continued demand for housing. Occupancy rates are forecasted to be above 94%, according to Colliers 

5. Tampa/St. Petersburg: Another Floridian CRE opportunity

Miami isn’t the only city in Florida worth watching in 2025. Tampa/St. Petersburg has much of what makes its neighbor so popular – plenty of sun, a booming economy, and no state income tax.

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Five and ten-year annualized total return metrics are at 6.9% and 8.6% respectively, as per PWC’s report, proving Tampa to be a great place for commercial real estate investments. 

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Source: PWC

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What’s driving the CRE market

• The metro’s economy shows strong growth with high-paying jobs and economic diversity
• Tampa/St. Petersburg display a resilient job market that is only minorly affected by Hurricane Helene's destructions, up at 3.8% from 3.3%, according to news outlet Tampa Bay Times
• The economic effects of storm damage are short-term, but the coastal metro needs rebuilding after the devastating hurricanes

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How to capitalize on Tampa/St. Petersburg’s CRE market

• Focus on homebuilding, as Tampa needs coastal housing after the devastations (from multifamily to single-home and luxury). PWC’s 2025 CRE report ranks Tampa first in homebuilding prospects
• Consider industrial and logistics investments, leveraging port-related growth as the coastal area is revitalized

6. Atlanta: Fast-growing metro area in the south

Recently, Georgia was ranked as the premier state for doing business for the 11th consecutive year by Area Development magazine. As the state’s capital, Atlanta is reaping the benefits. 

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Atlanta is a rapidly growing metropolitan area with a 1.3% year-over-year job growth, Cushman & Wakefield estimates. NAR Chief Economist Lawrence Yun is optimistic. “Looking ahead to 2024, the Atlanta real estate market shows promise of continued growth and stability. With balanced inventory levels, reasonable pricing trends, and a strong local economy, Atlanta stands out as a desirable location for homeowners and investors alike.”

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What’s driving the CRE market

• Atlanta has lower living and business costs compared to other major cities, maintaining its competitive edge in attracting businesses and residents
• The city’s economy is robust, particularly in sectors such as healthcare, finance, and hospitality, which saw notable gains over the past year
• Atlanta is experiencing continued population growth. The Atlanta Regional Commission (ARC) projects to welcome 1.8 million new residents across the region by 2050

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How to capitalize on Atlanta’s CRE market

• Target multifamily developments to capitalize on population influx and shortage of inventory. A 2023 advisory report already identified the need for close to 400,000 housing units at the current population level  
• Retail faces supply constraints with only 3.4% of retail properties vacant – the lowest vacancy rate on record, according to Cushman & Wakefield. With steady wage and population gains, as well as cooling inflation and increasing consumer confidence, demand for retail is set to increase even more.

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7. Wichita: Hidden gem of midwest CRE investments

While most of the cities on this list offer no big surprise to experienced CRE investors, Wichita is new on the list of hottest CRE markets to invest in. This Midwest city is quietly building momentum, offering savvy investors a blend of stability and growth potential.

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Wichita, Kansas is expected to see the highest rent growth in 2025 among the top 82 primary multifamily markets, according to Moody’s CRE. So what’s driving growth in this city?

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What’s driving the CRE market

• Strong economic development, with $418 million in capital investment in 2023 alone, media outlet Rebusiness Online reported
• Sizable investments in downtown, new industrial campuses, medical offices, and other projects spur momentum in Wichita
• A diverse economy that includes a thriving aviation industry with 115 aerospace companies

How to capitalize on the Wichita’s CRE market

Multifamily shows great promise, with rising rents a strong local market trend. Even at Moody CRE’s forecasted 10% year-over-year rent growth, the metro’s rent-to-income ratio would be 16%,  Moody’s CRE reports. Additionally, Wichita’s housing market is also ranked seventh-smallest by inventory size. 

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New home construction activity hasn’t caught up yet to increasing rental and property values, with housing unit construction only varying moderately year-over-year, data from Wichita State University show.

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Source: Wichita State University

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Which CRE markets present the best opportunities for you?

Opportunities abound for savvy investors and developers. Real estate is all about “location, location, location” –  but success in this dynamic landscape takes more than finding promising markets and good property prices.

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From the tech-driven growth in Austin to the diverse opportunities in Miami, and from the industrial boom in Houston to the hidden housing potential in Wichita, each market offers unique advantages. 

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The key is to align these opportunities with your investment strategies and risk tolerance, and to execute CRE deals swiftly.

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[Closing a great commercial real estate deal isn’t just about location – it’s about strategy and fast execution. Duckfund's soft deposit financing helps you quickly secure the funds you need when rare CRE opportunities arise.]