Investor Interest in Commercial Real Estate Grows Amid Supply Constraints

Commercial real estate (CRE) is gaining popularity among investors, particularly 'Mum and Dad' investors seeking higher returns than residential properties. Scott O'Neill from Rethink Group notes that while the commercial property market is tightly held and facing significant price corrections, it is expected to grow significantly, reaching a valuation of $399.5 billion this year. Factors such as lower interest rates and favorable lease agreements are driving this trend, with key growth areas identified in major urban centers. Meanwhile, investment manager Matt Jarvis highlights that reduced supply of higher quality commercial properties, combined with rising demand, is likely to boost rental prices and overall returns. Despite challenges like rising interest rates and economic uncertainty, sectors like multifamily and industrial assets are showing resilience and strong demand. Overall, the commercial property market is adapting positively to current economic conditions, making it an attractive investment option in 2025.