Top real estate experts expressed cautious optimism about the outlook for commercial real estate (CRE) at Goodwin’s 18th annual Real Estate Capital Markets (RECM) Conference, cohosted with Columbia Business School on March 6.
Panelists explored key real estate trends shaping the market, including surging demand for data centers, the outlook for capital flows, and evolving investor sentiment. They also explored the growing impact of artificial intelligence (AI) on the industry and risks posed by climate change.
Although the trajectory of interest rates remains uncertain, RECM attendees remained confident in their overall outlook for real estate. About 61% of attendees surveyed by Goodwin said they expect the commercial real estate market to improve over the next 12 months.
Below, we highlight some of the most talked-about topics, from AI to capital flows, at the event.
Strong Demand for Data Centers Poised to Continue
Data centers were one of the greatest sources of investor optimism at the conference. Most respondents to Goodwin’s 2025 Outlook for Commercial Real Estate Survey cited digital-economy properties as the asset class offering the best opportunities over the next 12 months.
Every segment of the data center market — including enterprise, co-location, and hyperscalers — is experiencing rapid expansion, and lease sizes are growing.
The surge in demand for data centers will likely continue, said James Collins, managing director and co-head of US real estate investment banking for Morgan Stanley. Citing the Jevons paradox, he suggested increased computing efficiency should lead to lower costs and greater demand. Further, the Trump administration has emphasized the need for new AI infrastructure, he said.
A key challenge will be increasing the power supply enough to meet rising demand, particularly because generative AI’s power consumption is expected to increase fivefold by 2027.
Watch “State of the Real Estate Capital Markets” (James Collins) for details.
Marc Holliday: Dislocation Is What You Wait For
Market uncertainty carries a silver lining, according to Marc Holliday, chairman and CEO of SL Green Realty Corp.: “Dislocation in the market is what you wait for.”
Current rates represent opportunity, Holliday argued. “Everyone talks about high interest rates. I don’t think they’re so high,” he said, pointing out that the early 2000s — “one of the greatest periods of investing” — had treasury rates of 4% to 5%, similar to today’s rates. He emphasized that rates are now “relatively stable,” which is a boon.
“Every 10 years, [there are about] two good years to make money. And the rest is asset management. We’re in that [money-making] period right now,” Holliday said.
Holliday championed New York City’s “unprecedented recovery” over the past 18 months, declaring “New York’s back.” He noted that the combination of stable interest rates, robust tenant demand, and low inventory “positions the city as one of the best investment opportunities” he has seen in his career.
Watch “Keynote Speaker: Marc Holliday” for details.
Market Sentiment Expected to Improve as Capital and Investment Trends Shift
More than 70% of respondents to Goodwin’s 2025 Outlook for Commercial Real Estate Survey expect transaction activity to pick up, while almost 60% expect availability of capital to improve over the next 12 months. However, panelists highlighted the tension between optimism and caution.
“There’s tons of money ready to invest. We just don’t know at what level. We just need some realization of pricing,” said Tim Mackey, chief investment officer at LoanCore Capital.
The stabilization of interest rates, increased investor confidence in pricing, and the return of core capital should boost transaction volumes, said Julia Butler, managing director and CEO of KKR Real Estate Select Trust Inc.
“I’m going to be optimistic and say that by the end of this year, things are going to be rolling in a really positive way,” Butler said, pointing to compressed debt spreads and record commercial mortgage-backed securities volumes as signals that equity investment will follow.
Panelists anticipate that alternative investments such as data centers may attract investor interest, particularly given the uncertainty related to office spaces. However, they expect that many traditional asset classes will continue to generate strong returns.
Watch “Global Capital Flows Panel” (Jarrett Vitulli, Julia Butler, Jennifer Dumas Hall, and Tim Mackey) for details.
Environmental Risks Are Reshaping CRE Economics
Investors cannot rely solely on insurance pricing as an indicator of climate risk because premiums may not accurately reflect risk exposure, according to Pari Sastry, assistant professor of finance at Columbia Business School.
As discussed in our dedicated piece on the topic, Sastry said states with high exposure to natural disasters (such as California and Florida) have regulations that require them to hold down premiums despite higher risks. To try to offset losses from these so-called “high-friction states,” insurers in states with lower climate risks sometimes disproportionately raise premiums, she said.
This dynamic essentially creates a mismatch between risk levels and premiums. Increasingly risky areas remain attractive for development, while areas less prone to natural disasters bear a disproportionate share of rising insurance costs, Sastry said.
Watch “The Growing Impact of Climate Change on Real Estate Coverage” (Pari Sastry) for details.
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