Commercial Real Estate Check-In: What the First Half of 2025 Tells Us About the Market
The first half of 2025 has offered something the commercial real estate market hasn’t seen in quite some time: clarity. After several years of pandemic-driven shifts, volatile interest rates, and cautious capital markets, the landscape is finally settling into a new rhythm. For property owners, tenants, developers, and investors alike, this year has become less about reacting to uncertainty—and more about identifying opportunities and executing long-term strategy.
Across the commercial real estate spectrum, leasing activity is recalibrating. In the office sector, the narrative is no longer just about remote work—it’s about function, efficiency, and value. We’re seeing increased demand for smaller, smarter spaces in both urban and suburban markets. Tenants are prioritizing accessibility, natural light, and flexibility in floorplans, while building owners are responding by investing in upgrades and offering move-in-ready suites. These spaces are leasing faster, especially when paired with on-site parking, modern finishes, and shared amenities. It’s a shift toward quality over quantity, and it’s reshaping how brokers position properties and how tenants evaluate space.
Multifamily continues to hold its position as one of the most stable and in-demand commercial asset classes. With construction starts slowing in many regions, existing properties are benefitting from limited new supply and consistent renter demand. Rents are holding strong in suburban markets, particularly in areas with good school districts, job access, and lifestyle amenities. Investors are leaning into this stability, often targeting mid-sized properties in high-growth regions where the fundamentals still make sense—even at today’s interest rates.
Industrial real estate has also maintained solid ground. Leasing remains active across a range of industrial assets, from small-bay spaces to last-mile distribution hubs. E-commerce is still a strong tailwind, and localized supply chains continue to create demand for warehouse and flex space. While development has slowed from its peak, absorption is still outpacing new deliveries in many markets, keeping vacancy rates manageable and rents relatively steady. For owners and developers focused on light industrial or logistics, the playbook is simple: stay agile, stay local, and focus on efficiency.
Retail is quietly stabilizing. While national headlines often focus on big-box closures, local and regional markets tell a more balanced story. Service-oriented retail—such as food and beverage, wellness, and health care—has shown strong performance, especially in neighborhood centers with daily-use anchors. These properties have attracted both tenants and buyers looking for reliable, recession-resistant income. New leases are being signed, and tenant retention is strong in well-managed locations. It’s not a return to 2019, but it is a more disciplined, predictable segment of the market that many investors are now revisiting.
Beyond the traditional sectors, one of the most talked-about trends this year has been adaptive reuse. Office-to-residential conversions are gaining momentum across the country, turning underutilized buildings into multifamily or mixed-use projects. Developers are responding to demand for housing and walkable urban spaces by transforming the outdated into the in-demand. These projects aren’t just about repurposing buildings—they represent a shift in how we think about land use, density, and long-term asset value.
At the capital markets level, investment volume is still measured, but intent is rising. More deals are being evaluated, and many investors are adjusting expectations around return, timing, and risk. Interest rates remain a factor, but with less volatility than in previous quarters, there’s room for strategic acquisition—particularly in value-add or core-plus opportunities. Buyers are being selective, but they’re also being bold when the fundamentals are right.
So, what does all this mean heading into the second half of 2025? In short: it’s a market that rewards preparation, creativity, and local knowledge. Whether you’re looking to lease commercial space, invest in a growing sector, or reposition an existing asset, now is the time to plan with intent and act with clarity. The commercial real estate market isn’t in a boom cycle—but it’s working, it’s moving, and it’s becoming more predictable.
At Haymaker Company, we’re proud to help our clients navigate the opportunities and challenges of today’s market. Whether you’re buying, selling, leasing, or developing, our team brings the local insight, market data, and creative thinking you need to move forward with confidence.
Visit HaymakerCompany.com to explore our listings, talk with our brokers, or learn more about current trends shaping Central Kentucky and beyond.
