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We wanted to share some of the insights our investments team has gathered in recent weeks as we navigate the current commercial real estate landscape. It’s no secret that the market is changing—fast. But through that noise, we see specific opportunities in the details. Shifting workplace habits, changing consumer behavior, and new economic realities are redefining what “value” means across different asset types. From our perspective, this is a time that rewards creativity, patience, and long-term thinking. Here’s a quick look at where we see potential—and where we’re taking a more cautious approach.
Distressed Assets: It’s unusual to see this combination of discounted pricing and long-term potential in real estate. High vacancy rates and economic strain—particularly in Class B and below office space—are pushing some owners toward default. For well-capitalized investors, this opens the door to reposition and revitalize strong properties that just need the right vision (and timing). Class-A Office: While the broader office sector is still adjusting, premium, Class-A office space is holding strong. We’re seeing companies that have downsized or consolidated, move into higher-quality, better-located buildings with increased amenities. This “flight to quality” and the demand from creditworthy tenants that still want modern, flexible office environments makes these assets well-positioned for recovery. Additionally, it represents rent growth opportunities. Conversions & Adaptive Reuse: Some of the most exciting projects we’re working on involve breathing new life into outdated properties. Converting older office space into apartments, or R&D space, is proving to be feasible—and essential in many cities. Ciminelli has been successful in converting vacant daylight factory properties and outdated office into vibrant residential and R&D spaces respectively. Flex Industrial: Think of it as the Swiss Army knife of commercial real estate. These versatile spaces combine warehouse, light manufacturing, and office uses and are proving to be very resilient. Their adaptability attracts a wide tenant base and adds real long-term stability for investors. |
Debt Maturities & Refinancing: 2026 represents a milestone moment in real estate financing. Data shows a significant volume of commercial real estate loans is set to mature around that time, creating financial strain on a large scale for borrowers. There is a large amount of troubled debt approaching maturity showcasing the negative side for current owners of distressed assets. Those borrowers/owners without an ability to infuse equity into their capital stack will be left with limited options.
Political Uncertainty: Changes in government policy continue to impact commercial real estate investments daily. Tariffs disrupt supply chains while immigration activities impact the availability of labor. Geo-political unrest impacts all of the capital markets as well as investor confidence. The ultimate result is immediate and lasting uncertainty-currently the biggest challenge to investors.
Inflation-Driven Price Increases: We all feel it-from development to daily operations; inflation is driving up costs and slowing down projects. Construction, utilities, and insurance increases are challenging to overcome. Properties with gross leases such as the office sector are feeling the most pain. Investors are largely sidelined until the situation becomes more stable.
Shifting Buyer Expectations: We are changing the way we evaluate risk, opportunity, and long-term value. Tenants and buyers demand sustainability, wellness, and flexible design requiring a new level of sophistication among investors.
With the right strategies and partnerships, the current market offers real potential. At Ciminelli, we’re focused on uncovering forward-thinking opportunities that respond to today’s challenges and help shape what comes next.