June 2025

North America

·Industrial real estate divides: some markets cool while others overheat. The U.S. industrial property market is entering a phase of divergence, with some regions nearing a healthy supply-demand balance while others confront mounting oversupply. Northern New Jersey and St. Louis are among the most stable, with modest construction pipelines and near-parity in expected demand, supporting steady rent growth. Meanwhile, markets like Atlanta and Boston face significant oversupply risks, with Atlanta seeing the largest gap—over 10 million square feet—between new inventory and tenant absorption. Memphis, on the other hand, has largely worked through its post-pandemic building surge, hinting at renewed pricing power. Washington, D.C. stands out for its elevated construction activity despite being a secondary industrial hub. The Southeast leads nationally in ongoing development, but some areas risk pushing beyond what demand can absorb. CoStar forecasts that rental growth will slow significantly—by over 350 basis points—in oversupplied markets, while balanced regions could maintain 2024’s performance levels. (Source: CoStar, 2025)

Atlanta and Memphis showing strong negative absorption

·Office market recovery gains traction- but only in a few cities. The long-awaited U.S. office recovery is beginning to take shape, but its progress is concentrated in just a handful of markets. Midtown Manhattan is leading the charge, with four straight quarters of positive net absorption and 5 million square feet of occupancy gains, largely fueled by hiring in financial services and surging demand for high-end trophy space. In contrast, many other major cities are lagging behind—only five of the top 12 office markets have posted positive absorption over the past year. Dallas-Fort Worth and San Jose are the only ones approaching New York's pace relative to inventory. Meanwhile, Boston has experienced the steepest occupancy losses due to waning biotech demand, and most gateway markets continue to struggle. Smaller office markets have shown resilience, adding nearly 7 million square feet of occupancy, though that figure still trails pre-pandemic norms. The uneven nature of this rebound underscores the sector’s ongoing challenges and suggests a full recovery remains a long way off. (Source: CoStar, 2025)

New York leads recovery whilst Boston and Washington DC suffering the most

·Ivanhoé Cambridge, CDPQ Quebec pension fund, defaults on NYC office tower as market pressures mount. Ivanhoé Cambridge, the real estate arm of the CDPQ Quebec pension fund, has defaulted on the mortgage tied to its 30-story office building at 85 Broad Street in Manhattan, amid ongoing distress in the U.S. office market. The debt has been transferred to special servicer CW Capital Asset Management, signaling that resolution talks are underway. Bloomberg reports that discussions are ongoing with Oppenheimer Holdings, a key tenant, and that a residential conversion of the 1983-built tower is being explored. The default adds to the challenges faced by parent company CDPQ, which recently blamed its Manhattan and Chicago office holdings for a –10.8% return in its real estate portfolio. Ivanhoé Cambridge purchased the building for approximately $652 million in 2017, marking its first major acquisition in Downtown Manhattan. Leadership changes have followed: Rana Ghorayeb now oversees all real estate for CDPQ, while Karen Horstmann was brought in this year to turn around the underperforming U.S. office portfolio. The situation at 85 Broad reflects wider investor struggles to adapt assets amid shifting demand and persistent office sector headwinds. (Source: Bloomberg, CRE Daily, The Real Deal, Ivanhoé Cambridge, CoStar, 2025)

85 Broad Street in Downtown Manhattan

·US multifamily markets regain momentum in 2025 especially around tech hubs and the leading Sun Belt cities. A new CoStar momentum index identifies the U.S. apartment markets making the biggest strides in recovery, spotlighting those with the most improved fundamentals rather than just current top performers. The list includes expected tech hubs like San Francisco and San Jose—both showing strong rent rebounds and leasing surges—as well as Sun Belt leaders like Jacksonville, Tampa, and Raleigh, where job growth, in-migration, and limited new supply have driven down vacancy and reignited rent growth. Florida cities led the charge, with Jacksonville topping the index thanks to sharp occupancy gains and population growth. Tampa and Orlando also benefited from strong employment in healthcare and logistics. Meanwhile, San Francisco saw one of the nation’s biggest rent growth increases, driven by AI hiring and urban revitalization efforts. In the Southeast, Atlanta and Raleigh stand out for a combination of corporate relocations, tech sector strength, and a pullback in new construction. Even overlooked markets like Minneapolis made the Top 10, thanks to consistent demand and limited development, suggesting investors are broadening their focus beyond coastal metros. With the national construction pipeline shrinking and demand strengthening, many multifamily markets are on firmer ground entering the second half of 2025—setting the stage for rent growth recovery in 2026 and beyond. (Source: CoStar, 2025)

Most improved multifamily markets

Rent growth momentum for top multifamily markets

·New York defies Northeast hotel sales slump amid Airbnb crackdown. Hotel sales across major Northeast U.S. cities dropped 6% year-to-date in 2025 compared to the same period in 2024, driven by high interest rates, costly borrowing, and economic uncertainty. Markets like Boston, Washington, D.C., Philadelphia, and Baltimore saw sales volume fall a sharp 58% when New York City is excluded from the data. Yet New York City stands out as an exception, with hotel sales jumping from $315 million to $553 million year-over-year. A key driver has been Local Law 18, which severely restricted short-term rentals like Airbnb, redirecting demand into hotels. This legislative shift, paired with New York’s enduring appeal as a tourism hub, has fueled hotel revenue growth. RevPAR in NYC has grown at an impressive 10.4% annually, far outpacing its regional peers. As buyers retreat elsewhere, New York's hotel market continues to attract capital and outperform. (Source: CoStar, 2025)

Hotel sales volume across the Northeast (Q1 2024 v. Q1 2025)

Europe

·UK, Germany, and Spain in global top five for cross-border capital destinations. Europe dominates cross-border real estate investment, with seven of the top 10 global destinations for capital targeting standing assets located in the region, according to a new Colliers report. The UK leads globally with 17% of total investment in Q1 2025, followed by the US (14.5%), Japan (7.8%), Germany (10.4%) and Spain (5.8%). Colliers attributes this shift to Europe’s lower interest rates, improved macroeconomic visibility, and relative price stability. Investors are increasingly favouring transparent and liquid markets like EMEA, as global risk appetite remains muted. Notably, multi-family has overtaken logistics as the top-performing asset class worldwide, while debt strategies are gaining momentum. Though total volumes remain below the five-year average, Q1 fundraising rebounded sharply to $58bn, signaling a shift from caution to active repositioning. (Source: Colliers, Savills, Green Street, 2025)

UK tops destination for global cross-border capital

·HSBCS eyes flex space at Canary Wharf amid desk shortfall at future HQ in the City of London. HSBC has made an offer to lease the remaining 180,000 sq ft at Canary Wharf’s 40 Bank Street, part of Canary Wharf Group’s MadeFor flex workspace platform, to address a shortfall of nearly 7,700 desks at its future HQ at Panorama St Paul’s. The bank’s new City offices at 81 Newgate Street, set for occupation next year, have proven undersized due to unexpectedly high London headcount. With its Docklands HQ lease expiring in 2027, HSBC is also considering retaining some satellite offices it previously intended to relinquish. The move underscores a wider shift in HSBC’s global workplace strategy, which includes reducing its office footprint while remaining flexible in core markets. 40 Bank Street, spanning 33 storeys and over 600,000 sq ft, is home to several tenants including Citi. The development is part of broader transformation plans for Canary Wharf, where QIA and CWG are preparing for the eventual redevelopment of HSBC’s current HQ. (Source: Bloomberg, Green Street, HSBC, 2025)

HSBC likely to take space in Canary Wharf

·Mitsubishi Estate buys majority stake in Patron Capital with EUR 600mn commitment. Mitsubishi Estate Co (MEC) has acquired a majority stake in Patron Capital and committed €600 million in equity to support new growth strategies, including a push into real estate credit. The investment, made through MEC’s Mitsubishi Estate Global Partners (MEGP) platform, will fund subsector expansion and give Patron access to a broader investor base. Founder Keith Breslauer and Patron’s senior team will retain a significant minority stake and continue to lead operations. The deal comes as private equity real estate firms face tougher market conditions, prompting Patron to seek long-term institutional backing. MEC highlighted Patron’s strong track record in Western European opportunistic investing as a key reason for the partnership. The transaction is pending regulatory approvals and aligns with MEC’s global ambitions for MEGP, which is scaling its presence across the US, Europe, Japan, and APAC. Patron’s recently launched credit platform will benefit from new capital as traditional lenders pull back, creating fresh opportunities for private financing. (Source: Private Equity Insights, Bloomberg, CoStar, Green Street, Mitsubishi Estate Co, 2025)

Mitsubishi builds footprint, which includes ownership of TA Realty in the US and Europa Capital in Europe.

·DWS’ open-ended fund launches Frankfurt tower sale after share redemption pressures, marking Frankfurt’s first major core office disposal since June 2024. DWS’ open-ended fund Grundbesitz Europa has launched the sale of Frankfurt’s Westend Duo tower for €300m, marking the first major core office disposal in the city since Amundi’s failed Grand Central deal in June 2024. The 30,300 sq m building, located in a prime banking district spot, is being marketed by BNP Paribas Real Estate, with first-round bids due mid-July. The sale aims to boost liquidity after €786m in share redemptions in just six months brought the fund’s liquidity close to regulatory limits. Currently 94% let with tenants including Hengeler Mueller and Bank of China, the asset generates €13.6m annually, with upside potential from current average rents of €42/sq m. DWS is targeting a 5% gross yield, in line with he level agreed in the Grand Central exclusivity agreement. DWS originally acquired the tower in 2014 for €240m and last valued it at €286m. The transaction will test investor appetite for prime German offices amid cautious domestic sentiment and tentative international re-engagement. (Source: Green Street, Westend Duo 2025)

Westend Duo Tower in Frankfurt launched to market

·JP Morgan and LaSalle relaunch sale of EUR 140m Paris office for the fourth time, down from an initial EUR 300m ask in 2020. JP Morgan and LaSalle have relaunched the sale of the Magnetik office building in Paris’ 14th arrondissement for a fourth time, now at a heavily discounted €140m, down from a €300m ask price when initially marketed in 2020. The 34,200 sq m complex, located at 1–11 Boulevard Romain Rolland, comprises two seven-storey buildings and is partially let to Deskeo, Medtronic, and Chronopost, which relocated its headquarters there in 2019. The property—formerly known as Périsud—was acquired vacant from Commerz Real in 2016, following the departure of pharma giant Sanofi. JP Morgan and LaSalle carried out renovations and repositioned the asset, but full occupancy proved elusive, especially after COVID disrupted office demand. Multiple sale attempts—first in 2020, then again in 2022 and late 2023—were derailed by changing market dynamics, including rising interest rates and high capex requirements. At one point, Black Swan Real Estate Capital emerged as a frontrunner, but withdrew due to renovation cost concerns. The current sales process, led by BNP Paribas Real Estate and JLL, reflects a steep value decline of over 50%, as owners aim to offload a challenged asset in a soft Parisian leasing market. (Source: BNP Paribas, JLL, Green Street, 2025)

Magnetik building located at 1-11 Boulevard Romain Rolland in Paris’ 14^th arrondisement