REAL ESTATE NEWS

Commercial real estate leaders entered 2024 with unbridled exuberance—but hopes of rapidly declining interest rates and improved economic fundamentals were quickly dashed. Ultimately, 2024 was another challenging year for commercial real estate investment.

This year, industry leaders are once again optimistic, but this time, it is different, according to Kyle Matthews, CEO & Founder of Matthews Real Estate Investment Services. He is entering 2025 with an informed optimism based on a wealth of data and a robust technology tool kit designed to support growth.

Stability Over Growth
While Matthews is optimistic that the industry will begin to recover in 2025, the growth is not promised, and he is tracking some worrying trends. In the last 100 days, medium- and long-term rates have increased 100 basis points, inflation still needs to come down and the Federal Reserve hit the pause button on rate cuts. More than growth, Matthews is hoping for stability.

“If you could just give me a normal, boring five-year, slightly, above flat linear growth in the industry, I’d take it,” he says. “And I think that's what we'll see in 2025.”

Real estate leaders have good reason to expect positive investment activity in 2025: it has already begun. Despite the historic divergence between the Federal Funds Rate and the 10-Year Treasury Yield and higher medium- and long-term rates, CRE investment activity rose substantially for the first time this cycle in 4Q 2024.

Matthews notes that his firm saw the benefits first-hand. They ended 2024 with a 41% increase in production over 2023. “It blew away my wildest expectations,” says Matthews.

This year, he expects to build on that end-of-year push. Industry-wide, he thinks 2025 will bring a 10% to 15% increase in investment volume and 30% to 40% increase in debt origination and lending volume, all supported by a strong and healthy economy.

Tech Will Drive Growth
Whether commercial real estate leaders are aiming for growth or stability (or both), Matthews says a robust tech toolkit with emerging technologies is the key to setting yourself apart and outpacing competition. He credits the firm’s willingness to leverage technology and its investment in proprietary tools as the reason for its increase in investment volumes last year.

“It makes a big difference in terms of prospecting, information, research and transaction management,” explains Matthews. The firm is using technology to better understand buyer and seller behaviors, process data and even generate reports. “It's all about creating efficiency, giving owners and brokers their time back to go out and dig up more deals or provide a better service,” explains Matthews.

The firm is leading the industry not only in implementing new technologies, but in innovation as well. Matthews is building an AI-powered proprietary tool that they are expecting to launch in late 2025.

While the firm is still developing the tool, Matthews has high hopes that it will have a major impact saying, “I feel confident that we are far and away leading the industry in technology development.”

For more insights and thought leadership from Matthews Real Estate Investment Services, click here.

Source: GlobeSt/ALM