Data Centers Drive Momentum as Office Faces Uneven Recovery
Seyfarth’s real estate team provides a bird's-eye view of the current state of commercial real estate throughout the country—highlighting which markets and major asset types are active, slowing down, or experiencing shifts.
Seyfarth’s Take: What to Know
✔ Opportunities: Data centers are the strongest asset class nationwide, with broad activity in markets from Atlanta to Seattle. Multifamily remains resilient in Boston, Dallas, Los Angeles, and New York, while industrial shows consistent strength, led by Houston and New York.
✔ Challenges: Office remains under pressure across the board. There are pockets of optimism in New York for Class-A, and San Francisco is showing early signs of a rebound tied to AI-driven growth and return-to-office requirements. Tariffs and rising construction costs continue to complicate the landscape.
✔ Market Trend: The digital economy will continue to drive supply/demand in data centers, while tariffs may shift the industrial asset class. Reduced interest rates will likely drive an increase in year-end CRE deals.
Regional Rundown
"While the more positive rate environment should serve as an accelerator, activity in Atlanta remains steady in most asset classes. The industrial market trudges along due to years of aggressive supply side growth, and the office market continues to dig out from the new workplace realities. Data center projects remain the hottest sector." Kwame Benjamin, Partner
"In Boston, a strong job market and economy is paving the way for solid momentum in several asset classes. However, tariffs mixed in with already high regional costs are creating some uncertainty for investors and developers." Catherine Burns, Partner and Eric Greenberg, Partner
"The Charlotte market continues to be relatively strong across all asset classes." Eric Sidman, Partner
"The Chicago office market remains under significant pressure, while retail continues to show signs of resilience, with losses in big-boxes seemingly being offset by demand for smaller storefronts and lifestyle-oriented destinations. The local data center market continues to stay hot with its locational advantages, despite infrastructure bottlenecks. Multifamily and industrial remain reliable performers." Michael Merar, Partner and Tobi Pinsky, Partner
"The Dallas-Fort Worth metroplex continues to rank as one of the top-performing CRE markets in the nation." Amy Simpson, Partner
"The Houston real estate market is strongest in data centers and industrial, both experiencing very high demand. Multifamily and retail remain healthy, while office continues to lag with limited momentum." Peter Oxman, Partner
"In Los Angeles, data centers remain steady, industrial is stabilizing with rising rents despite tariff and development pipeline concerns, and multifamily demand and rents stay strong. Office recovery lags with many distressed assets, while retail shows cautious optimism with stable vacancies but slow rent growth." Tim Farahnik, Partner and Stacy Paek, Partner
"In New York, market conditions remain steady. Demand is focused on luxury multifamily, high-end retail, and Class A office, while weaker office and retail assets continue to lag. Last-mile industrial and rentals remain healthy and deals still require a hyper-local lens." Miles Borden, Partner and Cynthia Mitchell, Partner
"With San Francisco companies starting to impose more in-office attendance requirements, the explosive growth of AI companies in the Bay Area, and optimism related to new mayor Daniel Lurie, the local office market is primed for a comeback. Brokers are reporting tremendous increase in foot traffic on office tours." Robin Freeman, Partner
"In Seattle, the market is waiting for lower interest rates and higher office attendance. Until then, attention is on data centers." Jami Balint, Partner and Bob Over, Partner
"The Washington, DC real estate market continues to be adversely affected by layoffs in the federal government, but suburban submarkets are showing signs of growth in comparison to the downtown core. Data centers remain a hot commodity and well-located retail is showing signs of renewal." James O’Brien, Partner
