SVN® International Corp. Economic Update – Keeping our clients up-to-date about the latest real estate landscape trends.
The U.S. economy demonstrated unexpected momentum in the latter half of 2025, with third-quarter GDP growing at a 4.4% annualized rate, fueled by strong consumer spending and a 9.6% surge in exports. However, the commercial real estate landscape remains bifurcated; while suburban office prices rose 2.7% over the year, central business district values fell by 2.9%. The industrial sector continues to show resilience with a 10% year-over-year increase in sale prices, and data center construction is projected to jump 23% in 2026 as firms build out AI infrastructure. Despite these pockets of growth, broader commercial property prices softened towards the end of the year, falling 0.4% in December.
Concerns are mounting regarding consumer stability and the residential housing market heading into 2026. Consumer confidence plummeted in January to 84.5, with the expectations index falling to a level historically consistent with a recessionary outlook. This dip in sentiment is reflected in the housing market, where pending home sales dropped 9.3% in December to a five-month low due to record-low inventory. Additionally, headline and core PCE inflation both remained at 2.8% through November, hovering above the Federal Reserve’s 2.0% target and likely delaying any near-term interest rate easing. While full rent payment rates remain resilient at 96.0%, the 30th consecutive month of annual declines in on-time payments highlights ongoing affordability constraints for many households.
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