Broadcast Retirement Network’s Jeffrey Snyder discusses the commercial real estate outlook with CBRE’s Matthew Mowell.
Jeffrey Snyder, Broadcast Retirement Network
Joining me now is Matthew Mowell. He’s a senior economist with CBRE. Matt, so great to see you.
Thanks for joining us this morning.
Matthew Mowell, CBRE
Yeah, it’s great to be here. So, you know, I’m a big consumer of podcasts. I’ve never been on one, so this is going to be fun.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, well, we certainly appreciate it. And I hope you had a great President’s Day celebrating Presidents Washington and Lincoln. I know they combined everything together, so we’re glad to have you.
Well, Matt, I want to start with a level setting question. You know, when you look back into 2025, what’s the general sense about the commercial real estate marketplace?
Matthew Mowell, CBRE
Yeah, so 2025 was more of a year of, I’d say, stabilization for commercial real estate. You know, our industry has been, I will go so far as to say that it’s really been kind of a recession in some ways since 2022. That’s when the Fed really started, you know, raising rates on a percentage basis, and it was really a historic increase in interest rates.
And is what that caused is the multiplier on the or the yield on income on commercial real estate to really blow out. So we saw a lot of sectors saw pretty noticeable value losses. So so there was that we many of us, we all know what’s going on in the office space, dealing with work from home.
So that sector was has really been dealing with a lot of issues, historically high vacancy rates. Now, industrial where whether things much better just because of the boom in demand for industrial space and multifamily really is very, very nuanced. And this was a sector that was heavily overbuilt in some places, especially in the Sunbelt.
I know you’re based in Charlotte, Jeffrey. I mean, that’s a market that saw a lot of construction and actually pushed rents down and industrial saw a lot of oversupply, too. Now, in 2025.
All right. To answer your question, that’s the that’s the bigger backdrop of where we’re coming out of the oversupply, much higher interest rates, office dealing with work, remote work. But in 2025, a lot of these sectors are moving back towards equilibrium.
So the fundamentals of beginning to repair. We’ve seen interest rates come back down. And we kind of ended the year with an uptick in more deal activity, certainly on the lending side, a lender is willing to, you know, underwrite loans for commercial real estate.
So it seems like we’re now entering into a new cycle.
Jeffrey Snyder, Broadcast Retirement Network
And that I guess that would be, you know, very good for the industry, of course, and good for consumers. Let me ask you about a specific segment. I’m very interested.
I think the audience is very interested around data centers. So those would be centers where, you know, you have artificial intelligence. You have all these server farms.
How how big of an opportunity is that in 2026? I know there’s a lot of, you know, legislation and a lot of focus here in the United States. Is that an area of perspective growth this year?
Matthew Mowell, CBRE
Yes, and the demand story is definitely a hockey stick style growth, you know, in this space, when you actually look at, you know, rents and they apparently in the data center space, the rent is measured as rent per like kilowatt capacity. We’ve seen rents grow by 50 percent since 2022. So this just you don’t see that in real that type of growth in commercial real estate normally.
So it really shows just the exuberance in that space. Now, the problem is there’s only so many of these big data centers available and there’s a lot of supply constraints here. You know, just in terms of powering them, where is it?
Where is it going to come from? There’s a there’s apparently a new thing people say now with the building data centers. BYOP, you know what that means, bring your own power.
Like you better be putting a windmill up on the roof or something like that. And it’s quite literally you see things like this going on. So that’s that’s kind of the issue with data centers is this.
It makes sense to put a new supply where we’re going to put it. There’s a lot of political backlash against these things. I live in Northern Virginia.
It’s kind of like the the OG of data centers. It’s where a lot of them are. And I’ll tell you what, nothing’s, you know, uniting people like opposing these things.
So, I mean, you have a lot of these factors in play. It’s really going to, I think, limit the supply of them. But certainly for now, a lot of growth.
Interestingly, from a historical standpoint, though, the issue of data centers is depreciation just because processing speed became, you know, fast, faster. A lot of the servers were condensed, you know. And a lot of them just became obsolete real quick just because technology changed.
So I wonder if maybe over the long term, we’ll revert to that. We’ll actually have an excess supply of data centers. I mean, that’s if you want my personal opinion, that’s something that worries me.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, let me ask you about you bring up or I brought up data centers, but you really expanded upon that, talked about artificial intelligence. How does AI fit into the commercial real estate marketplace? Obviously, there’s a data center piece we just talked about.
But but how does it filter into, for example, you know, building a building or determining whether to lend to build a building? Does it is it becoming more and more prevalent?
Matthew Mowell, CBRE
Well, here’s how I think about AI. The examples you used, I’m sure it will have an impact in terms of how we finance things, using as much being able to price things, you know, absolutely, absolutely. It’s going to play a role.
You know, I feel where we’re at today in 2026. If you go back in time, I love history, like looking at your 1999, 2000 wild things about the Internet, like after, you know, Pets.com blew up, like, oh, see, we told you this is bad. Like, so I’m just so I’m so skeptical of saying where it’s going to go.
I think it’s definitely going to matter. I think it’s going to change how we work. It’s going to create a lot of more efficiencies and, you know, how we price buildings for sure.
So I’m pretty hopeful about that. What from my job, what I’m thinking about, you know, looking at the economy and how that impacts real estate, I’m I’m thinking about what the impact is going to be on the labor market. Right.
Because, you know, you see, you know, I’m on video here. You can see the office behind me, a lot of office. It’s about bums in seats.
And if you’re using A.I. and not people to complete a lot of tasks, even high level tasks like coding, then that could potentially lower demand for the office market. And that’s something that actually how what I’m spending a lot of my time thinking about.
Jeffrey Snyder, Broadcast Retirement Network
Well, let me let me end on a again. I want to talk about investors, and there are all different types of investors. There are institutional investors.
There are individual investors. There are foundations that are pensions, even with maybe some of the headwinds longer term. It’s seen I don’t want to put words in your mouth, but it seems like real estate buying a portion or all of a building, an apartment complex, a data center seems like a relatively positive investment in the long term.
It seems like there will be a lot more allocations to this particular asset class. Want to get your reaction to that?
Matthew Mowell, CBRE
Well, look, I think it’s cyclical, like a lot of things. OK. And right now, I think the cycle we’re moving into for real estate looks good.
You mentioned real estate as an asset class. What I think is interesting right now is when you compare real estate pricing to other asset classes, say, if you like, calculate a P ratio on real estate, it looks a lot better than P ratios or P ratios right now in the stock market. Right.
So you try. Pricing is relatively attractive. So so there’s that.
The thing I think a lot of people forget about is real estate. It’s a lot of it can be very operating intensively. You own apartment buildings.
No one’s a landlord out there. You know, you have to service a lot of complaints. You pay insurance, you know, things like that.
And that’s really going to matter this time in this cycle we’re in right now is how well you can operate a building. And here’s what I mean by that. Like if you look at commercial real estate performance since like the 1980s, it really had an incredible tailwind of rates and, you know, long term interest rates were falling ever since Paul Bunker spiked them in the early 1980s.
Well, it’s what we see now is we don’t expect to see rates continue to have that. Downward trajectory, our house view is you hire for longer. That means the investment performance isn’t going to be this easy money producing strong valuation.
It’s going to be how well can you operate these buildings? How can you drive solid income? So that’s what we’re focused on is identifying the markets and being good stock pickers to figure out what drives that income, because it’s not going to be as easy as it was in the late 80s, early 2000s buying real estate this cycle.
Jeffrey Snyder, Broadcast Retirement Network
Yeah. Well, look, we need places to live. We need places to work.
We need places to store data. We need places to create and manufacture. So certainly, you know, an important asset class, nonetheless.
Matt, we’re going to have to leave it there. Thanks so much for joining us. And look, we look forward to having you back on the program again very soon, sir.
Matthew Mowell, CBRE
I’m glad. Thank you.