BOSTON— The U.S. commercial real estate market is beginning to show clear signs of a rebound, buoyed by strong consumer demand, accelerated decision-making, and a surge in artificial intelligence (AI) adoption.
According to new insights from real estate services firm Avison Young, sectors such as industrial, data centers, multifamily, and experiential retail are leading the way, while hybrid work continues to redefine the office space market.
“Confidence is returning, decisions are accelerating, and the market is beginning to turn a corner,” said Harry Klaff, Principal and U.S. President of Avison Young, highlighting a more optimistic outlook across asset classes.
Industrial & Data Centers: Demand Surging
Fueled by strong consumer spending and the data demands of AI, the industrial sector is experiencing sustained growth. Warehousing, logistics, and data center facilities are in high demand, particularly in markets with access to tech infrastructure and transportation hubs. This trend is being driven by both the e-commerce economy and the rapid scaling of AI and data-heavy enterprises.
Office: Hybrid Work Redefines Priorities
The office sector continues to adapt to evolving work habits. While hybrid models have softened overall demand, Class A office space remains in demand among companies seeking to attract and retain top talent with premium, amenity-rich environments. Tech-driven startups, particularly in AI and adjacent fields, are moving away from lean setups and gravitating toward higher-end office locations in innovation hubs like California, Manhattan, and Austin.
Retail & Multifamily: Experience and Stability Drive Growth
Retail is shifting further toward experiential models, as brick-and-mortar continues to rebound through lifestyle-focused shopping, dining, and entertainment venues. Meanwhile, multifamily housing shows strong absorption trends, with demand remaining steady in urban and transit-accessible markets.
AI Adoption Accelerates Innovation—and Real Estate Needs
One of the most significant drivers of change in 2025 is the continued acceleration of artificial intelligence adoption. A recent McKinsey study cited by Avison Young found that 78% of organizations were using AI at the end of 2024, up sharply from 55% just a year earlier. This rapid adoption is fueling a wave of innovation across industries, increasing demand for tech talent, lab space, and data infrastructure.
AI-focused companies are also expanding their physical footprints as they grow, often choosing premium office locations near top universities and venture capital hubs. The Bay Area remains the epicenter, drawing the largest share of AI-focused venture capital funding and serving as the launchpad for new startups in automation, analytics, and machine learning.
Barriers to Growth: Tariffs and Supply Chain Uncertainty
Despite this positive momentum, economic headwinds persist. According to Avison Young, ongoing tariff disputes and global supply chain disruptions are straining the tech and AI sectors. Rising production and manufacturing costs threaten to slow R&D spending and innovation, particularly among startups. Coupled with investor caution, these challenges could temper growth in the coming quarters.
Still, the current trajectory reflects renewed energy in U.S. commercial real estate, driven by technology transformation, consumer engagement, and a more stable investment climate.
“The surge in AI adoption is not just transforming industries—it’s actively reshaping the way companies think about their real estate strategies,” Avison Young’s analysts noted in the report. “The next 12 months will be pivotal.”
