The commercial real estate (CRE) landscape is evolving rapidly, with certain sectors poised for significant growth in 2025. Commercial real estate decision makers seeking strong opportunities should focus on the following five sectors, each driven by unique market forces and shifting consumer behaviors.
1. Industrial & Logistics Real Estate
The ongoing expansion of e-commerce and the increasing complexity of global supply chains continue to drive demand for industrial and logistics real estate. Warehouses, distribution centers, and last-mile delivery hubs are essential for efficient storage and rapid deliveries, making them a top investment choice.
A key driver of this trend is the sustained growth of online shopping. In 2023, e-commerce accounted for approximately 15% of total retail sales, with projections suggesting it could reach 41% by 2027. To support this growth, companies are investing in strategically located fulfillment centers near major urban hubs.
Additionally, supply chain disruptions over the past few years have underscored the need for more resilient and adaptable logistics networks. Businesses are diversifying their supply chains, leading to greater demand for regional distribution facilities that can mitigate risks associated with global dependencies.
The Buffalo Niagara region has seen increased interest in industrial real estate, particularly along major transportation corridors. With its strategic location near the Canadian border, growing investment in logistics infrastructure, and recent shifts in trade policies and tariffs, our area is well-positioned for further industrial expansion.
2. Healthcare and Medical Office Buildings
Healthcare real estate remains a stable and growing sector due to advancements in medical technology and demographic shifts. Medical office buildings, outpatient care centers, urgent care facilities, and senior housing developments are increasingly in demand as the population ages and requires more healthcare services.
The aging U.S. population, particularly the Baby Boomer generation, is driving demand for more accessible and specialized medical facilities. The need for expanded healthcare infrastructure is further fueled by technological advancements that allow for more outpatient procedures and telemedicine services, reducing reliance on traditional hospital settings. The U.S. News & World Report highlights long-term CRE investment opportunities in senior housing, reflecting the increasing demand for healthcare-related real estate.
Investors are also recognizing the potential of healthcare real estate to generate stable, long-term returns. Unlike traditional office buildings, medical office spaces tend to have lower vacancy rates and longer lease agreements, making them an attractive asset class in an uncertain economic environment.
Buffalo’s thriving medical corridor, anchored by the Buffalo Niagara Medical Campus (BNMC), continues to attract stakeholders in healthcare real estate. While the BNMC remains a hub for innovation, we’re also seeing medical developments expand into suburban areas. Projects like 716 Health and the Roswell Park Scott Bieler Amherst Center in Amherst reflect the growing demand for accessible, state-of-the-art healthcare facilities beyond the downtown core.
3. Flex Industrial Space
The demand for flex industrial spaces is rising as businesses seek versatile and efficient real estate solutions. These hybrid properties combine warehouse, office, and light manufacturing capabilities, making them an attractive option for a wide range of tenants. Flex space market is experiencing significant growth, driven by the need for adaptable workspaces in a rapidly changing economic landscape.
E-commerce, last-mile logistics, and advanced manufacturing companies are fueling this trend as they require flexible facilities to meet shifting supply chain demands. Startups and small-to-medium enterprises (SMEs) are also leveraging flex industrial spaces to scale their operations without committing to traditional long-term leases.
Moreover, the growing emphasis on sustainability and energy efficiency is influencing the design of modern flex spaces. Developers are incorporating green building technologies, such as solar panels and energy-efficient HVAC systems, to attract environmentally conscious tenants. This trend is especially noticeable in secondary markets where cost-effective and strategically located industrial space is in high demand. In Buffalo, the increasing interest in flex spaces reflects the city’s evolving business ecosystem and its appeal to companies seeking affordability and adaptability in their real estate investments.
4. Data Centers
As reference in our previous blog, the growing reliance on artificial intelligence (AI), cloud computing, and digital services is fueling a surge in demand for data centers. Total data center inventory in the top 12 markets has more than doubled since the beginning of 2020, according to Avison Young’s U.S. data center update for Q2 2023. These facilities are critical for the secure storage and processing of vast amounts of data, making them one of the most promising CRE investment opportunities in 2025.
Tech companies and enterprises across industries are expanding their data storage capacities to support innovations in AI, machine learning, and Internet of Things (IoT) applications. The hyperscale data center market is expected to continue its strong growth trajectory, with major tech firms aggressively expanding their data infrastructure.
Additionally, the shift toward edge computing, which requires data to be processed closer to the end user, is driving demand for smaller, strategically located data centers in urban and suburban areas. As a result, decision makers are looking beyond traditional tech hubs and into emerging secondary markets for new opportunities. The Buffalo market, with its reliable power infrastructure and cooler climate, is increasingly attractive for data center investments.
5. Mixed-Use Developments
Mixed-use developments, which integrate residential, commercial, retail, and entertainment spaces, are becoming increasingly popular among investors. These projects offer diverse income streams, resilience against market fluctuations, and enhanced community engagement.
The trend toward urbanization and the desire for live-work-play environments continue to drive interest in mixed-use developments. Consumers are seeking convenience, preferring neighborhoods where they can access essential services, leisure activities, and employment opportunities within walking distance.
Additionally, repurposing underutilized commercial properties—such as vacant shopping malls and outdated office buildings—into mixed-use spaces is gaining traction. This adaptive reuse strategy not only meets market demand but also aligns with sustainability goals by reducing the environmental impact of new construction, and urban decentralization which continues to rise in 2025.
As 2025 begins, these five commercial real estate sectors present compelling real estate opportunities. Industrial and logistics real estate will continue to thrive due to e-commerce growth, while healthcare and medical office buildings remain resilient due to demographic shifts. Flex industrial space will continue to thrive in secondary markets, data centers will benefit from AI and digital expansion, and mixed-use developments will provide flexibility and diversification.
Those who stay ahead of these emerging trends and consider the unique dynamics of key markets like Buffalo and Boston will be well-positioned to capitalize on the evolving CRE landscape and drive long-term success in an ever-changing market.