A team of our real estate-focused sales and operational leaders attended IMN’s Winter Forum on Real Estate Opportunity & Private Fund Investing in Laguna Beach, California this past week. Held from January 22-24, 2025, at the Montage Laguna Beach, the conference attracts more than 1,200 attendees and holds an agenda of more than 40 sessions with more than 200 speakers participating, including our own Manager Director Michael Dombai. 

While there, we spoke with fellow servicing firms, software providers, and real estate managers of all sizes and niches while also listening in to the expert opinions on the top trends affecting the segment.  

What’s clear is that real estate finds itself at an important junction with the new year ahead – whether it’s a new U.S. administration, the still-evolving commercial real estate recovery, or the closely watched interest rate cycle. As a result, there was plenty to discuss with our industry peers over the course of the conference – here are some of the most buzzed-about trends.  

1. Fundraising is down 

As cited in a speaking session from our valued partner Matt Posthuma at Ropes & Gray, PERE has published that fundraising is down 50% from its peak in 2021, and down around 30% from 2023. Of this shrunken fundraising pool, the largest real estate managers are claiming the lion’s share – a trend we are seeing not only in real estate but across the broader alternative asset landscape. 

While fundraising may be tempered, returns and investment values show promising signs of health, as the U.S. real estate sector is forecasted to submit better returns than the public equities market. 

2. Interest rates continue to bring uncertainty 

When it comes to interest rates, few feel confident enough to make a defining statement on what is to come, particularly with the volatile last five years in mind. However, with a recovered market, vocalized rate cuts by the Federal Reserve, and a likely extension to the U.S. Tax Cuts and Job Act, the broadly held hope is that we will settle into stable period of interest rates. 

3. Outsized insurance risk is our new normal 

Skyrocketing insurance rates were also heavily discussed – a timely topic given the event’s proximity to the L.A. fires that tragically continue to burn through the metropolitan area. Speakers suggest that while these natural disaster events are often referred to as “once-in-a-lifetime events”, they will transition to our new normal. Insurance rates in high-risk areas are unlikely to return to the past levels we’re accustomed to, and that added cost must be factored into future real estate deals and underwriting processes. 

4. All eyes are on the new U.S. administration 

As a new U.S. administration entered the White House earlier this week, the industry is on the lookout for changes in regulation, tariffs, geopolitical conflicts and more. The consensus is that impending deregulation could have a favorable effect, but other question marks remain. For example, how could impending tariffs affect the costs of building materials, and how might the possibility of mass deportations affect access to building labor and construction timelines? 

Even with the uncertainty of a new administration’s impact on the real estate space, foreign managers and investors have a favorable eye to U.S. real estate exposure due to its strong market recovery in a post-COVID world. 

5. Several sectors are producing exciting activity 

Activity in the data center niche creates the most excitement. Though they require ample energy to operate, some think we will see a renewed rise in nuclear power plants to power these data centers. Open air shopping centers have also performed well and new opportunities in this niche are attracting healthy deal attention. 

Luxury housing conversely has a poor outlook as a sector, even amid high building activity since materials and labor costs to build remain high. At the other end of the spectrum, demand for workforce housing may be at an all-time high, but the real estate investment space isn’t feeling optimistic about the possibility of returns for such projects, which tend to require a private/public partnership. 

In all, we had a productive few days rubbing shoulders with some of the brightest minds in the real estate investment space. This new year is certain to hold wins, challenges, and changes, and we’re excited and committed to helping our clients navigate what’s set to be a fascinating 2025.  

Ready to talk about your real estate servicing needs for 2025? Reach out to our team here.