The real estate market in 2025 offers a unique blend of opportunities for investors. With shifting economic conditions and changing work and demographic trends, there are several lucrative opportunities on the horizon for real estate investors.
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“Real estate provides a unique opportunity for investors to diversify with an asset that has intrinsic value and potential for appreciation,” says Richard Gebbia, principal at Siebert. “Moreover, real estate can be particularly powerful for those who identify hidden gems in undervalued or emerging markets.”
Whether you’re looking to purchase residential properties, explore auctions or dive into commercial sectors, understanding where and how to invest is crucial for maximizing your returns. Here are five of the best places to invest in real estate in 2025, according to experts:
— Housing.
— Properties purchased at auction.
— Commercial real estate.
— Single-tenant retail properties.
— Small-unit industrial properties.
Housing
Most people think of housing first when considering real estate investments. And there’s good reason to do so in 2025, according to Dan Spiegel, senior vice president and managing director of Coldwell Banker Commercial.
“The demand for apartment and single-family rental properties remains strong, driven by sustained high mortgage rates and the increasing household formation of millennials and Gen Z,” he says. “As these generations reach peak homebuying years, coupled with the continued shift toward remote work, housing demand will persist across the nation.”
He expects continued investment potential in rentals in both urban and suburban areas. Some rental buildings you might consider include multi-unit apartment buildings, town homes and single-family homes.
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Properties Purchased at Auction
Real estate is always a good deal if the purchase price plus the price of repairs are below market value, says Mark Charnet, founder and CEO of American Prosperity Group. Purchasing property at auctions is one way to get a deal, he says.
He likes Auction.com, but says Xome and Hubzu are good alternatives. These sites offer homes that are in foreclosure or bank owned, which is why the purchase price is lower.
“You will not normally be allowed to see inside the property, so a best guess of damage and repairs must be made by the purchaser in advance,” he says.
If auction shopping isn’t your cup of tea, he suggests using Zillow.com to find properties or asking local Realtors if anything on the market could be a good rental.
Commercial Real Estate
“The U.S. commercial real estate market appears to be on the verge of a rebound after two years of suboptimal performance and subdued transaction activity,” says Carey Heyman, managing principal of the real estate industry at CliftonLarsonAllen. He points to a few different real estate sectors worth considering in 2025: multi-family, office, industrial and retail.
The multi-family sector is well positioned for the coming year thanks to a slowdown in new construction and increasing homeownership costs, he says.
“The office sector is seeing a gradual improvement in occupancy rates due to return-to-office mandates,” he says. However, he notes that some clients have struggled to obtain financing.
“Increased development has driven up the national industrial vacancy rate,” but he says experts project that supply and demand will realign before the end of the year.
Meanwhile, the retail sector “continues to demonstrate resilience and stability,” Heyman says. Despite a large number of retailer bankruptcies and closures in the past year, he says occupancy rates have hit their highest level in years.
Single-Tenant Retail Properties
Like Heyman, Spiegel sees opportunity in the retail sector. He says you can also add income to your portfolio as a landlord for retail properties, such as quick service restaurants, oil change shops and convenience stores.
Restaurants and food franchise brands typically enter long-term leases. “(They’re) often backed by corporate guarantees, making these net-leased retail investments highly attractive to individual investors,” he says. “With demand for food service experiences and convenience continuing to grow, properties leased to such brands offer reliable, passive income streams over extended periods, often with inflation-adjusted rents.”
Small-Unit Industrial Properties
Large industrial warehouses may be beyond the reach of smaller real estate investors, but Spiegel says multi-tenant small-unit industrial properties are also gaining attention.
“These properties, often located in key urban areas or near transportation hubs, are ideal for last-mile distribution and serve local businesses in need of flexible spaces,” he says. “With e-commerce growth and the push for faster delivery times, demand for smaller, accessible industrial spaces is expected to remain robust, offering strong returns for investors.”
You might consider warehousing and storage units, food production or distribution properties, or urban industrial units.
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Best Places to Invest in Real Estate in 2025 originally appeared on usnews.com
Update 02/19/25: This story was previously published at an earlier date and has been updated with new information.
