It’s the end of 2024. 2024 was really a doozy. As we head into 2025, for most of you who are investors, syndicators, sponsors, or operators in the commercial real estate industry, you’re trying to figure out exactly what to forecast for 2025. What’s on the horizon for 2025? I have five hot takes about what to expect in 2025, so sit back and listen to our opinions. These might not necessarily be your opinions, but these are our thoughts about what to expect in the coming year.
1. SEC regulatory outlook and framework changes in 2025
First and foremost, we’re going to see a change at the Securities and Exchange Commission. Our colleagues and the Commissioners in Washington will likely experience a radical or different change in the regulatory outlook and framework. This typically happens when there’s a change in administration. With a change in administration in the White House, there will likely be a shift at the Commission.
This means that the Republicans, in this case, will have three Commissioners. The chairman of the Securities and Exchange Commission will be appointed by the incoming president and confirmed by the Senate. Therefore, our first hot take is that the Securities and Exchange Commission will undergo changes. You should not expect all the existing Commissioners to remain, as changes will follow the incoming administration.
2. Corporate Transparency Act Paused
Number two, just hot off the presses, a federal court judge in Texas has ruled to stay enforcement of the Corporate Transparency Act. Many of you will recall that the Corporate Transparency Act, recently enacted by Congress, required disclosure of all controlling members of every entity you owned. For many, it infringed upon privacy and financial privacy rights, particularly in states offering anonymity for filing entities like limited liability companies.
A federal court in Texas issued a preliminary injunction, effectively halting the legal enforcement of the Corporate Transparency Act. The ruling is twofold: first, the judge decided that states with entity formation rules should not be infringed upon by the Act. Second, states allowing anonymity, like Wyoming or Nevada, should maintain that right. Therefore, our second hot take is that the Corporate Transparency Act is on pause. Those of you scrambling to file by January 1, 2025, may have some relief, though appeals and possible Supreme Court involvement remain a possibility.
3. Lowering of Interest Rates
Hot take number three: We expect the Federal Reserve to continue lowering interest rates. Will it be as aggressive as the rate hikes starting in March of 2022? Likely not. However, some rate decreases are expected. This is crucial for those buying and selling real property or assets using leverage, as manageable debt is a foundational principle in the commercial real estate space.
4. Maturity Wall approaching with Existing Loans on Bridge Platforms
Hot take number four: Many lenders face a maturity wall as existing loans on bridge platforms, often in the floating debt space, are maturing. If you secured a loan between 2019 and 2020, you’re nearing this maturity wall. You may need to modify or restructure your debt through your existing lender or source new debt through refinancing or asset disposition. Don’t delay—consider modifications, refinancing, or asset sales now to avoid last-minute decisions.
5. Creativity and Action are Key to Success in 2025
Lastly, hot take number five: Creativity and action will remain critical for success in 2025. Paralysis by analysis kills deals. If you’re underwriting deals, keep doing so, but take action—either reject deals that don’t meet your criteria or move forward confidently. With anticipated rate reductions filtering into bridge products and the lending environment, those who act decisively will be well-positioned for success in 2025.
