As 2025 continues to unfold, markets are waking up to a new reality punctuated by tariff shocks, inflation persistence, rising yields on longer-term bonds, and growth downgrades that may have caught many by surprise. However, the underlying forces shaping this moment (including deglobalization, demographic pressure, energy insecurity, and political bifurcation) had been building over time, like massive tectonic shifts gradually making their way to the surface. As a result, the landscape built over the last four decades is transforming, becoming more fragmented and localized.
The Bell Had Been Ringing; It’s only now that we can finally hear it
In this environment, global investors were asked to hold two opposing truths, with growth moderating and inflation remaining sticky. For me, it was remarkable to witness this turnaround firsthand. What started with confidence at the World Economic Forum in January had pivoted to concern by the Milken Institute Global Conference in May.
Hines has long believed that this cycle would be different. That valuations would reset not with a bang, but with a steady recalibration. That fundamentals would reassert themselves. And that real estate (especially private real estate) would emerge as one of the few places where long-term capital could find income, resilience, and strong relative value.
"As the cycle progresses, we believe we will begin to shift to a building moment—an inflection point that many could miss" David Steinbach, Global Chief Investment Officer
We have been watching the key themes of deglobalization, deleveraging, demographics, dispersion, data, and decarbonization. These are structural forces that we believe will shape the investment landscape for years to come. Practically, our key near-term conviction remains living, and how we tackle that space will vary by market. At the same time, we continue to lean in on retail and U.S. office credit. Our fast-follow strategies are industrial (which remains interesting on a selective basis) and office on the equity side (which we continue to monitor closely). Regarding data centers, we continue to focus on powered land aggregation globally.
We Can't Unring the Bell, but We Can Redefine the Echo
"The lack of modern new supply is likely to be a significant market trend in the later years of this decade" Joshua Scoville, Senior Managing Director, Global Head of Research
Will there continue to be upward pressure on cap rates from persistent inflation and elevated interest rates? If we were to get into an extended period of rising cap rates, the historical experience suggests that real estate has plenty of potential to continue to perform, given a conceivable uplift in income growth. How real estate derives returns may differ from the last 40 years, but the oldest asset class in the world has historically thrived in many differing rate environments.
