An “office-curious” investment market should help commercial real estate investment across all asset classes top the circa £50B transaction volume of 2024 despite ongoing global political uncertainty, BNP Paribas Real Estate Head of Research and Strategy Vanessa Hale said at an investment briefing Wednesday.

The global adviser forecast that total transactional volumes for 2025 will be around £53B, 5% higher than last year, with interest rates moderating to around 3.75% and inflation running at about 3% by year-end.

UK office volumes of £9.5B were down 6% on 2023 and 56% off the 10-year average, while across the other commercial real estate asset classes volumes were up 32%, in line with the 10-year average, Hale said.

While she said retail investment is “back on the cards” after years as an unpopular asset class, she pointed to the ongoing strength of the industrial and logistics market, despite macro concerns over the possible impact of President Donald Trump's tariffs on manufacturing. In 2024, industrial and logistics investment was up 13% on 2023, just below the 10-year average.

However, Hale predicted that 2025 was likely to see a continuation of the M&A activity that characterised last year as the industrial and logistics real estate market becomes increasingly dominated by a small number of large players.

“Much will depend on the pace of interest rate cuts,” BNP Paribas Real Estate Head of Debt Capital Markets Adrian Frost said. “In 2025, we believe that European real estate refinancing requirements are below €15B, but in 2026, they will be around €27B, so we expect to see more consolidation this year. The big will get bigger.”

Frost said that while there had been a slight softening in capital market sentiment since the imposition of tariffs, overall there had been strong demand to provide lending into the real estate market, and he believed that would remain the case.

“The biggest issue in 2024 was the cost of debt because of high interest rates across the UK and Europe, which has had a huge impact. So in 2025, we do expect to see the deals get bigger and more cross-border investment,” he said.