Cushman: offices, leisure and data centres will thrive in 2025

Offices, leisure and data centres have been named as the key sectors driving real estate in 2025 by Cushman & Wakefield. The agency’s Visions report reveals that the UK remains a “haven” for real estate capital, despite the recent outward bond movement, having recorded the highest level of real estate activity in Europe in 2024. Daryl Perry, head of research and insight at Cushman, said: “The past year has seen global instability and market fluctuations. Our analysis shows that the real estate sector will continue to adapt to ongoing structural changes, like AI, technology, decarbonisation and societal and geopolitical fluctuations. “No investment can be absent of risk, but with targeted data analysis, investors will be able to navigate challenges and capitalise on opportunities with positive impacts on reward and wider economic growth.” The London office market remains the most liquid globally, according to Cushman, in part due to high demand and comparatively low supply for quality spaces, but also as a result of the continued business value for employee experience and the desire for new or recently refurbished assets. The research shows that, since the end of the pandemic, the number of central London office deals exceeding “prime” has increased by around 8%, pushing prime city rents higher year-on-year. Cushman expects prime city rents to grow by an average of 4.4% per annum through to 2028, while the average of the top 10% of rents achieved in the market is expected to rise by 7.6% per annum. Elsewhere, the data shows that investment and reward across leisure have boomed over the past two years as the sector has diversified and prospered. As such, Cushman expects experience-based sectors to continue to thrive during 2025, particularly across live sports and music. In addition, the agency found that UK hotel accommodation spending more than tripled over the past year, with assets focused on brand-building and clear, confident product messaging expected to continue to do well in 2025. Cushman also expects demand for data centres to skyrocket in the near future amid an increasing number of AI companies, which are growing at a quick rate. The report also expects that the perception of AI input into investment decision-making is set to change soon, having been stifled in the past by data opacity. The move is predicted to be driven by greater access to data and the increasing prominence of automated valuation models, further improving access to data. Perry concluded: “With key set-piece policy developments, the continued agenda-dominance of ESG, technological advancements and consumer recovery, we are positive about the market in 2025.” Photo © Shutterstock