Interview with Trimont’s regional leaders, Rebecca Percossi and Ted Wright

In a candid discussion, Trimont’s Rebecca Percossi, Executive Managing Director of International Business and Ted Wright, Executive Managing Director of the Americas, shared their insights on the current state and future trajectory of global commercial real estate markets. Their perspectives highlight key regional trends, asset class performances, and strategic outlooks that are shaping the industry.

Global Market Overview

Q: Can you give us an overview of the current trends you see across your respective regions?

Ted commented on the U.S. market, stating, ” One of the most significant trends impacting the U.S. market is the plateauing of interest rates. The Federal Reserve’s previous monetary policy, aimed at curbing inflation, led to a sharp rise in interest rates forcing borrowers with near term maturities to delay refinancing in hopes of more favorable rates which now are on the horizon.

There is a wall of transitional real estate debt set to mature over the next few years. Trepp estimates that USD 1.2T in CRE loans will reach maturity between now and the end of 2025, with another USD 1.8T to follow in 2026-2028. Due to the aggressive approach by the Fed, the overall CRE recovery in the U.S. has lagged compared to other regions.

Additional trends in the U.S. include the shifting demand across various property types, evolving regulatory frameworks and enhanced scrutiny on Environmental, Social, and Governance (ESG) factors is driving lenders to integrate these considerations into their financing decisions.”

Conversely, Rebecca observed a brighter outlook in Australia: “Optimism seems to be returning to the Australian commercial real estate market. Deloitte’s 2025 outlook survey indicates that 82% of respondents expect revenue growth in 2025, up from 29% in 2024. Additionally, Australia’s macroeconomic environment is projected to outperform other regions, with a GDP growth forecast of 2.2% for 2025, compared to 1.6% in the UK, 1.1% in the U.S., and 1.6% in the Eurozone. Nevertheless, interest rates remain sticky, as the Reserve Bank board suggests it is unlikely to reduce the cash rate in February or April, primarily due to inflation staying above the 2–3% target range. Despite sticky interest rates, the “Beds and Sheds” sectors continue to present prime opportunities in Australia.”

Asset Class Performance

Q: How are different asset classes performing across your regions? Which asset classes are currently performing well, and which are underperforming?

Rebecca offered insights into the office sector’s performance, particularly in Sydney, noting, “The office sector in Australia has been undergoing an extended correction period due to low transaction volumes.  This has led to limited visibility regarding current capital values in the market. However, there are now indications that this correction is approaching the bottom of the cycle, with the capital value adjustment observed over the past two years likely to conclude by the end of Q1 next year. Upon completion, the peak-to-trough value correction is projected to be approximately 25% nationwide. National CBD vacancy rates stabilised in Q3 2024 for the first time since 2019, with early signs of decreasing incentives in premium-grade market segments like Sydney CBD Core and Brisbane CBD. New supply in 2025 is expected to be subdued, with additional space anticipated to be 20% lower than 2024 levels, due to ongoing pressures on development feasibility.”

In contrast, Ted highlighted the success of certain asset classes in the Americas: “Data centers and industrial and logistics sectors are outperforming due to the digital transformation and e-commerce growth. With digital transformation accelerating across industries, data centers have emerged as a top-performing asset class. The need for cloud services, digital infrastructure, and increased data storage capacities has led to significant investment in this sector. The industrial and logistics sector continues to outperform other asset classes due to robust demand fueled by e-commerce growth and supply chain reconfigurations.”

Alternately, Ted also notes that “The office sector is under pressure as remote and hybrid work models become more entrenched. Demand for office space has decreased, leading to higher vacancy rates in many urban centers. However, there is a notable divergence between Class A properties with modern amenities and older, less adaptable office spaces.”

Global Challenges

Q: What are the key challenges and trends affecting the global commercial real estate market, particularly focusing on the differences between the U.S. and international regions?

Ted commented on the U.S. market saying, “The global commercial real estate market has experienced a tepid year in terms of investment volumes in 2024. These challenges are multifaceted and stem from economic and market-specific factors. One of the primary challenges is economic uncertainty, exacerbated by central banks’ monetary policies aimed at controlling inflation.

Recent rising interest rates have driven up borrowing costs, leading to cautious investment behaviors, and impacting refinancing activities. This has resulted in a slowdown in transaction volumes and a more conservative approach from both lenders and borrowers. The shift towards remote and hybrid work models has led to significant challenges in the office sector, as companies reassess their space requirements. This transition has resulted in increased vacancy rates. Investors are increasingly looking beyond U.S. borders for diversification and potentially higher returns in recovering international markets.”

Rebecca provided insights on the international scene, noting, “Ongoing global supply chain disruptions have affected the construction and development sectors. Delays in material availability and increased costs have hindered new projects, thereby impacting the pipeline of new commercial real estate supply. Global competition for capital and investment opportunities poses a challenge. The attractiveness of alternative markets such as EMEA and APAC, which is seeing a resurgence in investor confidence, diverts some of the capital that might otherwise flow into U.S. commercial real estate. The European market has seen more activity in the second half of the year, particularly in the UK. This has been driven predominately by July’s general election outcome providing much-needed stability and the August rate cut by the Bank of England.”

Emerging Trends

Q: Data centers have been in the spotlight in both Europe and the United States. Could you discuss what is driving the demand in this asset class?

Ted explained, “The increasing demand for data centers in the United States is being driven by several pivotal factors that are transforming the commercial real estate landscape and establishing data centers as a highly desirable asset class on a global scale. Foremost among these drivers is the continuous digital transformation occurring across various industries, which significantly fuels the need for data center facilities.

As businesses increasingly move their operations online and adopt cloud-based solutions, the need for reliable and scalable data storage and processing capabilities has grown exponentially. This trend is further accelerated by the rise of remote work, which requires robust digital infrastructure to support distributed workforces. Also, advancements in technology, such as artificial intelligence, machine learning, and the Internet of Things (IoT), are generating unprecedented volumes of data. These technologies require sophisticated data processing and storage solutions, which data centers are uniquely positioned to provide. As these technologies become more integrated into business operations, the need for data centers will continue to rise. “

Rebecca added, “Growth trends like those in the U.S. have also been observed in Europe and the Asia Pacific region, fueled by the increasing adoption of cloud computing, advancements in AI, digital transformation initiatives, and heightened demand for data storage and processing. Moody’s recently projected that data centre capacity in the Asia-Pacific will expand at an annual rate of 20% through 2027. The AUD 24 billion acquisition of data center giant Airtruck by a consortium of Blackstone and CPPIB stands as the largest Australia M&A deal in 2024 and the fifth largest in Australia’s M&A history.”

Q: Rebecca, the multifamily sector is experiencing growth internationally, especially in regions where renting a home was not previously common. Can you discuss this trend and its implications for the real estate market?

“The Living Sector, which includes student housing, co-living, serviced apartments, build-to-rent, and senior living facilities, is an emerging market in the Asia Pacific region, where it has accounted for only 6% of investment volumes since 2019. This sector is viewed as a key growth opportunity and is rapidly becoming one of the most sought-after asset classes in the region. In Australia, the residential market has traditionally emphasised a build-to-sell approach. However, factors such as a significant housing shortage, driven by low supply and strong migration, and a housing affordability crisis—evident from Sydney’s median price-to-income ratio, which is the second highest in the world at 13x—have shifted attention towards the living sector, particularly build-to-rent models. Regulatory headwinds such as planning laws and tax legislation are also currently being worked on within both Federal and State governments to support the living sector.”

Looking Ahead

Q: What strategies is Trimont implementing to capitalize on these trends and navigate the challenges in both the U.S. and international markets?

Rebecca stated, “As a leading commercial real estate facility agent and loan servicer, Trimont has strategically positioned itself to capitalise on the forecasted market improvement in 2025 while effectively navigating the challenges present in the market after the high-interest rate period. Trimont is leveraging advanced data analytics to provide deeper insights into portfolio performance and market trends. The adoption of digital platforms and process automation is central to improving operational efficiency. By streamlining workflows and reducing manual processes, Trimont enhances service delivery and client satisfaction, while also preparing for scalable growth. Through prioritizing a client-focused service and strategic advisory, Trimont builds long-term relationships and fosters trust with its clients.

Ted added, “By engaging closely with clients, Trimont has identified key pain points and is tailoring its services to deliver impactful solutions. We continue to invest in technology to enhance service delivery and operational efficiency. Advanced data analytics and automated processes are being deployed to provide clients with real-time insights and streamlined reporting. This technological edge helps clients make informed decisions in a changing market.

We are also expanding our expertise across various asset classes, including high-demand sectors like industrial, logistics, and data centers. By offering diversified asset management solutions, Trimont helps clients mitigate risks and capitalize on growth opportunities.

Finally, regular engagement with clients has revealed that one of their biggest pain points is navigating marketplace complexities. Trimont addresses this by providing comprehensive advisory services that guide clients through this changing landscape. The past year has demonstrated the critical importance of robust risk management frameworks. Proactive identification and mitigation of potential risks have been essential in maintaining portfolio stability. Enhancing risk management practices will remain a focus to safeguard investments and ensure resilience against unforeseen challenges.”

Closing Thoughts

Reflecting on 2024, both leaders emphasized the importance of agility. Factors such as interest rate changes, inflationary pressures, and geopolitical events have underscored the need for flexible strategies that can swiftly adapt to evolving conditions. This adaptability will be crucial in maintaining resilience and capitalizing on emerging opportunities. Continued investment in technology will be key to maintaining a competitive edge. Exploring innovative solutions and digital tools will facilitate improved service delivery and operational efficiency. Building on the adaptability lessons of 2024, strategies will be designed to quickly respond to market changes and emerging trends. This agility will be crucial in capturing growth opportunities and mitigating risks.

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Rebecca Percossi, Trimont’s Executive Managing Director, Head of International, hails from an extensive finance and real estate background.

Ted Wright, Executive Managing Director of the Americas at Trimont, has over 30 years of commercial real estate finance experience including oversight of highly structured public/private debt including construction, A/B participations, mezzanine, and preferred equity positions.

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