Trends Shaping Land Development in 2025

While the land development industry has seen a compound annual growth rate of 0.5% over the past five years (IBISWorld) and is expected to continue expanding, understanding the long-term structural trends shaping the market and profitability is crucial for continued success.  The rise of remote work following the pandemic has driven a decline in the office space construction market, with office rental vacancies up to 19.9% in March (CommercialEgde), with return-to-office mandates unlikely to spur new office construction. However, while the office sector may struggle to rebound, growth opportunities persist in other commercial and industrial markets, particularly warehouse and logistics facilities and data center construction. 

Shifting trade alliances and geopolitical dynamics are influencing real estate development opportunities, while the growing demand for U.S. logistics—driven by companies reassessing overseas production and federal industrial policies favoring domestic manufacturing—is creating a need for logistics infrastructure near manufacturing hubs. These factors are paving the way for new opportunities in industrial and commercial real estate.

Artificial Intelligence (AI) has tremendous potential to revolutionize property markets. With significant investments in data centers are already in progress, the immense funding in AI-related infrastructure guarantees strong and sustained demand for data centers in the years to come. And while the impact of data centers on the real estate market is clear, it’s essential to develop them in locations that can balance proximity to large population centers, financial hubs, e-commerce facilities, and defense operations; the availability of supportive infrastructure and power; and land affordability.