Interest rates, local-market economic trends, inventory and construction costs remain key indicators worthy of attention, but two other factors will grow significantly in their impact during 2025: labor shortages and labor-replacement technology.

That is according to a five-member panel of experts assembled at Auburn University's CityBuilders The Outlook 2025 event hosted by The Winchester Institute for Real Estate Development.

The Outlook is held annually as part of the outreach efforts of CityBuilders, which provides shared learning opportunities to benefit regional real estate professionals, students, and alumni of Auburn’s Master of Real Estate Development (MRED) program.

The opportunities include symposiums, panel discussions, and webinars that bring leading real estate professionals together to share insights and best practices. The Outlook is the first of several educational events planned for the coming year.

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AI is making headway in providing real estate professionals much greater insight into customer trends, their buying ability, and enhancing remote work.

 

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The 2025 panel

Rob Carter, president/COO of Westplan Investors, provides strategic leadership for the company’s operational functions and oversees all project debt financing. Carter also serves on Auburn’s MRED Advisory Board and is an Auburn alum.

Amanda Chivers, managing principal of Crown Hospitality Consulting, an Atlanta-based firm specializing in hotel asset management, operational review, construction and loan administration, and distressed asset turnaround in the upscale and luxury hotel sectors.

Ray Jones, a broker/operating partner with The Shopping Center Group in Birmingham,started in the commercial real estate industry in 2006 and focuses on tenant representation, site selection, and working with select landlord clients in Alabama, Mississippi, and the Florida Panhandle. Ray also serves on the MRED Advisory Board.

Shawn Roberts, president of Mad Dog Construction in Tallahassee, Fla., has led the construction and oversight of many university and K-12 projects, as well as offices, retail, industrial, clubhouse/resort, and financial institutions. He earned his bachelor’s degree in building sciences at Auburn and served as a captain in the U.S. Air Force. Shawn is also on the MRED Advisory Board.

Kevin Stacker, managing director of the Wells Fargo REIT (real estate investment trust) Finance group, oversees origination, structuring, and closing of balance sheet transactions, and coordination of investment banking products with the various Wells Fargo Securities teams. He earned his bachelor’s degree in finance from Auburn.

Sims Garrison, executive vice president and chief operating officer of Fairway Investments in Birmingham, served as moderator.

It’s a new year

“Thank God it’s 2025,” Jones quipped in kicking off a discussion of headwinds and tailwinds.

Although 2024 ended with drops in interest rates and a strong economy, “there were so many headwinds,” he said. “Retail sales have increased, but if you look at it in terms of inflation,” challenges remain hard to overcome.

“I am looking forward to 2025. If you’re in any kind of sales, you have to be optimistic,” Jones said. “2024 was a tough year,” but looking at the year ahead, “people seem more willing to re-engage.... From an interest rate perspective, we’d like to see it a little bit lower.”

“Headwinds?” Roberts, in the construction business, asked. “Labor. We suffer from it, and we’ve really got to figure that one out... For This generation, we’ve really got to explain to folks that for some of them, they really need to go into trades. It is another way to make a living as a vocation. Higher Ed is not for everyone.”

Subcontracting work and availability will be a factor to continue watching, he said, and on the positive tailwinds side, “We turn in the numbers and we keep thinking there is no way they can build for this, but they do and they keep building.”

Inflation and interest rates, Chivers said, continue to be determining factors for investors in the hospitality industry. “However, the brands have continued to structure deals... Some have secured financing going forward, and we are starting to see building picking back up.”

She remains cautiously optimistic in the face of challenges such as labor supply, insurance and other costs, and is keeping an eye on cash flow and the credit crunch.

It is, however, a good time for long-haul investors to consider hotels and real estate, “because they will work back to the top,” Chivers said.

“No longer are we looking just to flip deals,” she said. “We’re looking for long-term opportunities with good investment strategy.”

Carter also points to interest rates and inflation as continued chief influencers, with many developers during 2024 having  to “basically put  land into a pipeline and just hold on or drop projects.”

“When the Fed moved in September, I think there was just a collective sigh in the real estate industry,” Carter said. “We’re now optimistic... but these deals are still hard to pencil, and the uncertainties have not gone away.”

Regarding rental properties, “We’re seeing more renters, and renters staying in our markets longer,” he said.

The debt-equity balance, Stacker said, will be a factor, as investors “continue to weigh the calculus between equity and debt.”

“Banks right now are absolutely flush with cash,” Stacker said. “I think people are optimistic... Loan requests have really tailed off from where they were 24 months ago. The spigot  was wide open. The spigot  is still open, but people are more selective.”

Regarding loans, “if you’ve got a good deal, the banks are going to be interested right now,” he said.

Labor and technology

A shortage of qualified labor, especially in the construction field, is one of the bigger concerns for 2025, Roberts said.

“For us, it really is,” he said. “They’re out there building your jobs.... Always remember there is another portion to this entire process. Labor is important... Timely payment is important” in order to keep good workers working.

Roberts expressed concerns about political debates regarding deportations and tariffs, noting that future contracts might include clauses to provide builders with grace factors for missing deadlines because of a depleted workforce and price escalation due to tariffs much like those implemented during the COVID-19 pandemic.

“When you start pulling from the bottom of the labor pyramid, it’s going to have an effect” all the way to the top.  They may not be on your project specifically, but it all works together in one way or another, he said.

One growing answer to the labor challenge is technology and management of it, Chivers said.

The hotel and entertainment industry, for example, also has challenges with labor shortages, she said.

“The only thing we can look at to help mitigate that issue is technology,” Chivers said. The industry is “looking at tech for jobs that people don’t necessarily want to do.... You might start seeing it at your hotel, when a robot might come to your room to drop off a towel, or something like that.”

Jones agreed. “You see technology being used more everywhere,” he said, “such as everyone going to self-checkout now. And I think that will continue to be a trend.”

Artificial intelligence, or AI, is making headway in providing real estate professionals much greater insight into customer trends, their buying ability, and enhancing remote work, the panelists said.

Presentations also are easier and timelier with technology improvements, Stacker said. Feeding data into an app or with AI can “almost instantly produce a presentation that previously would have taken four analysts.”

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Learn more about The Winchester Institute for Real Estate Development at Auburn University.

 

To receive more information on giving and support for the program, contact John Benner, executive director of The Winchester Institute.