The Commercial Real Estate Forum presented by Cal State Fullerton’s Center for Real Estate expanded in 2025, with hundreds of students, faculty and real estate professionals attending a comprehensive forecast and outlook, networking events, and award ceremony on Feb. 19, 2025. A panel discussion featuring College of Business and Economics Economist and Woods Center Director Anil Puri, Rexford Industrial CIO Patrick Schlenhuber, Samuel Properties Director of Development Jay Tanjuan, and Ashwill Properties Broker Gary Martinez explored the transformation of this important sector in light of hybrid work schedules, trade wars, political changes and more.
The Opaque Outlook for the Economy Impacts Real Estate’s Future
“To be honest, no one is sure what will happen. The picture is as clear as mud as they say. It’s like a blizzard with so much happening that is dramatic and consequential,” said Puri, speaking of geopolitical changes, tariffs and the changes in the federal government. “There are two important deficits: one is international trade deficits. The other is fiscal deficits. Right now, trade deficits are getting the attention.”
Puri noted that the U.S. has had a trade imbalance for decades, but the Trump Administration is in need of revenue for tax cuts that will be extended beyond this year. $4.5 trillion in expenditures and $1.5 trillion in revenue creates a lack of clear sources for revenue.
“Tariffs are really a tax collected by people who import, but the ultimate burden is on the buyer and seller. We don’t know where it will land,” said Puri.
Looking at history, Puri pointed to the 6.5% tariff increase in the 1930s, which coincided with the Great Depression. Puri estimates that it would take an average overall tariff increase of 5% to erase much of the deficit. In the first Trump administration, tariffs were increased by approximately 1.5%.
“The second part of the story is inflation,” said Puri. “And the last piece of the puzzle is the state of the economy, such as GDP and employment. One would think that if there is a reduced labor force available due to reduced immigration and deportation, that would increase the wage rate and lead to inflation. Tariffs would also increase inflation. There is a positive side – some believe artificial intelligence will be our savior. But it is an open question to what extent this will come together and whether we will fall into the real danger of stagflation – persistent inflation and slow growth.”
The New World of a Slower Southern California Commercial Real Estate Market
About half of commercial properties in Orange County are industrial properties, with the other half being retail, office, multifamily housing or other uses, explained Martinez. In mid-2022, rising interest rates began to make investment difficult, but by 2024, the situation had somewhat stabilized. “We have a lot of hopeful optimism for the economy,” said Martinez. “2025 looks relatively stable. One sector doing much better than anticipated is the office market, increasing in occupancy as people come back to work. Predominately, we are a service-oriented economy, so we need office workers to be employed.”
Tanjuan noted that commercial real estate has been in a recession for the past three years, with lowering tenant demand. “Until we see corporal America start engaging again and leasing space in our market, we won’t see a pickup in tenant demand and warehouse vacancy,” he said. “When the market was super hot, you could plug in any rent growth you could imagine and still be low. 2024 was slightly better than 2023, and we hope that 2025 will be slightly better than last year. So we’re trending in the right direction. But we need to see more progress to really see a difference.” In the first two months of 2025, the level of commercial activity has increased markedly, Tanjuan noted.
Schlenhuber reported that the change in vacancy rates has gone from below 1% across Southern California – the largest industrial market in the world – a few years ago. Now, the average is around 4% in the infill markets, with much higher vacancy levels further east. “4% would be enviable in most parts of the country. But 4% on a $2.2 billion base is a lot of vacant buildings,” he said. “Deals are taking a lot longer if they actually go through. A lot of false starts are happening when the deal gets to the final finish line and then disappears. But we’re optimistic that the recent uptick will continue, though we did see an uptick at the beginning of last year. It seems like there’s a seasonal uptick coming out of the holidays.”
The cost to hold inventory in the warehouse has increased, so the just in time inventory approach from before the COVID pandemic has returned, Schlenhuber noted.
Though the focus of the forum was on commercial real estate, Martinez did highlight two needs for Orange County residential housing: affordability and senior housing. In some cases, office real estate is being transitioned to multifamily housing properties, but Martinez noted the challenges of inefficient space with some office layouts. “In some cases, there are opportunities for adaptive reuse, but in other cases, it’s easier to just scrap it and start fresh,” he said. Price downturns are expected in the industrial real estate market, even though prices for other types of real estate remain high.
For More on Real Estate
The 2025 Commercial Real Estate Forum event was sponsored by Capital Pacific Real Estate, BOMA OC, First American Title, and longtime CSUF partner and real estate mogul Patrick Donahue ’78.
From supporting undergraduate and graduate academic programs in real estate to providing networking and professional development events for real estate professionals, the Center for Real Estate is Cal State Fullerton’s connection to the residential, commercial and industrial land use sectors. For more on the Center for Real Estate, read more of our articles on real estate education and research.
