The survey found industry challenges won't stop investment into commercial real estate in 2025, but innovation and changing employee expectations will impact how investments are assessed.

Despite rising energy costs, office vacancies, interest rates and economic uncertainties as the industry adjusts to a new administration, recent insights garnered from TD Bank’s survey at the CRE Finance Council Miami found that commercial real estate leaders are still excited for the opportunities this year could bring. More than 200 commercial real estate professionals shared their 2025 outlooks, with 76% believing dropping commercial real estate property values will drive increased investment this year.

So, is Commercial Real Estate “Back"?

TD Bank's survey focused on sentiment surrounding the commercial real estate sector, along with what's driving investment. A few other survey highlights include:

- More than half of commercial real estate investors (52%) believe future interest rate movement – specifically lowering rates – will have the biggest impact on the sector, but just 14% expect the biggest business impact to come from changing policies and regulations of the new presidential administration.

- The majority (70%) of respondents expect housing material prices to rise in 2025, but only 32% expect it to have an impact on investing in new developments.

Return-to-Office Policies and Their Impact

As CRE professionals plan their 2025 investments, there’s a rising confidence among investors. That confidence could be driven by return-to-office requirements from companies across the U.S. In fact, the majority (68%) of industry professionals predict that return-to-office requirements are the business-level decision that will have the biggest impact on the commercial real estate market in 2025. However, many investors and property owners aren't expecting office work to match pre-Covid levels – instead, mixed-use spaces are expected to be the future. The survey revealed that more than two-thirds (68%) of CRE professionals expect mixed-use properties will garner the most traction in 2025.

“We’re experiencing a very modest recovery in parts of the office market, but that doesn't mean the industry should be quick to revert to its old ways. The office segment will continue to face challenges as a whole. As employees return to in-person work, they crave unique, meaningful workplace experiences that make coming into the office a positive experience,” said Hugh Allen, Head of U.S. Commercial Real Estate at TD Bank. “Investors and commercial real estate owners are taking these changing expectations into account when they invest in their next project. This includes amenities like in-office gyms, extended break rooms, and cafeterias – organizations want to create a sense of place for their employees, enhancing their return-to-work experience.”

Investment Interest at a Crossroads Amid Various Uncertainties

While the majority (70%) of commercial real estate professionals believe that the price of housing materials will rise again in 2025, they are divided when it comes to predicting how this will impact the market, with 38% anticipating continued investment and 32% forecasting an impact on the market’s ability to invest in new developments. Many investors have concluded this interest rate environment is the "new normal."

“The commercial real estate sector will face new challenges in 2025, and a new administration will bring wild cards to the market, but this analysis shows that the right investors are prepared to face those challenges head on,” said Hugh Allen. “Navigating the uncertainties regarding inflation and interest rates will be key to getting the timing right for investors to pull the trigger on acquisitions and developments.”

CRE’s Top-of-Mind Tech & Sustainability Initiatives

Along with properties, CRE professionals have their eyes on tech investment this year, especially predictive analytics. Three-fifths (60%) of industry professionals expect predictive analytics to have the biggest technological impact on CRE in 2025. This is followed by smart buildings (32%) and efficiency and sustainability advancements (28%), in-line with green initiatives in recent years.

"Technology will drive commercial real estate into its next era," said Allen. "The advancements in artificial intelligence and overall upgrades to how we use innovation in CRE will continue to bear positive outcomes for the investors who use them properly."

As energy costs continue to rise, more than half (55%) of industry professionals believe smart buildings and other technological advancements are the sustainability trend that will make the largest splash. That said, changes in the White House raise questions on the state of sustainability moving forward, with 30% of CRE professionals citing government environmental protections as the most significant sustainability trend in 2025.

Survey Methodology

This study was conducted at the Commercial Real Estate Finance Council Miami 2025 from January 12-15, 2025. A total of 211 commercial real estate professionals were polled.

About TD Bank, America's Most Convenient Bank®

TD Bank, America's Most Convenient Bank, is one of the 10 largest banks in the U.S. by assets, providing over 10 million customers with a full range of retail, small business and commercial banking products and services at more than 1,100 convenient locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. In addition, TD Auto Finance, a division of TD Bank, N.A., offers vehicle financing and dealer commercial services. TD Bank and its subsidiaries also offer customized private banking and wealth management services through TD Wealth®. TD Bank is headquartered in Cherry Hill, N.J. To learn more, visit www.td.com/us. Find TD Bank on Facebook at www.facebook.com/TDBank and on Instagram at www.instagram.com/TDBank_US/.

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