TD Bank Survey Reveals Optimism for 2025 Investments Driven by Commercial Property Values
The State of Commercial Real Estate in 2025: Optimism Amid Challenges
Despite persistent challenges such as rising energy costs, office vacancies, fluctuating interest rates, and economic uncertainties as the commercial real estate (CRE) industry adapts to a new administration, many industry leaders remain optimistic about opportunities in 2025. Insights gathered from TD Bank’s recent survey at the Commercial Real Estate Finance Council (CREFC) conference in Miami indicate that confidence remains strong among investors and professionals alike. The survey, which collected responses from more than 200 commercial real estate professionals, revealed that 76% of respondents believe declining commercial property values will drive increased investment this year. This raises an important question: is commercial real estate making a comeback?
Is Commercial Real Estate Truly Rebounding?
The TD Bank survey sought to assess sentiment regarding the future of the CRE sector while also identifying key factors driving investment. Several notable trends emerged:
- Over half (52%) of CRE investors believe that the movement of interest rates—particularly potential rate reductions—will have the greatest impact on the industry. However, only 14% consider the policies and regulations introduced by the new presidential administration as the most significant business factor.
- A significant majority (70%) of respondents predict that housing material costs will continue to rise in 2025, yet only 32% believe that this will significantly impact investment in new developments.
These findings suggest that while economic and regulatory factors remain important considerations, investors are prepared to adapt to these shifts and pursue strategic opportunities within the evolving market landscape.
The Role of Return-to-Office Policies in CRE Investment
A key driver of CRE investment sentiment in 2025 is the evolving nature of office spaces and workplace policies. Many companies across the U.S. have implemented return-to-office (RTO) mandates, and this shift is influencing real estate investment decisions. According to TD Bank Survey Reveals Optimism for 2025 Investments Driven by Commercial Property Values the survey, 68% of respondents believe that return-to-office policies will have the most significant impact on the commercial real estate market this year.
However, despite this renewed focus on office spaces, investors and property owners acknowledge that traditional office work patterns may never fully return to pre-pandemic norms. Instead, there is growing interest in mixed-use developments that combine office spaces with retail, residential, and hospitality components. The survey revealed that 68% of CRE professionals anticipate mixed-use properties to gain the most traction in 2025.
Hugh Allen, Head of U.S. Commercial Real Estate at TD Bank, noted, “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.”
Allen further emphasized that investors and commercial property owners are taking these changing expectations into account when planning new developments. Employers TD Bank Survey Reveals Optimism for 2025 Investments Driven by Commercial Property TD Bank Values are focusing on creating engaging environments that offer amenities such as in-office gyms, expanded break areas, and modern cafeterias to enhance the employee experience. This shift reflects a broader trend in commercial real estate where quality of space and workplace experience are becoming more critical than ever before.
Investment Outlook: Balancing Optimism and Caution
While many CRE professionals remain optimistic about investment opportunities, there are still factors that could influence the market’s trajectory. Rising material costs TD Bank remain a concern for many investors, with 70% of survey respondents expecting further increases in 2025. However, opinions differ on how this will impact the market:
- 38% believe that investment activity will continue despite rising costs.
- 32% expect higher material prices to hinder investment in new developments.
Additionally, the current interest rate environment is being perceived as the “new normal” by many in the industry. While there is hope for rate cuts, investors are preparing for sustained higher rates and making strategic adjustments to their portfolios accordingly.
“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,” Allen commented. “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.”
The Growing Role of Technology and Sustainability in CRE
As commercial real estate evolves, technology and sustainability initiatives are playing an increasingly important role in shaping the industry’s future. Many investors and developers are prioritizing technological advancements to optimize operations, enhance building efficiency, and improve overall asset value.
According to the survey:
- 60% of industry professionals expect predictive analytics to have the biggest technological impact on CRE in 2025.
- 32% believe smart building technologies will significantly influence the sector.
- 28% highlight efficiency and sustainability advancements as key drivers of change.
These insights align with broader trends in real estate, where data-driven decision-making and smart technology integration are becoming essential for competitive advantage. Predictive analytics, for instance, allows investors to make more informed decisions by leveraging data to forecast market trends, tenant behavior, and asset performance.
Allen remarked, “Technology will drive commercial real estate into its next era. 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.”
On the sustainability front, rising energy costs are pushing the industry toward greener solutions. More than half (55%) of CRE professionals believe that smart buildings and other technological advancements will be the most impactful sustainability trend in 2025. At the same time, policy changes at the federal level are creating uncertainty, with 30% of respondents citing government environmental protections as the most significant sustainability trend to watch.
Final Thoughts: A Market at a Crossroads
As 2025 unfolds, commercial real estate professionals find themselves at a crossroads. On one hand, there are considerable challenges to navigate, including economic uncertainties, evolving workplace dynamics, and regulatory shifts. On the other hand, declining property values, potential interest rate adjustments, and technological innovations present unique opportunities for those willing to adapt.
The findings from TD Bank’s survey highlight a cautious yet optimistic outlook among industry leaders. While some areas, such as office real estate, may still face hurdles, the increasing appeal of mixed-use developments, tech-driven efficiency, and strategic investments in high-value assets suggest that the market is moving toward a new era of resilience and innovation.
As Allen put it, “Navigating commercial real estate in 2025 will require adaptability, foresight, and a willingness to embrace change. Those who can effectively integrate technology, sustainability, and evolving tenant expectations into their investment strategies will be best positioned to succeed.”
Survey Methodology
This study was conducted at the Commercial Real Estate Finance Council (CREFC) Miami 2025 event from January 12-15, 2025. A total of 211 commercial real estate professionals participated in the survey, providing a comprehensive snapshot of industry sentiment and expectations for the year ahead.
