State of the Industry: Commercial Real Estate’s Evolution (BOMA 2025)

“The past few years have challenged our assumptions, but they’ve made one thing abundantly clear—our industry is recalibrating,” said Mary Lue Peck, BOMA International’s president and chief operating officer, in her highly anticipated State of the Industry address at the 2025 BOMA International Conference & Expo.

The past several years have been difficult ones in CRE, to put it simply. But the industry is showing signs of recovery, Peck noted:

• “Capital markets are still tight, with many players on the sidelines, but what’s key is that they’re not withdrawing, they’re simply delaying,” Peck said. “We expect to see increased transactions in the latter half of this year as we gain clarity around trade policy, inflation, and interest rates.”
• Overall transaction volume was up 11.3% year-over-year in the first quarter of 2025, signaling recovery. However, “it’s a divergent market, with industrial and multifamily leading the way, while office volume dropped about 18%,” Peck explained. “Cap rates are resetting, with office the highest at about 7.7 and industrial remains the lowest at 6.4. After two years of decline, property values are starting to climb again.”
• Central business districts (CBDs) are struggling and construction is down significantly. “This sector is in the middle of a long transformation,” Peck said. “It will not be painless. It’s not happening as fast as we’d like it to happen, but it is happening.”
• Industrial is evolving from pure logistics to things like advanced manufacturing and data centers. Trade policy is a “wildcard” that may create short-term volatility here, Peck said; however, the long-term outlook for industrial remains strong and solid.

Peck also noted that despite the Trump Administration’s dramatic policy shifts in trade, 44% of foreign investors plan to increase their holdings this year. However, they’re not doing so without some specific requirements for the buildings they plan to invest in.

“These investors are prioritizing sustainability and digitalization—95% of respondents said that energy use and management played a key factor in determining whether they will or won’t invest in a property, and 59% of respondents are using AI in their daily operations,” Peck said. “They’re looking to invest in properties that deliver efficiency, intelligence, sustainability, and flexibility.”

The Evolving Workplace

Flexibility isn’t just key for investors, Peck added—workers need it too. Gensler’s Global Workplace Survey 2025 found that employees want to be in the office more often than they are, but the study also found that 74% of workers believe their workplace, as currently designed, is an impediment to them doing their best work.

“That’s not just a design problem, that’s a retention problem,” Peck said. “That’s a ‘getting people back to the office’ problem.” Workplaces need to evolve beyond pure functionality with four walls, cubicles, and lockers, she added. Workspaces need to include natural light, flex space, and multipurpose rooms.

“That’s the power of our industry,” Peck said. “We’re already seeing the future of workplace design take shape in many forms.”

Overcoming the Generational Divide

“Just as our buildings are evolving, our approach to talent management and workforce strategy needs to evolve,” Peck said. “As I’m speaking with industry leaders, their No. 1 challenge remains attracting, developing, and retaining workforce. The demographic reality is this—based on our current models and current approach, we will not have enough workers to fill all of the roles we need. AI and automation will be part of the solution, but it’s not the full solution.”

The performance management system is still based on the values of the Silent Generation, born between 1928 and 1945, Peck noted. This generation was deeply shaped by the Great Depression and World War II. “In the workplace, they respected authority, seniority, and traditional hierarchy,” Peck explained. “They believed perks should follow tenure. Private offices were a reward for loyalty.”

Baby Boomers grew up in a time of prosperity, but also social upheaval, with the Vietnam War, the civil rights movement, and Watergate as defining moments. Like the Silent Generation, Baby Boomers tend to value loyalty, job stability, seniority, and traditional hierarchies, Peck said. But the ensuing generations view the workplace—and the nature of work—differently.

Generation X “was forged in an era of uncertainty,” Peck said. This generation is deeply pragmatic, self-reliant, and adaptable. “This generation was also the first to seriously question whether career success had to come at the expense of your personal and family life,” Peck said. “In the workplace, Gen X brings an entrepreneurial and informal mindset. They focus on result and efficiency, not on hierarchy, seniority, or bureaucracy. It’s function, not form. This generation will quickly leave the workplace if it doesn’t meet their expectations for autonomy, flexibility, and diversity.”

“Millennials grew up with the internet, 9/11, and Columbine,” Peck said. “They were the first digital natives, and when entering the workforce, they were branded entitled, lazy, unproductive, unmotivated. In reality, they simply worked differently. They harnessed technology in ways prior generations had never seen, and they took that and significantly boosted productivity.” Millennials demand purpose from their job and surround themselves with organizations that align with their values, Peck added. This generation is motivated by the relationship and the competence of their direct supervisor, not just the company. They also crave responsibility and unique work experiences, and they expect continuous feedback.

Generation Z has never known a world without smartphones or social media, Peck said. “They’ve lived through economic turmoil, a global pandemic, and now a rapidly changing world being shaped by AI and automation,” Peck explained. “Like the generations that came before them, prior generations are dismissing them. We hear they’re too reliant on technology, they’re too sensitive, they’re not willing to work hard—but that’s not what the data shows. Gen Z is incredibly hard-working.” This generation values instant feedback, authenticity, transparency, and flexibility, and if their company won’t invest in them, they’ll leave and go to a company that will, Peck said.

“We’re managing through distinct value sets, and we’re doing it with systems and structures that are based on a generation that’s no longer participating in the workforce,” Peck explained. “We need to recalibrate, reorganize work, and manage differently. Manage the outcome, not just activities or time in the office. Offer shorter meetings more frequently. Allow for opportunities to give that constant feedback.”

Investing in the workforce with professional development is crucial to finding and keeping people in the roles commercial real estate needs to fill, Peck said. “Or, we can build job roles with the expectation that we’re going to have turnover every eight to 15 months,” she added. “One or the other.”

“Where are we headed?” Peck concluded. “The market is starting to stabilize, economic conditions are improving, technology is advancing, and the next generation is gearing up to lead. Let’s lean into the complexity, embrace the transformation, and build a commercial real estate industry that doesn’t just recover, but redefines what’s possible.”