An upturn in all commercial real estate sectors, including industrial? That’s what PwC and the Urban Land Institute are predicting in their Emerging Trends in Real Estate 2025 report.

The report points to the Federal Reserve Board’s decision to start lowering interest rates last year. This move should spur an increase in commercial real estate transactions in 2025, according to PwC’s and the Urban Land Institute’s report.

To create their report, the two organizations personally interviewed more than 450 commercial real estate industry experts, including investors, lenders, brokers, advisors and consultants. The Emerging Trends in Real Estate Report also includes survey responses from almost 1,600 people.

As a sign of the optimistic tone of this year’s survey, 65% of respondents rated the chance of their firms being profitable this year as “good” or “excellent.” That’s up from just 41.3% of respondents saying the same in 2024.

This doesn’t mean that 2025 won’t bring challenges. A total of 55% of respondents said that commercial real estate debt markets are still undersupplied for acquisition activity, while 58% said they were undersupplied for refinancing and 75% for development activity.

Respondents, though, were hopeful that economic conditions would continue to improve in 2025. A total of 49.9% of respondents said that they expected inflation to decrease this year, while an additional 1.8% said that they expected it to decrease significantly. A total of 38% of respondents said that they expected inflation to remain stable at current levels throughout this year.