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By Partner Valuation Advisors Eric Enloe
After years of navigating economic uncertainty, CEOs are finally signaling a shift—from cautious optimism to a more confident stance on the business environment. The latest Conference Board Measure of CEO Confidence, in collaboration with The Business Council, surged by nine points in Q1 2025 to reach 60, the highest level in three years. For the first time since early 2022, sentiment has decisively tilted toward optimism, suggesting that business leaders see tangible improvement in economic conditions and are increasingly willing to invest.
This renewed confidence has meaningful implications for commercial real estate, influencing everything from capital deployment to workforce strategies and risk perception.
The Q1 survey, fielded from late January through mid-February, highlights a broad-based improvement in CEO sentiment. CEOs reported a far more positive assessment of both general economic conditions and their own industries compared to the previous quarter. Notably:
In CRE, this matters. Institutional capital flows and corporate expansion plans closely track executive confidence. A more bullish C-suite translates into increased leasing, hiring, and investment—all of which support market stability and growth.
One of the most encouraging takeaways from the survey is the increase in CEOs planning to expand capital expenditures. While the majority (54%) plan to hold spending steady, the share of CEOs increasing investment climbed to 33%, up from 25% in Q4 2024. This pivot suggests that businesses are re-engaging in strategic growth initiatives—whether through expansion, technological upgrades, or real estate commitments.
For CRE investors and developers, this shift is critical. Industrial and office landlords, in particular, should take note, as rising capital investment often translates into greater demand for corporate facilities, logistics infrastructure, and headquarters expansions.
Yet, even as spending plans rise, workforce expansion is showing signs of moderation. While 73% of CEOs plan to maintain or grow their workforce, the percentage expecting to actively expand hiring fell from 40% to 32% quarter-over-quarter. At the same time, wage pressures remain: 71% of CEOs plan salary increases of 3% or more, a figure that continues to edge upward.
For office landlords, this suggests stable, albeit measured, demand for space as companies cautiously recalibrate their workplace strategies. While hybrid work remains dominant, the survey also underscores a continued CEO preference for bringing employees back to the office, with a notable shift toward three-to-four days in-person or a fully in-office model. While full-office reoccupation remains elusive, prime assets in key markets may see a gradual recovery.
The survey also reveals a declining perception of business risks, including cyber threats, regulatory uncertainty, and supply chain disruptions. However, geopolitical instability stands out as the one rising concern, with 55% of CEOs now citing it as a high-impact risk, up from 52% in Q4. Another factor to consider is tariffs. While there are potential short-term negative impacts from the tariffs, that noise could eventually turn into a positive impact in the long term.
For real estate investors, this means less volatility in operational risk factors but continued uncertainty in global supply chains, interest rate policies, and capital flows. Industrial and logistics investors should remain particularly attuned to how geopolitical shifts could impact trade flows, reshoring trends, and supply chain resiliency strategies.
The sharp rise in CEO confidence is an encouraging signal for commercial real estate. While workforce expansion is stabilizing, the increase in capital investment signals a renewed appetite for long-term business commitments, which should benefit leasing activity and capital markets.
However, CRE professionals should remain pragmatic. The market is still recalibrating from years of disruption, and while confidence is up, cautious execution remains the prevailing mindset. Investors and operators who align their strategies with corporate capital deployment trends, workforce shifts, and risk mitigation efforts will be best positioned to capture the upside of this renewed optimism.
As 2025 unfolds, the question is no longer whether businesses are confident, but how they will act on that confidence. The answer to that will shape the next cycle of commercial real estate investment and development.
Eric Enloe, MAI, CRE, FRICS, Senior Managing Director, Partner Valuation Advisors, directs valuation and consulting engagements related to a wide variety of property types for national institutional assets and portfolios. His broad range of experience in valuation and analysis includes retail, office, industrial, multi-family, development land, manufactured housing, regional malls, hotels, self-storage, and educational facilities.
