Real estate’s great wealth transfer will arrive in 2025 — and most firms aren’t ready

The largest transfer of generational wealth in commercial real estate history is coming in 2025. This isn’t hyperbole — it’s a fundamental shift that will reshape how deals get done, who wins them and what organizations need to survive.

Commercial real estate transactions have been stagnant for two years, with uncertainty around elections, interest rates and tax policy keeping many players on the sidelines. But 2025 will likely see a surge in activity that most organizations aren’t prepared to handle.

The new rules of engagement

Family offices have quietly dominated transactions through this period of uncertainty, leaning on deep balance sheets and established banking relationships to close deals while others struggle to get financing. Family offices have been around forever, but you may be just now noticing them because they’re more active.

For the past decade, commercial real estate operated on a simple model: Access cheap capital, execute quick improvements, refinance the property to take out equity and collect rents. That playbook is now stale, creating an opportunity for family offices to reshape how deals get done.

While traditional players are constrained by short-term pressures and shareholder expectations, family offices are taking on longer-term investment horizons — often 10 years or more — giving them a significant competitive advantage in an environment where traditional deal structures no longer pencil out.

Price discovery has been challenging because sellers weren’t motivated unless properties were distressed. Now, with the potential for more bullish Federal policy and favorable tax legislation, we’re likely to see significant inventory hit the market at favorable pricing.

This freedom comes with a challenge: Many of these family offices lack operational and leadership leverage capable of scaling complex real estate portfolios. It’s not just about finding someone to handle transactions. These organizations need sophisticated infrastructure to identify opportunities, analyze assets and execute deals efficiently. The talent shortage is particularly acute in asset management, where finding qualified professionals who can handle complex portfolios has become more difficult.

Building for the future

The solution won’t be simply hiring more staff or implementing new technology. While data analytics tools have become crucial for speed to market, successful organizations are focusing on optimizing what they already have.

If a back office runs with 10 or fewer employees it will need to augment its operations by outsourcing operations and embracing strategic partnerships, rather than investing fully in internal infrastructure. Consider a family office that manages $100 million in assets where the president serves as both chief investment officer and CFO. This lean operation needs to consider outsourcing and implementing technology solutions as part of its productivity strategies.

Organizations have spent the last 12 months planning because of market uncertainty and a lack of tangible deal flow. Now, with the potential for more clarity around tax policy and interest rates, those who’ve prepared can move quickly when opportunities arise. The IRS has announced that the lifetime estate and gift tax exemption will increase in 2025, under current law, but will be decreased by half at the start of 2026, creating urgency around wealth transfer planning.

The organizations that succeed in this transformed landscape will be those that can adapt quickly while maintaining the fundamentals that drive real estate success. This means:

• Building sophisticated operations without sacrificing speed.
• Maintaining a relationship-focused approach.
• Developing strong strategic partnerships.
• Optimizing existing technology infrastructure.
• Maintaining flexibility for longer investment horizons.

For family offices sitting on generational wealth, 2025 presents a rare opportunity to reshape their operations for long-term success. For everyone else, it’s a wake-up call to fundamentally rethink how they approach the market.

We’re likely to see more generational wealth transfer in commercial real estate in the next 12 months than we’ve seen in the past 20 years. Instead of deciding if they should adapt, they’ll need to decide how quickly they can build the infrastructure needed to compete in this transformed landscape.

Essential steps for 2025

Success in this market will require organizations to focus on the following:

• Speed to market and operational efficiency: This might mean not having a full-time CFO but rather using outsourced expertise to augment what you already have.
• Infrastructure for asset identification: Getting the most out of your current technology tools rather than implementing new solutions you can’t fully use.
• Strategic partnerships: Finding the right mix of internal talent and external support to maintain lean operations while scaling capabilities.
• Resource planning: Understanding how water and energy access might impact asset values and development opportunities in different markets.
• Transition planning: Formulating a plan, understanding the options and barriers and collaborating with advisors early in 2025 to navigate estate tax changes and wealth transfer strategies.

How Wipfli can help

In 2025, real estate organizations must balance generational wealth transfer with operational transformation while building sustainable, scalable businesses. Success will require both deep industry expertise and strategic innovation.

Wipfli can help. Our experience in the real estate industry combined with our advisory solutions can help organizations optimize their operational infrastructure, implement effective technology solutions, develop comprehensive transition plans and create strategic partnerships that drive growth. We focus on practical solutions that enhance organizational efficiency and long-term asset value. Learn more about our real estate services.