The annual State of the Industry address at the BOMA International Conference & Expo is “insightful, informative and always entertaining,” said Manny Moreno, BOMA’s 2024-2025 chair, prefacing the address at the 2024 show.
2024’s address was not only a chance to learn about industry trends—it was also the last State of the Industry address for Henry Chamberlain, outgoing president and chief operating officer of BOMA International. Chamberlain has led the organization for nearly 23 years and has been a staff member of BOMA International for 39 years; at the end of 2024, he’ll be succeeded by Mary Lue Peck, who’s currently senior vice president for BOMA International and will become the organization’s first female president and COO.
Chamberlain and Peck delivered the address together, covering the top trends in the industry and the outlook for the next few years.
Top Trends in Commercial Real Estate
The office sector is “holding it together better than people thought it was going to,” Chamberlain explained. “There is office distress out there, but it’s being managed for the most part.” Owners of office buildings are discovering that getting people back into buildings is about creating the spaces people want to be in, especially lounge space. “Nineteen percent of office space now is lounge space—places where people can spread out,” Chamberlain said. “People want that flexibility.”
Flexibility is the key word with office, Chamberlain added—it’s “something we have to build into the future of real estate.”
Industrial real estate continues to perform strongly, with rents nationwide exceeding $8 per square foot, Chamberlain added.
Health and wellness continue to be important to tenants and their employees, he said. “Active design was a big conversation five to 10 years ago,” Chamberlain explained. “Bringing in the gyms, having showers, tying into bike trails—and it dovetails with mental health.” He namechecked Sunday keynote speaker Michael Smerconish, who spoke about the need to mingle with many different types of people. “The fact is, there’s a mental health issue out there,” Chamberlain said. “Health and wellness is an important part of what’s going on around us.”
Adaptive reuse, in which an older or historic property is transformed for a different use, is still a small part of the market. “For the most part, office conversions don’t pencil,” Chamberlain explained about the push to turn underutilized office buildings into multifamily residential units. It can make financial sense to turn office buildings into other types of buildings, but multifamily conversions can be tough to make work. “Adaptive reuse is going to take longer to play out, but we certainly have to remake the industry and reimagine what’s going on across all the different markets out there,” he said.
Reinventing Our Communities
Peck spoke about the concept of 15-minute cities—walkable destinations in which all of the major necessities, from churches to grocery stores, can be reached on foot in 15 minutes or less. “Since the pandemic, more cities and consumers are shifting toward this concept,” Peck said. “Properties in walkable communities often command premiums of 40 to 100%, and 60% of individuals who work in walkable communities rate their quality of life as excellent compared to those who live in less walkable areas.” Walkable communities also decrease obesity-related medical costs significantly, Peck added.
Look no further than host city Philadelphia to discover the benefits of the 15-minute city, Peck said. She highlighted two buildings that are highly connected to their neighbors. The Cira Center combines urban convenience with high-quality amenities, including a restaurant, meeting event space, a fitness center and tenant touchdown lounges. “Coming into the office feels like you’re going to a destination,” Peck said.
Philadelphia’s Comcast Center is also highly amenitized, with a high-tech lobby featuring one of the largest screens in the world. “The lobby is full of dynamic public spaces that engage the tenants and visitors alike,” Peck explained. “It’s primarily office, but it also integrates retail, restaurants, a hotel—the Four Seasons—and public areas, embracing its neighbors and connecting its tenants to everything around them. By incorporating cutting-edge technology, this building is a model for the integration of digital infrastructure.”
This digital transformation is continuing at a frenetic pace, Peck continued. “Proptech is already widely established within the commercial real estate industry, which paves the way for substantial AI implementation. Many buildings and companies are already using AI-powered software, whether it’s in tenant apps or workplace solutions. A lot of buildings are using predictive maintenance, where sensors predict structural or equipment failures while AI optimizes things like your HVAC system or overall energy management.” In the future, building owners and managers could use digital twins—virtual models of buildings that simulate behavior and model operations—to test out decarbonization strategies or model the effects of potential natural disasters, Peck added.
“A lot of this emerging technology has yet to scale,” she said. “However, it holds significant promise for the future. And, as Henry always says, it’s incumbent upon us to be students of the industry. As this technology gets more adopted, the cost is going to come down, while demand is going to rapidly increase. Buildings are on a journey to digitally connect their workforce, their workplace and their assets, and they’re looking to property owners and managers to support them.”
It's easier than ever to be a student of the industry, Chamberlain added. The integration of BOMI into BOMA International puts career education and training at a property professional’s fingertips, and conferences like this one let attendees not only network, but problem-solve together.
“The fact is, we all need to learn from each other and figure out what’s going on,” Chamberlain said. “That’s how we’re going to reimagine and reinvent. The future is bright. We’ve been through a tough time, but things are going to get better.”
