KPMG Survey: Boston Business Leaders Eye Strategic Investments in Real Estate and Talent in 2025

NEW YORK, Feb. 18 – Expansion is on the horizon for business in Boston, as leaders express plans to invest in talent, tech, and real estate in 2025 according to a new study released today by KPMG LLP, the U.S. audit, tax, and advisory firm.

The KPMG 2025 Perspectives: Local Insights from Boston report reveals the region is well on-track for growth this year. Optimism towards local growth is driving investments, with 72% of organizations planning to grow their commercial real estate footprint over the next 12-18 months, 85% planning to expand their workforce, and 87% planning to make a strategic deal at some point in 2025. To meet the demand of this expansion and retain top-tier talent, businesses are looking at creative solutions like prioritizing AI implementation (85%) and offering alternative work schedules.  

“Industry optimism matched with a strong workforce is what’s fueling growth here in Boston,” John Capone, KPMG's New England and Upstate New York Managing Partner. “However, business leaders must remain vigilant over wavering economic conditions and make strategic plans to change course, if necessary.”

The KPMG 2025 Perspectives: Local Insights from Boston report surveyed 100 business leaders (54% C-suite; all VP-level and above) at companies with annual revenues of more than $50 million on the key challenges and opportunities in driving business growth in the city. Key findings are highlighted below.

Boston business leaders are confident in the growth prospects for their companies against a backdrop of challenging economic and market conditions.

"Boston’s business outlook is exceptionally strong and leaders are backing this optimism with action," said John Capone, KPMG's New England and Upstate New York Managing Partner. "Boosting headcount and expanding generative AI functions are top growth priorities in 2025."

• Boston business leaders are confident in the growth prospects for their country (73%), their industry (93%), city (92%) and state (90%) over the next three years.
• Issues top of mind for their businesses reveal the impact of increased disruption and the challenges of navigating long-term structural change.
  • The top three issues included: economic and market conditions (66%), AI or GenAI implementation (41%) and, cybersecurity (24%).
• 85% of business leaders plan to increase their headcount in 2025.
• 72% plan to increase their commercial real estate footprint in the next 12-18 months and only 6% have plans to decrease their footprint.
• 85% say the provisions set to expire at the end of 2025 from the Tax Cuts and Jobs Act (TCJA) will have a moderallte to high impact to their overall organization.
• 97% believe Boston is well-positioned to attract talent and new businesses, including startups, in the next 12-18 months.        

Business leaders in Boston eyed strategic, transformational M&A deals – with the overwhelming majority planning to do so in 2025. 

"Coming into the year, business leaders were preparing to jumpstart transformative M&A deals in Boston’s business environment, with most business leaders planning to make strategic moves this year, reflecting a strong commitment to innovation," says Janessa Howarth, KPMG’s Deal Advisory Partner.  

• 75% planning strategic transformation deals, 54% joint ventures, 49% minority investments.
• 60% plan to pursue deal making in the first half of 2025, 27% said the second half of 2025.

GenAI is a top investment priority as Boston business leaders predict AI will have a significant impact on their organization; they also are increasing their investments in cybersecurity to protect their operations and intellectual property from AI threats.

“AI’s rapid adoption is amplifying transformation, across the enterprise,” said Kevin Bolen, KPMG’s New England Principal and Head of Planning and Investments. "Upskilling employees is central to sustainable growth and leaders are doubling down to equip their workforces with future-ready skills.”

• Today, 81% of Boston businesses believe AI will impact their organization compared to 75% one year ago.
• 85% report that despite ongoing economic uncertainty, generative AI is a top investment priority for their organization.
• 79% say the integration of generative AI has made them rethink the skills required for entry-level roles.
• 57% express concern regarding the impact of generative AI on company culture.
• 89% are confident their organization can access suitable cybersecurity talent and solutions to defend against AI threats.
• 90% of organizations are increasing investments in cybersecurity to protect operations and intellectual property from AI threats.

With employee engagement a top challenge, business leaders are open to alternate work arrangements including 4-day work weeks.

"Business leaders are trying new playbooks to retain and attract top talent with alternative work schedules emerging as part of the solution," said John Capone, KPMG's New England and Upstate New York Managing Partner. "By offering moderated work weeks and flexible hours, organizations are aligning themselves with the changing needs of their workforce while aiming to foster a more productive and satisfied workforce.”

• The greatest challenges business leaders in Boston anticipate in 2025 as it relates to their workforce are employee engagement (34%), recruiting and retaining top talent (33%), upskilling and reskilling initiatives (32%) and mental health and well-being (31%).
• 52% of business leaders say they are providing 32-hour work weeks today due to efficiencies gained by using AI. 
• To enhance their organization’s employee experience, said they would consider a 4-day, 32-hour work week (63%), a 4-day 40-hour work week (51%). 52% would consider a flex work schedule (employees work a set number of hours at a specific time with the remaining schedule flexible and at their discretion).
• 94% feel they have successfully optimized their organization's work arrangements (ie: hybrid, in-office full time, remote).
• 52% are trying to bring employees back to the office more frequently.
• Business leaders cite improved professional development and mentoring opportunities (77%), increased employee engagement and connectivity (75%) and increased productivity (73%) as the primary motivation for encouraging employees to return to the office.
• Despite strong feelings of having an optimal work model, 75% of organizations surveyed have made changes to their approach to work arrangements in the last 12 months (ie: hybrid, in-office full time, remote).
• As consumer needs change, employer benefits aim to mirror those needs, reflected by the fact that 35% of employers in Boston are offering GLP-1 coverage as a benefit.
• Boston leaders rate their talent pool significantly superior (91%) to other regions in the U.S.

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