M
arket consolidation is poised to accelerate in 2025, driven by a perfect storm of factors. Years of sluggish market growth and aggressive expansion by large corporations have set the stage for a year of significant mergers and acquisitions.
Behind the scenes, major deals are already being made. Compass's acquisition of Latter & Blum and @properties Christie's International Real Estate in 2024 were just the beginning. Howard Hanna's merger with Home Experts Realty is another example of the trend.
Industry experts predict that 2025 will be a banner year for M&A, citing several reasons. A slow market has put pressure on smaller companies, forcing them to consider selling or merging. Larger companies like Compass have managed to grow despite the challenges, and are now looking to expand through acquisitions.
However, not all brokerage leaders are focused on M&A. Inman's latest survey found that nearly 47% of respondents didn't prioritize M&A, while only 8% saw it as a major priority. But when asked about M&A in 12 months, the numbers were similar, with 36% saying it was "not on their radar" and another 16% selecting two.
Despite this, experts predict significant M&A activity in the coming months. Private equity companies are sitting on enormous cash reserves, waiting for opportunities to deploy them. Capital markets may also provide more funding to strong companies, enabling them to acquire weaker ones.
Brokers are most interested in making acquisitions, with 48% of respondents saying their leadership teams would consider acquiring a competitor in their market this year. Only 23% indicated they would be open to selling.
The strongest companies will likely survive and thrive, while those struggling to adapt to the new normal may become acquisition targets. "On the outside, they may not look like they're struggling, but they likely are," said Chris Heller, president of OJO/movoto.com.
Proptech firms may also be impacted by M&A activity in 2025. With many startups struggling to find profitability, some may merge with other companies or be acquired at fire-sale prices. Others may have good products but struggle with revenue growth, making them attractive acquisition targets for larger companies seeking to expand their customer base or product lines.
Inman's survey methodology notes that the results reflect the opinions of the engaged Inman community, which may not always match those of the broader real estate industry. The survey was conducted from January 21 to February 4, 2025, and received 652 responses from a rotating, randomized selection of community members.
