Commercial Real Estate: 2025 Deal Volume Rises, But Remains Below Pre-Pandemic Levels
The U.S. Commercial real estate market demonstrated a degree of stabilization in 2025, despite a 20% year-over-year drop in deal volume during December. While December marked the second consecutive month of decline, the full-year picture reveals a 17% increase in total deal volume compared to 2024, though still lagging 30% behind pre-pandemic levels in 2019.
A Year of Resilience
According to data provided by Moody’s, the market navigated economic headwinds, policy uncertainty, substantial loan maturities, and elevated interest rates throughout the year. Kevin Fagan, head of CRE capital market research at Moody’s, described 2025 as a period of “steady, albeit decelerating, climb toward stabilization.”
Sector Performance
The office and multifamily sectors led the recovery. Office deal volume increased by 21% compared to 2024, fueled by return-to-office initiatives and growth in AI-related employment. However, investor interest remained concentrated on Class A properties. Multifamily deals, despite declining occupancy and rent, saw a 24% increase in volume, benefiting from higher mortgage rates that kept potential homebuyers in the rental market.
Retail also experienced a healthy 19% gain, with grocery-anchored and necessity-based centers proving resilient against e-commerce pressures. According to Fagan, retail has “officially re-entered the conversation as a durable, investment-grade asset class.”
Deal Sizes and Trends
Larger deals—those exceeding $100 million—saw a 23% increase, though they remain at half of 2019 levels. Smaller deals, under $5 million, surpassed 2019 volume by 4%, driven by activity from private capital and individual investors. Deals between $5 million and $15 million were 12% below 2019 levels, while those between $15 million and $100 million continued to struggle due to financing challenges.
Beyond the core five sectors (multifamily, office, industrial, retail, and hotel), alternative investments like healthcare properties, data centers, and student housing gained traction. The demand for data infrastructure was particularly notable, exemplified by a $615 million land deal in northern Virginia for data center development.
Corporate Investment
Corporate owner-occupiers, particularly tech companies like Amazon, Apple, and Microsoft, increased their investments in commercial real estate. Apple, specifically, deployed over $1.1 billion in California’s Santa Clara County, acquiring office buildings and R&D campuses. This activity reflects a strategy of securing long-term operational space while capitalizing on price adjustments in the Silicon Valley office market.
The market also saw a portfolio rebalancing, with institutional investors selling multi-tenant properties to private equity firms, who are now actively deploying capital.
Looking ahead, market participants anticipate potential benefits from a more accommodating Federal Reserve and possible tax cuts. However, with interest rates unlikely to fall dramatically, 2026 is expected to see a moderate continuation of the current momentum rather than a return to the era of exceptionally low capital costs.
Frequently Asked Questions
What happened to commercial real estate deal volume in December 2025?
Commercial real estate deal volume dropped 20% in December 2025 compared to the same month in the previous year.
Which sectors led the recovery in commercial real estate in 2025?
The office and multifamily sectors led the recovery, with office deal volume up 21% and multifamily up 24% compared to 2024.
What is the outlook for commercial real estate in 2026?
The outlook for 2026 is a moderate acceleration of the current momentum, rather than a return to the era of ultracheap capital, according to Moody’s.
As commercial real estate navigates a shifting landscape, what role will evolving workplace trends and technological advancements play in shaping future investment strategies?