- Commercial real estate deal volume is up just 5% year-over-year as of Q3 2025, per Moody’s data shared with CNBC — a sharp slowdown from post-pandemic momentum.
- Despite overall sluggishness, large-scale transactions remain active, with 29 of the top 50 deals in September exceeding $100M.
- Office and open-air retail sectors — both previously underperforming — have emerged as bright spots amid a market marked by investor uncertainty.
- Hospitality saw the steepest drop, with hotel transaction value down 30% year-over-year in September, amid falling international and business travel.
CRE Slows in 2025 — But Not Everywhere
According to CNBC, commercial real estate dealmaking is cooling off in 2025 after a rebound in 2024, with transactions — including office deals — still well below pre-COVID levels. Moody’s data shows only a 5% year-over-year increase in total deal value through Q3, tracking the top 50 US property sales.
Economic uncertainty is weighing on investor sentiment, but deals are still happening — especially for high-quality assets.
Bigger Deals Still Getting Done
One trend defying the slowdown: a clear “flight to quality.” In September, the average deal size jumped to $12.7M, compared to a $11.2M average over the previous two years. Large-scale transactions are dominating, with third-quarter deals over $100M up 35% compared to 2024.
“This pause in overall growth reflects 2025’s uncertainty,” said Kevin Fagan, Head of CRE Capital Market Research at Moody’s. “But high-quality properties are still attracting capital, including from sovereign wealth funds.”
Office Shows Signs of Life
Once written off by many, the office sector showed new strength. Tech giants led the charge in September:
- Apple acquired a Sunnyvale office portfolio for $365M
- Nvidia purchased a Santa Clara building for $83M
- MetLife scored a 39% discount on a Newport Beach office deal
Deep discounts are drawing buyers back, with large corporations seizing the opportunity to consolidate real estate holdings at a bargain.
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Open-Air Retail Makes a Comeback
Another outperformer: open-air retail. Investors including Nuveen, Tanger, InvenTrust Properties, and MCB Real Estate poured nearly $500M into retail centers in September — primarily strip malls anchored by restaurants and essential services.
Nuveen’s Chad Phillips cited strong total returns and low replacement costs as key drivers behind the firm’s retail strategy, calling it a “resilient, essential real estate need.”
Hospitality Takes a Hit
Hotels were the month’s weakest sector. Deal value plunged 30% in September from a year earlier, driven by reduced business and international travel. Investors and lenders appear to be avoiding the space as companies trim travel budgets.
Why It Matters
Even in a cooling market, certain commercial real estate sectors are gaining ground. Office and retail assets — especially those offering discounts or essential services — are drawing strategic investments, suggesting that investors are selectively optimistic.
What’s Next
Expect continued bifurcation in the market. While overall volume may stay muted, premium and opportunistic buys — particularly in the office and retail sectors — will likely dominate activity heading into 2026.
