- CRE lending surged, with CBRE’s Lending Momentum Index up 45% YoY in Q2 2025, led by alternative lenders and debt funds.rn
- After sharp increases in 2022, RERC cap rates held stable across most property types, with modest compression in data centers, industrial Ru0026D, regional malls, and student housing.rn
- SitusAMC’s quarterly survey shows stronger preference for CRE relative to bonds and cash, with investors citing the sector’s “safe haven” appeal despite volatility from tariffs and inflation.rn
- June was 2025’s most active month to date with $38B in volume, but transactions remain 16% below last year and 20% under the 8-year average. Retail, multifamily, and industrial led gains, while office and hotel lagged.rnrnrn
A Slow Shift Beneath the Surface
The cre market may still feel “stuck” to many investors, but the latest data from SitusAMC suggests movement is underway. With the 10-year Treasury yield hovering between 4.2% and 4.4% this summer, financing costs remain elevated but stable. Debt fund activity surged nearly 90% QoQ, making alternative lenders the largest source of non-agency originations at 34% of the market—up from less than 20% just five years ago.
Returns Turning the Corner
After a prolonged downturn, CRE returns are back in positive territory. The NCREIF NPI recorded one-year trailing returns of 4.2%, the strongest since late 2022. Apartments logged their fifth consecutive quarter of appreciation, while retail outperformed with 1.9% quarterly returns, the highest among major property types.
Industrial remains resilient long-term but posted its weakest performance in four years, while office continued its slide, with occupancy below 80% for a fifth straight quarter. Hotels, weighed down by weaker international tourism, saw the sharpest drop in fundamentals with RevPAR declining to its lowest level in over a year.
Transaction Volume: Retail Stands Out
Deal activity in June highlighted a bifurcated market:
- Retail: $6B in trades (+34% MoM), the only property type above its long-term average.
- Apartments: $12.5B (+23% MoM), supported by portfolio sales.
- Industrial: $8.5B (+10% MoM), maintaining investor appeal despite slower rent growth.
- Office: $5.5B (–18% MoM), now 40% below its LTA, with only 9% of surveyed investors favoring the segment.
- Hotels: $1.5B (–47% MoM), reflecting deep investor skepticism.
What’s Next
While overall cre prices remain flat, stability in cap rates and dry powder waiting on the sidelines suggest the market could be positioned for a stronger rebound in 2026. Investors in SitusAMC’s survey overwhelmingly recommended a “hold” strategy across property types, with selective interest in multifamily, student housing, and neighborhood retail.
As one institutional investor put it: “With low deal flow over the past several years, investors want to invest and lenders want to lend.”
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