CRE Transactions Rebound in Q3 2025

Monetary Policy and Capital Market Context

Atlus Group reports that the Federal Reserve’s 25-basis point rate cut in September—the first of 2025—sparked broad-based optimism across capital markets. Investors welcomed signs of economic resilience, progress in disinflation, and AI-driven growth. Credit spreads narrowed, equity indices reached record highs, and bond issuance spiked, setting the stage for a rebound in CRE transactions.

National CRE Transaction Trends

• Total volume: $150.6B, up 23.7% QoQ and 25.1% YoY
• Transaction count: 45,893 properties, a 12.6% quarterly and 6.8% annual increase
• YTD volume: $265B across 93,000 properties—outpacing both 2023 and 2024

Multifamily led the surge, with 51.1% YoY growth, accounting for 34% of single-asset dollar volume. Industrial (+26.5%), office (+28.0%), and general commercial (+48.9%) also outperformed. Hospitality remained the only major sector in decline, down 11.9% YoY.

Pricing Trends: Post-Pandemic Highs

Median price PSF rose across nearly all subsectors:

• Multifamily: $144/SF, +17% YoY
• Industrial: $105/SF, +14% YoY
• Office: $135/SF, +15% YoY
• Storage: +8% QoQ, +17% YoY — sector leader
• Automotive: +5% QoQ, +19% YoY — strongest annual subsector gain

Only bars/restaurants (-2.4%) and big-box retail (-2.8%) posted quarterly declines. Deal size and building size also expanded, signaling greater investor appetite for larger, high-quality assets.

Market Dynamics by Sector

Multifamily:

• Highest transaction volume, +51.1% YoY
• Median pricing up 17.3% YoY
• Deal sizes jumped 27.3% YoY, with a focus on institutional-grade assets

Industrial:

• Continued steady growth, +26.5% YoY
• Storage was the standout subsector
• Demand remains high for last-mile and logistics facilities

Office:

• Showing early signs of selective recovery
• Medical office remains a premium asset class
• Median deal sizes +23.8% YoY

Retail:

• Mixed performance; automotive strong, big-box weak
• Overall pricing up 12.5% YoY
• Investor focus shifting to necessity-based and experiential formats

Hospitality:

• Weakest major sector but stabilizing
• Full-service hotels saw 5.2% QoQ pricing growth
• Transaction size and building size increased, favoring high-end assets.

Regional Performance and MSA Highlights

Southern markets dominated:

• Texas, Florida, and Carolinas far outpaced national averages
• Northeast corridor and Southern California underperformed

MSA standouts:

• Miami office: +32.7% YoY
• Los Angeles: broad sector price declines, e.g., office (-27.3%)
• Washington D.C.: diverging trends with office up (+22.5%) but multifamily down (-30.4%), reflecting how slowing deliveries in some markets are now beginning to influence pricing dynamics and investor positioning in multifamily
• Chicago, Atlanta, Dallas, and New York: gains across all major property types

Investor Sentiment and Capital Flow Trends

• Large deal activity surged to pre-2023 levels, signaling confidence from institutional buyers
• Median building sizes continued rising across sectors
• Financing conditions improved: CMBS issuance rebounded, bank lending picked up, and Fed surveys reported looser credit standards
• REITs and brokerage firms reported increased deal flow and improved outlooks on Q3 earnings calls.

Looking Ahead: Q4 and 2026

Q3 2025 stands out as a potential turning point for CRE markets:

• Strongest Q2-to-Q3 transaction volume growth since 2021
• Historically, Q4 tends to outperform Q3—72% of the time over the last 25 years
• Market momentum suggests a strong finish to 2025, with growing alignment between buyers and sellers.

The Takeaway

Easing monetary policy, improved capital access, and renewed investor appetite point to a durable commercial real estate recovery heading into 2026.