December’s drop masked a year that still moved capital back into commercial real estate
Commercial real estate deal volume in the United States slid again in December, showing how far buyers, sellers and lenders still stood apart on price even after a year of renewed activity.
Moody’s data on the top 50 sales showed total dollar volume down 20% year over year, the second consecutive monthly decline, and left overall transactions roughly 30% below 2019 levels.
Yet 2025 as a whole still marked progress. Moody’s estimated full‑year deal volume ran 17% above 2024, a slower clip than the prior year’s 24% gain but enough to suggest that capital was edging back into the market rather than rushing for the exits.
“The US commercial real estate (CRE) market in 2025 was defined by a steady, albeit decelerating, climb toward stabilization,” said Kevin Fagan, head of CRE capital market research at Moody’s.
“The recovery proved resilient in the face of significant economic slowing, policy uncertainty, a massive loan maturity wall, and persistently high interest rates compared to three years ago.”
Leading that recovery were multifamily and, more surprisingly, office. Total office deal volume was up 21% on the year, concentrated in Class A and trophy assets even as vacancy remained elevated elsewhere.
Investors also returned to retail, where grocery‑anchored and necessity‑based centers helped lift deal volume 19% in 2025.
“Retail has officially re-entered the conversation as a durable, investment-grade asset class, with investors more focused on the usual underwriting nuances than potential functional obsolescence and a ‘retail apocalypse,’” Fagan said.
Office deals defied the gloom
The office rebound ran counter to the pandemic narrative that offices were finished, helped by stricter return‑to‑office policies and a hiring wave tied to AI and data‑center build‑outs.
Tech and corporate owner‑occupiers were among the most active buyers, with Apple alone deploying more than $1.1 billion in California’s Santa Clara County at prices marked down 20–30% from 2022 peaks.
“By purchasing these assets, Apple is securing its long-term operational footprint while capitalizing on a 20–30% pricing reset in the Silicon Valley office market compared to 2022 peaks,” Fagan said, noting that Microsoft made similar moves.
Capital markets recalibrated
Larger transactions over $100 million climbed 23% from 2024, but stayed at only half their 2019 level, while sub‑$5 million trades inched 4% above pre‑pandemic benchmarks as private capital stepped in.
Alternative sectors such as medical office portfolios, data centers and student housing also featured prominently in 2025’s biggest trades, reflecting how investors rebalanced away from more volatile assets.
Commercial and multifamily mortgage originations rose sharply through 2024 and into early 2025, even as confidence wavered, with multifamily, office and health‑care loans leading year‑over‑year growth and total CRE lending in 2024 rebounding 16% from the prior year, according to the Mortgage Bankers Association.
In October, Moody’s monthly data already showed the first year‑over‑year drop in almost two years, a sign of a pricing standoff rather than a clear downturn.
“More than an imminent downturn in the CRE capital markets, the slip to negative growth in October 2025 reflected the stalemate going on between buyers and sellers,” Fagan previously said.
“The bottom of the U-shaped recovery from 2023 low volumes had been lengthened by persistently high interest rates and policy and economic uncertainty of 2025.”
Looking ahead, Fagan said most participants remain cautiously optimistic: “Market participants are largely optimistic, anticipating tail winds from a more dovish Federal Reserve under an incoming chair and fiscal lifts from potential tax cuts. However, with interest rates unlikely to drop precipitously, 2026 is expected to see a moderate acceleration of current momentum rather than a return to the era of ultracheap capital.”
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