The headquarters of Moody’s Corp. in New York on August 27, 2024.
Jeenah Moon | Bloomberg | Getty Images
A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for real estate investors, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future issues straight to your inbox.
Commercial real estate transaction volume fell for the second month in a row in December, but full-year figures show some progress that could potentially provide some much-needed momentum this year.
According to monthly data provided by Moody’s as an exclusive to CNBC’s Property Play, total deal dollar volume fell 20% year-over-year in December. It tracks the 50 largest commercial real estate sales in the U.S. across the core segments of multifamily, office, industrial, retail and hotel.
For all of 2025, transaction volume was 17% higher compared to 2024, healthy growth but lower than the 24% annual growth the previous year and still 30% below the pre-pandemic 2019 benchmark.
“The U.S. commercial real estate (CRE) market in 2025 was characterized by a steady, albeit slowing, climb toward stabilization,” said Kevin Fagan, head of CRE capital markets research at Moody’s. “The recovery proved resilient given the significant economic slowdown, political uncertainty, a massive credit maturity hurdle and persistently high interest rates compared to three years ago.”
Get Property Play straight to your inbox
CNBC’s Property Play with Diana Olick covers new and evolving opportunities for real estate investors, delivered weekly to your inbox.
Sign up here to get access today.
At the top of the landscape were the multifamily and office sectors. The rebound in office has increased as return-to-office orders and a boom in AI employment counter the pandemic-driven narrative that office is over.
The total volume of office deals increased by 21% in 2025 compared to the previous year. However, investors continue to favor Class A or trophy assets as the rest of the market struggles.
Multifamily, which experienced declining fundamentals such as occupancy and rent, still led the way in deal making in 2025, posting a 24% increase in deal volume over 2024. They benefited from higher mortgage rates in the single-family home for sale market, which prevented more renters from becoming buyers.
Retail also recorded a whopping increase of 19%. The sector’s fundamentals, particularly grocery and convenience centers, were strong and able to withstand ongoing pressure from e-commerce.
“Retail has officially re-entered the conversation as an investment-grade, long-lived asset class, with investors focused more on the usual underwriting nuances than potential functional obsolescence and a ‘retail apocalypse,'” Fagan said.
Last year also saw something of a comeback for the struggling larger dollar CRE deals. Sales volume above $100 million was 23% higher than in 2024, Moody’s noted. These deals reflect institutional players, corporate owners and some REITs. However, at only half of 2019 levels, this segment is still the furthest away from recovery.
The smallest deals, those under $5 million, are now actually exceeding their 2019 pace by 4%. They tend to be favored by private equity and individual investors, who have been more active and liquid this interest rate cycle. Deals priced between $5 million and $15 million are just 12% below 2019 volume.
The mid-sized deals between $15 million and $100 million are still struggling as they are the most vulnerable to financing difficulties.
Another leading trend in 2025 was the alternative play – sectors outside of the five core areas, such as healthcare real estate, data centers and student housing. The largest sale of 2025 was a 296-property medical practice portfolio that Remedy Medical Properties purchased from Welltower. It was also the biggest sale ever in the industry.
The seemingly desperate need for data was also highlighted in the top 50 deals of 2025. Amazon And GoogleIn particular were active. The ninth-largest sale of the year was a $615 million Northern Virginia land deal. SDC Capital Partners acquired 97 acres of eligible data center land in Leesburg from Chuck Kuhn’s JK Land Holdings, a record-breaking deal valued at over $6.3 million per acre.
Data also led to a rise in the number of owner-occupiers, especially from tech giants like Apple and Amazon. According to Fagan, Apple actually went on a buying spree of sorts, investing over $1.1 billion in Santa Clara County, California alone, including several office buildings as well as an office and research and development campus.
“By purchasing these assets, Apple secures its long-term operational presence while benefiting from a 20-30% price adjustment in the Silicon Valley office market compared to peak levels in 2022,” Fagan said, adding Microsoft took similar steps last year.
2025 earnings cautiously bode well for commercial real estate, which will see some sort of portfolio realignment. While institutional investors definitely returned to the sector, some large public REITs sold large multi-tenant portfolios to private equity firms. The latter are now emerging as big players and are looking to deploy significant capital that fell by the wayside in the recent high interest rate environment.
“Market participants are largely optimistic, expecting tailwinds from a more dovish Federal Reserve under its new chairmanship and tax relief from possible tax cuts,” Fagan said. “However, since a drastic fall in interest rates is unlikely, a moderate acceleration of current momentum is expected in 2026 rather than a return to the era of ultra-cheap capital.”