Moody’s Corp. headquarters in New York, 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 the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Register to receive future editions, straight to your inbox.
Commercial real estate transaction volume declined in December for the second month in a row, but the full-year figures reveal some progress, likely to create much-needed momentum for this year.
Total dollar trading volume fell 20% in December year over year, according to monthly data provided by Moody’s as an exclusive media outlet to CNBC’s Property Play. It tracks the top 50 commercial real estate property sales in the United States, across the major segments of multifamily, office, industrial, retail and hospitality.
For the full year 2025, transaction volume was 17% higher than in 2024, a healthy expansion but lower than the 24% annual growth seen the year before and still 30% below the 2019 pre-pandemic benchmark.
“The U.S. commercial real estate (CRE) market in 2025 has been defined by a steady, albeit decelerating, progression toward stabilization,” said Kevin Fagan, head of CRE capital market research at Moody’s. “The recovery has proven resilient in the face of a significant economic downturn, political uncertainty, a massive loan maturity wall and persistently high interest rates compared to three years ago.”
The residential and office sectors led the landscape. The return to office has gained momentum, as return-to-power orders and a boom in AI employment counter the pandemic-induced narrative that the office is over.
The total volume of office transactions increased by 21% in 2025 compared to the previous year. Investors, however, continue to favor class A or trophy assets, while the rest of the market is in difficulty.
Multifamily properties, which have seen declines in fundamentals such as occupancy and rent, are still leading transactions in 2025, with a 24% increase in transaction volume compared to 2024. They have benefited from higher mortgage rates in the market for single-family homes for sale, which have kept more renters from becoming buyers.
Retail also saw a significant gain of 19%. Sector fundamentals, particularly grocery and essential centers, were strong, fending off continued pressure from e-commerce.
“Retail is officially re-entering the conversation as a sustainable, quality asset class, with investors more focused on the usual nuances of underwriting than potential functional obsolescence and a ‘retail apocalypse,’” Fagan said.
Last year also saw some return for larger, much more beleaguered CRE deals. Sales volume of more than $100 million was 23% higher than in 2024, according to Moody’s. These transactions reflect institutional players, owner-occupied companies and certain REITs. This segment, however, is still the furthest from recovery, at only half of 2019 levels.
The smallest deals, those under $5 million, are now 4% ahead of 2019. They tend to be favored by private capital and individual investors who have been more active and liquid throughout this rate cycle. Transactions priced between $5 million and $15 million are only 12% below 2019 volume.
Mid-sized deals, those between $15 million and $100 million, are still struggling because they are the most vulnerable to financing difficulties.
Another dominant trend in 2025 has been the alternative play – sectors outside of the top five, like healthcare-related properties, data centers and student housing. The largest sale of 2025 was a portfolio of 296 medical practices, purchased by Remedy Medical Properties from Welltower. It is also the largest sale ever in the industry.
The seemingly desperate need for data was also among the top 50 deals of 2025. Amazon And Googlein particular, were active. The ninth largest sale of the year was a $615 million land deal in Northern Virginia. SDC Capital Partners has purchased 97 acres of data center land in Leesburg from Chuck Kuhn’s JK Land Holdings, a record deal topping $6.3 million per acre.
The data has also led to an increase in business ownership, particularly from tech giants like Apple and Amazon. In fact, Apple has embarked on a shopping spree of sorts, according to Fagan, deploying more than $1.1 billion in California’s Santa Clara County alone, including several office buildings and an office and R&D campus.
“By purchasing these assets, Apple is securing its long-term operational footprint while capitalizing on a 20-30% price escalation in the Silicon Valley office market from 2022 highs,” Fagan said, adding that Microsoft took similar steps last year.
The 2025 gains bode well for commercial real estate, which is experiencing something of a portfolio rebalancing. As institutional investors have returned to the sector for good, some large public REITs have sold large multi-tenant portfolios to private equity firms. The latter are now emerging as significant players, seeking to deploy significant capital that had remained on the sidelines in the recent higher interest rate environment.
“Market participants are largely optimistic, anticipating tailwinds from a more dovish Federal Reserve under the new presidency and fiscal improvements resulting from potential tax cuts,” Fagan said. “However, as interest rates are unlikely to fall precipitously, 2026 should see a moderate acceleration of current dynamics rather than a return to the era of ultra-cheap capital.”