US commercial real estate transaction analysis - Q4 2025

Exciting ends and energetic beginnings

As of writing this in late February, we’re only partway through the first quarter of 2026, and it has certainly not been a dull start. The excitement and market energy that built through 2025 is still very real. We’ve recently published our US CRE Investment & Transactions Quarterly report for Q4 and full-year 2025, based on data from Reonomy. The clear theme from the last quarter of 2025: US CRE is in recovery.

Before we recap the major themes across the US CRE market, let’s quickly set the stage for the Q4 2025 CRE trends by recapping the overall macroeconomic and capital market environment in which these trades happened.

Markets climb a wall of worry

Moving into the final stretch of the year, the macro narrative transitioned from the exuberant “melt-up” of Q3 to a more nuanced story of resilience in the face of political headwinds. The fourth quarter was defined by markets climbing a wall of worry, as investors navigated the longest US government shutdown in history, which began in October. Despite the legislative deadlock and a relentless stream of negative headlines, risk assets maintained their upward trajectory. Equity markets continued to print new all-time highs, supported by the Federal Reserve’s sustained easing cycle and a fundamental AI-driven gold rush that showed few signs of cooling.

The macroeconomic picture for Q4 reflected below-trend but stable growth. While the government shutdown obscured official statistics for much of the quarter, private data suggested the economy remained on a firm footing. Real GDP growth for 2025 is estimated to finish around 2.1%, a deceleration from the prior year but resilient enough to avoid the hard landing many had feared. The FOMC remained proactive, delivering two additional 25-basis-point cuts in October and December, bringing the federal funds rate down to a target range of 3.50%-3.75%. Chairman Powell emphasized an improving balance in risks, even as the labor market showed further signs of cooling, with unemployment drifting up to finish the year at 4.4%.

Credit markets mirrored equity market optimism, as investors largely ignored the political theater in Washington to focus on the Fed’s dovish glide path. The 10-year US Treasury yield dipped toward 3.95% in October as a safe-haven response to the shutdown, before settling near 4.05% by year-end. Credit spreads remained remarkably compressed, with investment-grade spreads finishing near multi-decade lows.

Equities capped off 2025 with a solid fourth-quarter performance. The S&P 500 gained 2.3% in Q4, bringing its full-year return to 17.9%. Technology and Communication Services remained the undisputed leader across sectors. Valuation remained the primary point of contention heading into 2026, with the S&P 500’s forward P/E ratio ending the year at 22.1x above historical averages.

As we entered 2026, market sentiment remained constructive but cautious. The VIX stayed largely suppressed in the mid-to-high teens despite the policy noise. Against this backdrop, CRE transaction markets closed 2025 on a decisive upswing.

Q4 2025 transaction activity

National CRE transaction activity closed the year strong. Through Q4 2025, 46,395 properties transacted, up 3.9% quarter over quarter and 2.2% year over year. Aggregate transaction volume totaled $179.9 billion, a 20.7% increase from Q3 and up 20.2% from Q4 2024.

Industrial drove much of the annual growth, surging 54.4% to $44.9 billion. That made it the largest single sector for the quarter, accounting for just under a quarter of total activity (by count) and 29.9% of single-asset sale dollar volume. Multi-property transactions (+32.2%), general commercial (+51.9%), and hospitality (+72.9%) also recorded year-over-year dollar-volume gains that exceeded the overall market increase.

For the full-year 2025, 176,445 properties transacted, up 0.6% from 2024, marking the first annual increase in property count since 2021. Total transaction volume reached $560.2 billion, a 14.4% year-over-year gain and the second consecutive annual increase. After years of waiting for the turn in the market, the data now confirms it.

Transaction pacing and pricing trends

Transaction velocity in Q4 2025 remained above pandemic-era lows but still below 2015-2019 norms. On a typical day in Q4, the number of assets that traded was 4.9% below pre-pandemic trends. Multifamily, a key contributor given the sector’s overall share of properties, remained 11.0% below its pre-pandemic average.

Median price per square foot for single-asset transactions increased 2.5% in Q4 2025 compared to Q3 2025. General commercial (+4.4%), industrial (+3.9%), and retail (+2.5%) outperformed the overall market, while hospitality was the only sector to post a quarterly decline (-0.4%).

On a year-over-year basis, median pricing rose 12.1% across all property types, led by retail (+13.4%) and multifamily (+12.4%). Since Q4 2019, immediately preceding the pandemic, the median price per square foot has climbed 58.5%, with wide variation by sector. Industrial pricing is up 83.8% over this period, compared with a 38.2% increase for office.

Perhaps the most telling pricing signal from 2025: all four major property types (industrial, multifamily, office, and retail) recorded positive year-over-year price growth in every quarter, the first time that’s happened since 2022, with annual median transacted price gains exceeding 10% in each quarter. Broad-based and sustained. That’s the story the pricing data tells.

Subsector performance

In Q4 2025, 12 of 15 subsectors posted quarter-over-quarter increases in median price per square foot, led by storage (+10.9%), general commercial (+6.4%), and street and strip centers (+4.5%). Full-service hotels (-0.8%), automotive (-3.1%), and anchor and other big-box retail (-5.8%) were the only subsectors to record median price declines compared to Q3 2025.

Year-over-year, 14 of 15 subsectors saw median transaction price appreciation, with storage (+32.0%) and general commercial (+16.6%) leading the gains. Manufacturing was the lone exception, with median pricing down 10.8%.

Median transacted building size was largely unchanged quarter-over-quarter but increased across all sectors on an annual basis, led by hospitality (+6.9%), office (+4.9%), and industrial (+3.9%). The continued expansion in transacted building sizes reinforces a theme from recent quarters: institutional capital is returning and gravitating toward larger, higher-quality assets.

Regional and metropolitan performance

As always, national aggregate trends mask significant geographic variation. When we break out transaction activity by the 100 largest MSAs, the divergence from the national change becomes clear.

On a property count basis, the overall 3.9% quarterly increase and 2.2% annual increase played out unevenly. The Southeast and Mountain West picked up the slack for the Northeast, Midwest, and California, where a significant number of MSAs reported activity running up to 10% behind the national figure. On an annual basis, those geographic trends held, but some regions became more pronounced. Florida’s Atlantic Coast and California lagged the country, while the Texas Triangle stood out in a very positive way, with its major metros performing 20% or more above the national change.

Dollar volume trends were messier. The overall 20.7% quarterly increase showed significant divergence at the metro level. Where activity was up, it was up in a big way. Where it was down, it was down in a big way. Southern California was 10% or more below the national change, while Northern California was actually up 20% or more. Only one metro in the Northeast Corridor between DC and Boston outperformed the country: Philadelphia. Tennessee and the Carolinas fared much better than the Deep South, which saw an interesting dynamic where more properties transacted, but aggregate dollar volume was down.

Across the ten largest MSAs, year-over-year changes in median transacted price per square foot varied widely by market and property type. Los Angeles saw declines across all major sectors, including retail (-26.7%) and multifamily (-25.1%). Chicago, Dallas, and Phoenix recorded median transacted price gains across the board. The largest year-on-year increase occurred in Washington, D.C. retail (+39.6%), while the steepest decline was in Washington, D.C. office (-39.1%). That’s a 79 percentage-point spread within a single metro. Location and sector specificity matter more than ever.

Property sector deep dives

Industrial: The volume story hides a structural shift

Industrial was the standout sector in Q4 2025 by dollar volume, with $44.9 billion transacted, a 54.4% surge over Q4 2024. That made industrial the largest single sector for the quarter. Median pricing rose 3.9% quarter over quarter and 10.9% annually, reaching $106/SF.

But the headline numbers mask a structural shift worth watching closely. While dollar volume surged 54%, deal count was nearly flat, rising just 1.4% year over year. On a trailing four-quarter basis, deal count growth was less than 1%. That means the average deal size expanded dramatically. Institutional capital appears to be concentrating into larger industrial assets, particularly big-box logistics and modern distribution, while smaller deals sit on the sidelines. This is a notable change from the broad-based industrial frenzy of 2021-2022 and signals greater asset selectivity rather than blanket appetite for the sector.

Within the subsectors, storage pricing led the way with a 10.9% quarterly gain and a 32.0% annual increase. Warehouse and distribution posted steady growth at $112/SF (+3.8% QoQ, +9.4% YoY). Manufacturing continued to struggle, with median pricing down 10.8% year-over-year. Median transacted building size increased 3.9% annually to 16,336 square feet, and around 82 properties transacted on an average day in Q4.

Multifamily: Steady growth, still below potential

Multifamily maintained its position as the most actively traded property type by count, with 12,699 properties transacting in Q4 2025, up 3.8% year-over-year though down 1.5% from a quarter prior. Dollar volume reached $39.3 billion, up 14.2% annually but down 10.8% from Q3’s strong showing.

Median pricing rose 1.7% quarter-over-quarter and 12.4% year-over-year, reaching $144/SF. The sector’s median transaction value held steady at $1.7 million. Daily trading averaged approximately 141 properties, though this remained 11.0% below pre-pandemic averages, the largest gap among major sectors. That persistent gap suggests room for continued expansion of activity as financing conditions improve.

Median transacted property size held at 9,836 SF, largely consistent with recent quarters. Housing affordability challenges continue to drive investor interest in rental housing, keeping multifamily at the top of most allocation lists.

Office: A quiet recovery

Given the narrative around office since the pandemic, the Q4 numbers are worth a double take. Dollar volume reached $22.7 billion, up 14.9% year-over-year and 26.7% from Q3. Transaction counts rose 2.9% annually. This is a sector many have written off, yet it is showing real signs of rebound.

Median pricing rose 1.6% quarter-over-quarter and 10.8% annually, reaching $136/SF. Medical office at $203/SF remains one of the highest-priced subtypes across all of CRE, up 3.5% on the quarter and 13.6% year-over-year. General office also posted gains, with pricing up 2.0% QoQ and 12.3% YoY.

The median transaction value hit $1.7 million, and around 87 office properties transacted on an average day, approaching but not yet reaching the pre-pandemic average of roughly 90. Median building size increased 4.9% annually to 10,804 SF, reflecting continued institutional preference for larger, higher-quality properties.

The question going forward is whether this quiet recovery can sustain itself through the first half of 2026, given the “SaaS-pocalypse” that rocked markets in Q1 2026. The tech-sector turbulence put a damper on return-to-office assumptions and office demand expectations, particularly for properties with heavy exposure to software and tech tenants. That’s a story we’ll be watching closely.

Retail: Pricing strength meets volume weakness

Retail delivered one of the quarter’s most surprising signals. Dollar volume dropped 24.1% year-over-year to $24.3 billion, and transaction counts were flat. That’s a meaningful decline in activity. Normally, one might expect price softness to accompany a volume drop of that magnitude.

Instead, median price per square foot rose 2.5% quarter-over-quarter and 13.4% year-over-year, reaching $138/SF. Street and strip centers led quarterly growth at +4.5%, while bars and restaurants held near highs at $209/SF (+13.7% YoY). Anchor and big-box retail were the clear weak spot, with pricing declining 5.8% on the quarter.

The implication: the deals that did close were higher-quality assets. Weaker assets may simply be sitting on the sidelines with no bids. On average, 122 retail properties traded per day in Q4, with median building size at 9,349 SF. This pricing-volume divergence is a dynamic worth monitoring as we move into 2026.

Hospitality: A big quarter for deal counts

Hospitality was the clear outlier in Q4 by transaction count growth, with properties transacted surging 85.9% vs Q4 2024 and 57.3% from Q3 2025. Dollar volume followed suit, climbing 72.9% annually to $8.1 billion.

Pricing was more restrained. Median price per square foot dipped 0.4% quarter-over-quarter but was up 2.8% year-over-year, reaching $133/SF. Full-service hotels saw modest price declines of 0.8% quarter-over-quarter, while limited-service gained 1.6%. The median transaction value stood at $4.4 million, the highest among major sectors.

With 16 properties transacting on an average day and a median building size of 38,094 SF (up 6.9% annually), hospitality’s big quarter was driven more by count and volume than by pricing gains. Investor appetite for the sector appears to be broadening after several quarters of caution.

Commercial general and mixed-use

Commercial general and mixed-use properties posted solid gains in Q4, with dollar volume reaching $10.8 billion, up 51.9% year-over-year and 35.3% from Q3. Transaction counts were down 7.3% annually, however, continuing the theme seen across multiple sectors: fewer deals, but bigger ones.

Median pricing rose 4.4% quarter over quarter and 11.5% annually, reaching $101/SF. Within the subsectors, commercial general properties hit $92/SF (+16.6% YoY) while mixed-use reached $108/SF (+11.4% YoY). Roughly 66 properties traded per day, with a median building size of 9,003 SF.

The biggest surprises

Three sector-level dynamics stood out as especially noteworthy from the Q4 data.

1. The retail pricing-volume disconnect: Retail dollar volume dropped 24% year-over-year, making it the only sector to post a meaningful decline. Yet median pricing per square foot rose 13.4%. In a normal environment, one might expect those two things to move together. The gap suggests that weaker retail assets have effectively left the market, and the deals getting done are skewed toward higher-quality product.
   

2. The industrial count-versus-dollar divergence: Dollar volume surged 54% year-over-year, but deal count barely moved. That may tell us institutional capital is concentrating into larger industrial assets rather than spreading across the sector broadly. It’s a meaningful structural shift from the broad-based sector-focused frenzy of 2021-2022.
   

3. Office’s quiet persistence: A 15% year-over-year dollar volume increase and median pricing of $136/SF (up 10.8% annually) is hard to square with the prevailing narrative of empty towers and permanent remote work. Medical office at $203/SF continues to punch well above its weight. Whether this can sustain through the tech-sector turbulence of early 2026 is an open question, but the 2025 data paints a more nuanced picture than the headlines would suggest.

Looking ahead

Q4 2025 closed the year on a note of genuine momentum. Total transaction volume of $560.2 billion for the full year represented a 14.4% gain over 2024, and for the first time since 2021, the number of properties transacted actually increased. Pricing was positive across the board, and institutional capital came back in size. The recovery that was tentatively emerging in mid-2024 now looks firmly established.

But the ground is already shifting beneath us. The government shutdown that defined Q4’s political backdrop has given way to new sources of uncertainty in early 2026, including the market volatility related to disruptive AI that rocked tech-exposed office markets in Q1. The Fed’s easing cycle provides a tailwind, but forward P/E ratios at 22x and credit spreads at multi-decade tights leave limited margin for error in the broader capital markets.

Within CRE, the themes that emerged through 2025 remain the ones to watch: institutional capital concentrating into larger, higher-quality assets, persistent geographic divergence between Sun Belt and Northeast markets, and a pricing recovery that is broad-based but still below pre-pandemic velocity. The market is functioning. Capital is moving. But selectivity, not exuberance, continues to define the moment.

We’ll continue tracking these trends through 2026 in our quarterly reports. For a deeper look at the data behind this analysis, explore the full Q4 2025 US CRE Investment & Transactions Quarterly report.

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