What a quarter century of transaction data tells us about US commercial real estate

The quiet shift in US commercial real estate transactions

Over the past quarter century, U.S. commercial real estate has experienced a structural transformation. Beneath the familiar cycles of boom and bust lies a quieter but more enduring shift: the median transacted CRE asset has become smaller, yet considerably more valuable. This evolution reflects more than inflation or rising construction costs. It also reflects broader changes in tenant demand, investor strategy, and how real estate is capitalized and traded.

Drawing on the Altus Group Research Team’s latest US CRE Investment & Transactions Quarterly report (Q1 2025), this article examines the long-term trends that reshaped the CRE landscape and what they may suggest about its future.

The long view: 25 years of evolution

Since 2000, median deal size roughly tripled across all major property types, led by industrial (+254%) and multifamily (+226%). But even as deal values grew, the typical sold property became smaller. In the office sector, median transacted building size declined nearly 17%, the steepest drop among the sectors. Retail, industrial, and multifamily all similarly posted notable declines.

Median deal size by major property type - indexed

But driving this apparent contradiction of rising deal size and declining property size is price growth. Across the board, investors now pay significantly more per square foot, with increases of over 250% for industrial, 240% for multifamily, and nearly 200% for office and retail. This surge in value more than offset reductions in asset size, lifting typical deal sizes even as typical transacted properties shrink.

Median price per square foot by major property type - indexed

Post-GFC recovery (Q1 2009 - Q1 2025)

The recovery from the Global Financial Crisis (GFC) shows a similarly uneven playing field across property types. Industrial assets surged ahead, posting gains in both pricing (+152%) and building size (+1%), with the sector illustrating a rare case in which typical buildings grew slightly larger. Multifamily saw strong pricing momentum as well, though the typical asset size declined sharply (-13.3%), limiting typical deal size growth to just 80%.

In contrast, office and retail posted smaller increases in both price per square foot and deal size, with only minimal shifts in asset size. These patterns reflect deeper sectoral pressures that include changing workplace habits and shifting consumer preferences that began taking shape well before the pandemic.

The recent view (Q1 2024 - Q1 2025)

Despite tighter credit conditions and higher interest rates, CRE pricing remained remarkably resilient over the past year. Median price per square foot rose roughly 15% across the board, and median deal size increased in all sectors.

Surprisingly, office led in typical deal size growth (+25.2%), but this trend likely reflects investors targeting high-end 'trophy' assets rather than a broader recovery. Similarly, industrial’s steady performance may point to demand for newer, larger logistics space. And while multifamily price appreciation was solid, the sector experienced more modest gains in deal size (+6.3%) and even a reduction in typical building scale (-1.4%).

Why smaller assets?

One of the more counterintuitive findings from the data is the consistent shrinking of the typical traded CRE asset.

For office and retail, this may reflect broader demand-side shifts. Office users now occupy less space than they did in 2000 due to digitization and hybrid work models, while retailers now favor smaller footprints better suited to omnichannel strategies. These trends help explain why the sectors saw the steepest declines in asset size coupled with the slowest growth in price per square foot.

Median transacted building size - office and retail sectors

On the other hand, industrial and multifamily have fared better thanks to more favorable fundamentals. E-commerce and supply chain shifts have underpinned demand for industrial space. And while industrial was the lone sector to see median building size increase for much of the 2010s, it declined sharply after 2022 amid rising rates. Multifamily remained resilient due to strong demographic tailwinds and affordability pressures in the single-family home market. But as investors retreated from the sprawling garden-style communities of decades past in favor of infill urban development, typical building size fell dramatically after 2009.

Median transacted building size - Industrial and mutifamily sectors

This research focuses exclusively on single-property transactions. And as a result, if a larger share of institutionally held, operationally intensive assets now trade through entity-level or portfolio deals, that could partially account for some of the declines we’ve recorded in median asset size over time.

Additionally, an increasing number of newer, large-format facilities (especially in industrial and specialized office sectors) are purpose-built for specific tenants and therefore rarely change hands. Many also have not yet entered the resale market due to their recent development.

Together, these trends push the “typical” single CRE transaction toward smaller, more liquid, and more easily financed assets that better align with today’s tighter capital conditions and increasingly selective investor strategies.

Looking forward

The post-COVID dealmaking surge of 2021–2022, fueled by historically low borrowing costs, created a moment in which nearly any deal could pencil out. Most sectors saw sharp increases in typical building and deal size, transaction volume, and pricing over the period. The one exception was the office sector, weighed down by uncertain demand in the face of remote work. However, this period didn’t reverse the long-term trajectory of single-asset U.S. CRE deals. Rather than signaling a return to larger assets, it was a temporary acceleration within a broader shift.

Over the past 25 years, CRE has steadily become more urban while investors have grown more sophisticated, focused on quality of space over quantity, gravitating toward smaller, better located, and more flexible assets. And until borrowing costs fall materially, capital could remain concentrated in these compact, more easily financed properties, with median deal size staying modest even as price per square foot continues to rise.