Commercial Real Estate Deal Growth Stalls: What Slowing Momentum Means for 2026

Commercial real estate investors hit the brakes this October, marking the first year‑over‑year decline in deal volume since early 2024. After nearly two years of strong momentum, the market’s sudden hesitation has thrown a spotlight on widening pricing gaps, elevated financing costs, and the ongoing standoff between CRE buyers and sellers.

According to Mortgage Professional America, the slowdown doesn’t signal a collapse—rather, it underscores how far pricing expectations have drifted apart in today’s high‑rate environment. Kevin Fagan, head of CRE capital market research at Moody’s, described October’s numbers as a sign of an extended stalemate rather than an impending downturn.

Deal Volume Still Active, but Momentum Slows

Despite the cooling pace, October still delivered $24.4 billion in U.S. CRE sales—roughly 70% of the volume seen in October 2019. Total 2025 deal activity remains above 2024 levels. But as Moody’s data shared with CNBC reveals, the rapid growth seen in late 2024 and early 2025 has lost steam.

Multifamily took the sharpest hit, with a steep 27% drop in October deal volume. Yet, many multifamily assets still trade at premiums—showing that while demand is strong, pricing has become more tangled and competitive.

Hospitality Surges as Conversions Reshape the Market

The hospitality sector emerged as the only segment with a year‑over‑year increase, rising approximately 6%. A standout transaction was the sale of the New York Edition hotel from Abu Dhabi Investment Authority to Kam Sang Company for $231.2 million.

Kevin Fagan highlights a broader trend: struggling office buildings transforming into valuable hotel or residential conversions. Iconic projects such as the Woolworth Building illustrate how adaptive reuse continues to redefine the CRE landscape.

Meanwhile, value‑seeking buyers made headlines when New York Life acquired a Manhattan office tower for nearly half its 2015 valuation. Institutional investors are circling distressed but well‑located assets—hinting that prime office space still offers long‑term promise.

Commercial Mortgages: A Volatile but Active Landscape

The third quarter of 2025 brought a powerful resurgence in mortgage originations. According to the Mortgage Bankers Association, commercial and multifamily lending jumped 36% year‑over‑year.

Even more surprising: office lending surged 181%. Despite the sector’s challenges, lenders are selectively backing properties with conversion potential or those supported by medical and life‑science tenants—two fields rapidly absorbing obsolete office inventory.

What This Means for 2026

This slowdown suggests 2026 will be shaped not only by fundamentals like rent growth and occupancy, but by how quickly market participants recalibrate expectations in a higher‑cost environment.

For commercial originators, investors, brokers, and analysts, this means strengthening market literacy—particularly around evolving debt markets, valuation resets, and underwriting shifts. And professionals entering or upskilling in real estate, mortgage, or finance will need sharper insights and stronger training than ever.

This is where institutions like Cameron Academy play a crucial role. With licensing education, continuing education, and professional development across real estate, mortgage, insurance, and financial services, Cameron Academy helps future‑focused professionals stay competitive, confident, and opportunity‑ready.

As the market transitions into its next cycle, knowledge isn’t just power—it’s deal flow, resilience, and long‑term career growth.