CRE Deal Volume Slips in December, But Office Space Makes a Surprising Comeback

The commercial real estate market ended December on a softer note, with deal volume falling for the second straight month, according to exclusive Moody’s data shared with CNBC’s Property Play. But despite the chilly finish, the broader picture of 2025 reveals a very different—yet surprisingly optimistic—story.

A Mixed Year With Momentum Brewing

Total deal volume in December dropped 20% year over year. Yet the full year showed a 17% increase over 2024—proof that, despite economic headwinds, elevated interest rates, and massive loan maturities, the CRE market is quietly stabilizing.

Kevin Fagan, Moody’s head of CRE capital market research, summed it up well: the 2025 recovery was slower, but it was undeniably resilient.

The Office Comeback Nobody Saw Coming

For years, the narrative has been that “office is dead.” But 2025 challenged that idea dramatically. Office deal volume surged 21% as return‑to‑office mandates strengthened and AI-driven employment expanded. Investors, though, are laser‑focused on high‑quality Class A and trophy assets, leaving lower-tier buildings to find creative new identities.

This shift matters for anyone entering real estate. Renewed office activity means more leasing, more transactions, and more asset management opportunities—exactly the kind of trends ambitious students at Cameron Academy track to stay ahead.

Multifamily Still Leads, Even With Softening Fundamentals

Multifamily saw a strong 24% gain in deal volume. While rent growth and occupancy cooled, high single‑family mortgage rates kept many renters from transitioning to homeownership.

Retail Reclaims Its Strength

Retail posted a solid 19% jump, powered by grocery-anchored and essential-service centers. Moody’s even declared retail “officially back” as a durable long-term asset class.

A Big Year for Big Deals—Sort Of

Large CRE trades above $100 million climbed 23%, including institutional transactions and corporate owner‑occupied deals. Still, this segment is only halfway back to its 2019 pre‑pandemic peak.

Smaller deals under $5 million surpassed 2019 levels by 4%, fueled by active private investors and local buyers. Mid-sized deals continue to feel the squeeze from tight financing conditions.

Alternative Assets Take Center Stage

Health care properties, data centers, and student housing led the way. The largest CRE deal of 2025 was a record‑breaking sale of a 296‑property medical office portfolio.

Demand for data centers exploded, with Amazon and Google locking in new sites. One Virginia transaction reached a jaw‑dropping $6.3 million per acre.

Tech Giants Go Shopping

Apple alone invested over $1.1 billion in Santa Clara County real estate, acquiring discounted office and R&D space. Microsoft followed a similar playbook—signaling a trend of major tech firms securing their long‑term physical footprint.

The Outlook for 2026: Cautious Optimism

Institutional investors are reentering the market, while private equity firms aggressively deploy capital as interest rates show signs of easing. A potentially more dovish Federal Reserve and possible tax incentives may further accelerate activity.

However, a return to ultra‑cheap borrowing is unlikely. Expect moderate acceleration—not a buying frenzy.

What This Means for Today’s Real Estate Professionals

Whether you’re expanding a license, adding a specialization, or watching market trends, this CRE shift signals one clear truth: the market is moving again. And where movement happens, opportunity follows.

At Cameron Academy, we prepare real estate, mortgage, and professional students to understand and capitalize on these evolving trends—because educated professionals thrive in every market cycle.

To explore the original reporting behind these insights, visit CNBC’s Property Play newsletter at CNBC.com.