Executive Summary
The commercial real estate market is at or near a cyclical trough and transitioning into an early-cycle recovery phase, and history says what comes next is long and durable.
Using the NCREIF Property Index (1978–2025), we introduce a quantitative framework to isolate a dominant CRE cycle of roughly 20–21 years, materially longer than the typical business cycle. Today’s pattern closely mirrors the early phases following the 1992 and 2009 troughs. Our prior fundamental analysis reached the same conclusion: recoveries (~2 years) and expansions (~12–13 years) are supported by both price appreciation and underappreciated income growth. By both quantitative and fundamental measures, the current cycle remains early by historical standards.
For investors, this phase of the cycle has historically been associated with attractive forward risk-adjusted returns, though timing and selectivity remain critical given continued dispersion across markets and sectors.
We introduce a quantitative framework for understanding the phases of the commercial real estate cycle over the long term — a companion to our earlier fundamental analysis, The (CRE)covery | How long do CRE cycles last? Using the NCREIF Property Index (1Q 1978–4Q 2025, ~191 quarterly observations), we combine time-series decomposition with frequency-based analysis to isolate the underlying market cycle from short-term volatility and structural trends. The framework offers investors an objective lens to assess market phase transitions, identify mid-cycle corrections, and contextualize current conditions within a longer-term cycle.
- CRE cycles are long. The periodogram identifies a dominant cycle of roughly 20–21 years, materially longer than the typical 7–10-year business cycle. This indicates that CRE performance is driven primarily by slow-moving capital, construction, and valuation dynamics rather than short-term macro fluctuations.
- Turning points corroborate the long cycle. Peak-to-peak distances measure ~18 and ~15 years (peaks circa 1990, 2007, and 2022); trough-to-trough distance is ~17 years (troughs circa 1992 and 2009, with a third forming in 2024–2025). The 2008–2009 drawdown and 2022–2024 correction are the two largest cyclical dislocations in the sample.
- The market is currently near a cyclical trough. Peak-to-peak distances measure ~18 and ~15 years (peaks circa 1990, 2007, and 2022); trough-to-trough distance is ~17 years (troughs circa 1992 and 2009, with a third forming in 2024–2025). The 2008–2009 drawdown and 2022–2024 correction are the two largest cyclical dislocations in the sample.
- Mid-cycle corrections are real but distinguishable. Private CRE markets experience periodic slowdowns and valuation resets that fall short of full downturns. We apply a minimum distance rule, set at ~70% of the dominant cycle length, to separate meaningful turning points from short-term fluctuations, reflecting the gradual, asymmetric nature of CRE pricing. Indeed, these corrections are essentially indistinguishable when viewed through the lens of a longer-term index.
Bottom line
This quantitative analysis validates our prior fundamental conclusion; real estate cycles are long. It showed recoveries (~2 years) and expansions (~12–13 years) are durable and supported by both price appreciation and underappreciated income growth. Our prior fundamental analysis suggests that the U.S. private real estate market remains in recovery and the U.S. listed REIT market, a leading indicator, has transitioned from recovery into expansion. In other words, public and private market data indicate that the current cycle remains early by historical standards.
To read more about the investment implications and the methodology overview for estimating commercial real estate cycles, read the full report
Risk considerations
Investing involves risk, including possible loss of principal. Past Performance does not guarantee future return. Potential investors should be aware of the risks inherent to owning and investing in real estate, including value fluctuations, capital market pricing volatility, liquidity risks, leverage, credit risk, occupancy risk and legal risk. Real estate investment options are subject to some risks inherent in real estate and real estate investment trusts (REITs), such as risks associated with general and local economic conditions. Commercial real estate (CRE) investing carries several inherent risks, including those related to the economy, interest rates, market fluctuations, high upfront costs, and tenant-related issues like defaults or high turnover. Economic downturns can lead to decreased property values and increased vacancy rates, while financing costs, insurance expenses, and potential environmental or structural problems can also pose significant challenges. All these factors and risks can impact rental income and overall investment returns.
Private market investments carry distinct risks due to illiquidity, limited transparency, and higher minimum investment requirements. These include liquidity, market, capital, and regulatory risks, as well as higher fees and longer investment horizons compared to publicly traded securities. Real assets require independent evaluation before investing. As an asset class, they are less developed, more illiquid, and less transparent than traditional asset classes.
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MM15031 | 06/2026 | 5632131-062028
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