U.S. commercial real estate (CRE) transaction volumes rose 12% in December 2025 ($71.4bn) compared to the same month last year. Fourth quarter volumes reached $185.8bn, up 30% versus last year, while full year 2025 transactions increased 23% to $545.3bn. This marks the second consecutive year of rising deal activity (after 14% growth in 2024), pointing to a continued thaw in market liquidity after the prior downturn.
Reported volumes were meaningfully boosted by a sizable forward sale (~$23bn) of a data center under construction. Importantly, even excluding data centers in both 2025 and 2024, investment volumes still rose 14% in 4Q and 19% for the full year. This reflects a broad-based rebound in deal activity across every major traditional property type:
| Property | 4Q25 | 2025 |
|---|---|---|
| All | 30% | 23% |
| All (Ex-Data Centers) | 14% | 19% |
| Office | 23% | 26% |
| Industrial | 3% | 15% |
| Retail | 31% | 26% |
| Apartment | 4% | 9% |
| Hotel | 57% | 13% |
| Land | 25% | 44% |
| Senior Housing | 22% | 47% |
| Data Centers | 542% | 274% |
Source: MSCI, Real Capital Analytics, Principal Real Estate. Data as of 4Q 2025.
Transaction volumes are a useful barometer of market sentiment: accelerating activity typically reflects rising demand and confidence, while decelerating volumes point to growing caution. The market continues to face meaningful risks and uncertainties, but the recent pickup in transaction activity, reminiscent of the post-GFC recovery, is notable. It suggests the market may be reaching a similar inflection point, marked by returning confidence and renewed investor engagement.
This backdrop is consistent with the 2026 Global CRE Outlook: A Cycle for Selectivity, which argues that commercial real estate has entered a recovery phase by most traditional measures. However, returns are diverging sharply across sectors, regions, and fund strategies. This unevenness isn’t a flaw in the cycle—it is the cycle. Investors are no longer confronting a broad-based downturn; they are navigating widening dispersion. As the cycle ahead will likely be alpha-driven, real estate investors will need to take a page from equity investors’ playbook: asset and market selection will drive performance.
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. All these risks can lead to a decline in the value of the real estate, a decline in the income produced by the real estate and declines in the value or total loss in value of securities derived from investments in real estate. Commercial real estate (CRE) investments carry several inherent risks, including those related to the economy, interest rates, and tenant behavior. These risks can impact property values, rental income, and overall investment returns. International investing involves greater risks such as currency fluctuations, political/social instability, and differing accounting standards.
Views and opinions expressed are accurate as of the date of this communication and are subject to change without notice. This material may contain ‘forward-looking’ information that is not purely historical in nature and may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.
The information in the article should not be construed as investment advice or a recommendation for the purchase or sale of any security. The general information it contains does not take account of any investor’s investment objectives, particular needs, or financial situation.
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