MSCI Real Capital Analytics released transaction volumes for U.S. CRE in 2Q25 on Wednesday, July 23. They rose +7% in 2Q25 and were revised higher to +20% in 1Q25. As a result, volumes rose +13% in the first half of 2025 compared to the same period last year.
By property type (1Q25 / 1H25):
- Office: +51% / +16%
- Industrial: +1% / +15%
- Retail: +30% / +16.5%
- Apartment: -14% / +5%
- Hotel: -26% / -5%
- Sr Housing: +43% / +79%
This undeniably exceeded most expectations post-Liberation Day, but the full impacts of tariffs may not have surfaced yet. Indeed, while transaction volumes rose +35% in April and +16% in May, they declined -16% in June. Even so, June 2025 recorded the highest monthly volume of the year at approximately $38 billion—above the 2025 average of $35.7 billion. However, June 2024 was a tough comparison, with $45 billion in volume versus a 2024 monthly average of $36.4 billion. Comparisons become more favorable in July, August, and September 2024, which saw volumes of $32.3 billion, $39.2 billion, and $35.2 billion, respectively—potentially creating a favorable backdrop for a continued increases in year-over-year changes in transaction volumes.
The positive implications of the tax bill for CRE may help to mitigate any impacts of a tariff induced slowdown in activity. As a review, the “One Big Beautiful Bill Act”, which was signed into law on July 4, 2025, preserves and, in many cases, strengthens the tax advantages of owning U.S. CRE—both equity and debt. These provisions have the combined impact of lowering taxable income while increasing cash on cash returns and net operating cash flow. Additionally, section 899 (which was expected to have negative implications for foreign investment in the U.S., given its retaliatory tax measures) was removed from the final bill.
See our note titled The “One Big Beautiful Bill Act” and implications for commercial real estate for further analysis.
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.
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.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
Principal Real Estate is a trade name of Principal Real Estate Investors, LLC, an affiliate of Principal Global Investors.
4691926
