US Commercial Real Estate Transaction Volume Drops for First Time in Two Years

October 2025 marks a negative year-over-year growth in CRE transactions, reflecting an ongoing stalemate between buyers and sellers.

The recovery in commercial real estate (CRE) has been slow and bumpy, largely mirroring the volatility of interest rate policy over the past few years—the two are deeply connected.

After gaining significant momentum post-pandemic, the sector has hit a rough patch this year. According to monthly data provided by Moody’s, October was the first month of negative year-over-year transaction volume growth since the post-Fed rate hike recovery began in early 2024. The data tracks the top 50 CRE property sales across the U.S.

Kevin Fagan, head of CRE capital market research at Moody’s, explained the significance of the slip: “More than an imminent downturn in the CRE capital markets, the slip to negative growth in October 2025 reflects the stalemate going on between buyers and sellers.” He added that persistently high interest rates and economic uncertainty have “lengthened” the bottom of the U-shaped recovery.

Sector Dynamics: Industrial and Multifamily Lead, Hotels Surprise

Despite the slowdown in growth momentum, October was still an active month, with $24.4 billion in sales, roughly 70% of pre-Covid (October 2019) sales.

• Top Performers: Industrial and multifamily segments dominated the top 50 deals.

• The Anomaly: Hotel was the only sector to see improved deal volume compared to last year, posting 6% growth after a negative third quarter.

A notable transaction was the sale of The New York Edition hotel (originally the historic MetLife Clock Tower) for $231.2 million. Fagan highlighted that properties like the Clock Tower, which were nearly worthless as offices, have become “extremely valuable” after conversion to hotels or residential units.

Multifamily Pullback and Office Discounts

• Multifamily Retreat: The multifamily segment saw the biggest pullback in October, down 27% from 2024. This retreat is significant, as the sector had been showing volumes higher than pre-Covid levels in the preceding four months.

• Office Conversion & Discounts: The office sector continues its rocky recovery, characterized by either deep discounts or property conversions. Sales like the Sotheby’s headquarters to Weill Cornell suggest repurposing into healthcare or medical office space.

A distressed Manhattan office building was picked up by New York Life for almost half of its last sale price in 2015. Fagan views this as positive: “It shows there is institutional interest in offices sold at discounts, reinforcing the long-term value floor for office buildings in good markets.”