A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox.
Commercial real estate dealmaking is having a rough 2025, after gaining significant momentum coming out of the pandemic. Transactions are still happening, but they have stalled at well below pre-Covid levels.
The overall dollar value of deals has grown just 5% from last year as of the third quarter, according to new monthly data provided by Moody’s as a media exclusive to CNBC’s Property Play. It tracks the top 50 CRE property sales across the U.S.
Trends in September reveal several themes: Flight to quality, economic uncertainty hitting the hotel sector hard, and a growing interest in two beleaguered sectors — office and retail.
The flight to quality can be seen in the average dollar size of sales in September, up to $12.7 million, compared with the average of $11.2 million over the two years prior.
Of the 50 top deals closed, 29 were for over $100 million. The volume of $100 million-plus deals in the third quarter was up 35% over last year, while the volume of smaller deals has been flat or shrinking.
“We had a lot of volume growth, recovery, after the first Fed rate hikes in 2022-2023. 2024 was a pretty good year,” said Kevin Fagan, head of CRE capital market research at Moody’s. “We saw significant volume expansion, and that really has paused given all the uncertainty in 2025, albeit for large transactions, which tend to be the higher quality properties.”
Fagan noted that there is much more certainty among investors in higher quality properties, and that’s why they’re seeing money flowing in from several sources, including sovereign debt funds.
One glaring weakness is in the hotel sector, with deal value down 30% in September compared with the same month in 2024. That was the only asset class to post a significant decline last month, likely due to a drop in international and business travel.
“A lot of companies are cutting margins, and one of the ways they do that is to have less types of certain travel,” said Fagan. “So, really feeling the avoidance of hotel assets among lenders and investors, and that’s showing up in the volume data this month.”
While hospitality took a hit, office notched a win.
In September, Apple spent $365 million on an office property portfolio in Sunnyvale, California. Nvidia spent $83 million on a single office building in Santa Clara, California. Meanwhile, Metlife got a roughly 39% discount deal on an office property in Newport Beach, California.
“That’s been a pretty typical number for office, where you see sellers kind of throwing in the towel finally,” said Fagan. “Given that kind of discount, some of these companies, especially large tech companies with a lot of cash, can scoop up their own campuses and for a relatively cheap cost. So that has been a bit of a trend. We saw Microsoft do that in Seattle recently as well.”
Another big winner in September was open-air retail. Buyers including Nuveen, Tanger, InvenTrust Properties and MCB Real Estate collectively poured just under half a billion dollars into retail properties during the month, mostly open-air strip centers with restaurants. That’s a big bet on the consumer at a time when confidence is waning.
Nuveen’s global head of real estate, Chad Phillips, told Property Play last week that he has been leaning heavily into open-air strip centers for the past two years.
“The total returns are good. You’re buying at far less than replacement cost. So you put it all together, and it’s a very resilient, essential real estate need where we can make strong, risk-adjusted returns,” said Phillips.
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