Commercial Real Estate Deals Slowing: Moody’s Highlights Two Bright Spots
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Commercial Real Estate Dealmaking Stalls in 2025, But Opportunities Emerge
What’s Happening in Commercial real Estate?
Commercial real estate dealmaking is experiencing a slowdown in 2025, following a period of recovery after the initial impact of the COVID-19 pandemic. While transactions are still occurring, they are significantly below pre-pandemic levels. This shift is marked by a ”flight to quality” and a surprising renewed interest in previously struggling sectors like office and retail.
Key Data Points (Q3 2025)
According to exclusive data provided by Moody’s to CNBC’s property Play, the overall dollar value of commercial real estate deals has only increased by 5% compared to the previous year as of the third quarter of 2025.
| Metric | Value |
|---|---|
| Overall Deal Value Growth (YOY) | 5% |
| Average Deal Size (September 2025) | $12.7 million |
| Average Deal size (Prior 2 Years) | $11.2 million |
| Deals Over $100 Million (Q3 2025) | 35% increase YOY |
Emerging Trends in September 2025
- Flight to Quality: Larger,higher-quality properties are attracting more investment,driving up the average deal size.
- Economic Uncertainty & Hotels: The hotel sector is particularly vulnerable to current economic uncertainties.
- Renewed Interest in Office & Retail: Despite long-term concerns, both office and retail spaces are seeing a resurgence in investor attention.
What Does This Mean for Investors?
The current market presents a mixed bag for investors.the slowdown in overall transaction volume suggests caution, but the flight to quality and renewed interest in certain sectors indicate potential opportunities. Investors are prioritizing stable, high-quality assets, likely anticipating continued economic volatility.
Who is Affected?
- Commercial Property Owners: Those with lower-quality properties may face challenges in attracting buyers.
- Investors: Need to be more selective and focus on quality assets.
- Lenders: Increased scrutiny of loan applications and potential for higher interest rates.
- Hotel Sector: Facing meaningful headwinds due to economic uncertainty.
Timeline of Recent Events
- 2022-2023: Initial Fed rate hikes begin to impact the CRE market.
- 2024: Significant volume expansion in CRE dealmaking as the market recovers.
- 2025 (YTD): Slowdown in transaction volume, with a 5% increase in overall deal value as of Q3.
- September 2025: Emergence of key trends: flight to quality, hotel sector struggles, renewed interest in office and retail.