Commercial real estate deal volume drops for first time in nearly 2 years
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The recovery in commercial real estate has been slow and bumpy, similar to the interest rate policy of the last few years. Of course, the two are deeply connected.
After gaining significant momentum after the pandemic, this year has been challenging. October was the first month to see negative growth in transaction volume on an annual basis since the post-Fed rate hike recovery began in early 2024, according to monthly data provided by Moody’s as a media exclusive to CNBC’s Property Play. Tracks the top 50 commercial real estate, or CRE, property sales across the US
Deal volume growth turned positive early last year and was even approaching pre-Covid levels by the end of the year.
“The shift to negative growth in October 2025 reflects the ongoing impasse between buyers and sellers, beyond an imminent downturn in CRE capital markets,” said Kevin Fagan, head of CRE capital markets research at Moody’s. “The trough of the U-shaped recovery from low volumes in 2023 is further prolonged by persistently high interest rates and policy and economic uncertainty in 2025.”
However, October was still an active month. Sales totaled $24.4 billion, which is roughly 70% of October 2019 sales. Total dollar volume is still higher this year than last year, but growth momentum has slowed significantly since 2023.
When looking at specific real estate trends, industrial and multifamily top the top 50 deals. The only sector that showed an increase in transaction volume compared to last year was hotels. After a negative third quarter, growth was 6 percent.
Landscape view of the Metropolitan Life Insurance Company Tower, North Building, and 41 Madison, located along Madison Park in the Flatiron District of New York’s Manhattan borough.
Brian Logan | Istock | Getty Images
One notable sale: The New York Edition hotel at 5 Madison Avenue was sold by the Abu Dhabi Investment Authority, a sovereign wealth fund, to the Kam Sang Company, a real estate development company, for $231.2 million.
“The New York Edition hotel is an interesting hotel both because of the very high sales price, the Middle East sovereign wealth fund originating from New York, and the history of the building,” Fagan said, noting that this building was actually an office building called the MetLife Clock Tower and was the tallest building in the world for about three years from 1910 to 1913.
Both the Clock Tower and the Woolworth building, which was once the tallest building in the world, have been converted into hotels and residences, respectively, since 2013.
“These are virtually worthless as offices, but extremely valuable as hotels and apartments respectively,” Fagan added.
Meanwhile, the multifamily segment saw the biggest decline in October, down 27% from 2024. The previous four months had shown higher volumes than pre-Covid levels, and despite the pullback, buildings were mostly trading at a premium to previous sales.
Office continued its hard recovery, with discounts or property conversions as part of the story.
The biggest sale in October, according to Fagan, was the sale of Sotheby’s headquarters to Weill Cornell; This likely means reuse as a healthcare or medical office.
New York Life purchased a worn-out office building in Manhattan from BGO for nearly half its last sale price in 2015.
“This demonstrates institutional interest in offices being sold at a discount, which strengthens the long-term value base for office buildings in good markets and reinforces the recognized enduring benefit of such properties,” Fagan said.
