O
ctober marked the first year‑over‑year decline in U.S. commercial‑real‑estate deal volume in almost two years, highlighting a widening gap between buyers’ and sellers’ pricing expectations. The slowdown follows a year in which industrial and multifamily assets closed at or above pre‑pandemic levels, buoyed by cheap debt and a surge of capital into hard assets. Kevin Fagan, Moody’s CRE capital‑market research head, said the negative growth reflects a stalemate rather than an imminent downturn, and that the bottom of the U‑shaped recovery has been protracted by persistently high rates and 2025 uncertainty.
Despite the dip, October still generated about $24.4 billion in sales—roughly 70 % of October 2019 volumes—while total dollar volume this year stayed above 2024 levels, Moody’s data shows. Transaction growth, however, has slowed sharply since 2023 as rate shifts and credit costs reshape underwriting and leverage, especially in conduit and single‑asset CMBS. Multifamily, identified earlier in 2025 as a leading growth sector, experienced the steepest pullback, with volumes down ~27 % YoY, even as many assets traded at premiums to prior sales.
Hospitality was the only sector to post higher deal volume than a year earlier, up about 6 % after a weak third quarter. A notable trade was the sale of the New York Edition hotel at 5 Madison Ave by the Abu Dhabi Investment Authority to Kam Sang Company for roughly $231.2 million. Fagan highlighted the high sale price, the exit of a Mideast sovereign‑wealth fund from NYC, and the building’s history as the former MetLife Clock Tower, noting its transformation from a nearly worthless office into a valuable hotel and apartment complex, similar to conversions at the Woolworth Building.
For office lenders and borrowers, October’s largest deal—the sale of Sotheby’s headquarters to Weill Cornell—illustrates how medical and life‑science tenants are filling obsolete space. New York Life’s purchase of a distressed Manhattan office tower at about half its 2015 price further shows institutional capital targeting discounted assets. Fagan said this signals institutional interest in office sales at discounts, reinforcing a long‑term value floor for office buildings in strong markets and the enduring utility of such properties.
Commercial and multifamily mortgage originations jumped 36 % YoY and 18 % QoQ in Q3 2025, per the Mortgage Bankers Association, with office loan volume surging 181 % YoY. For originators, October’s figures confirm a market described as volatile and unpredictable. Lenders continue to favor multifamily and industrial, while the office market remains structurally challenged. The recent stall in volume growth suggests that 2026 originations will depend more on how quickly buyers, sellers, and lenders can agree on a new risk‑pricing equilibrium in a higher‑cost, slower‑growth environment.
