Q1 2025 CRE Investment Rises 17%

NEW YORK — In 2025's first quarter, commercial real estate acquisition activity increased 17%, according to MSCI and Colliers data.

Real estate investors deployed $92.5 billion into the major asset classes during the quarter, but the number of trades was down 12% from the first quarter of 2024. Aaron Jodka, director of U.S. capital markets research at Colliers, said single-asset transactions increased 21% year-over-year and largely drove the market. He added the number of properties sold did decline in 2025's first quarter because there were fewer large portfolio deals that closed, compared to the year ago quarter. Jodka said the first quarter is too early to tell if tariffs will impact commercial real estate investment activity, particularly since most commercial real estate deals take weeks or months to close.

In late 2023 and early 2024, investors were willing to purchase properties that had short-term lease rollover as a means of driving rental-rate increases at renewal time, but now with higher rents, longer-term leases are more attractive to investors.

Jodka said, "It seems [demand] has shifted to a 15-year, credit tenant, low cap-rate transaction, to be able to predict what's happening. There's a shift to core investing to start 2025."

For the first quarter of 2025, industrial real estate volume increased 24% year-over-year to $22.3 billion, and multifamily real estate volume experienced a 36% increase to $30 billion. Jodka added that the multifamily sector will also remain strong because supply-demand dynamics in rental housing remain strong, despite record supply hitting the market. However, office volume has continues to slip annually, but single-asset office transactions did increase 17% year-over-year. According to Jodka, many investors are carefully monitoring the 10-year Treasury yield, and some are waiting to strike until that rate dips.

Source: Jacksonville Business Journal (05/05/25) Fahey, Ashley

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