Real Estate Pulse - Q4 2025
Signals of Ongoing Cycle Upturn – and Uncertainty
The cyclical upswing in US commercial real estate (CRE) investment performance continued through the third quarter of 2025, with NCREIF-Expanded Index metrics confirming a well-established cyclical upswing.
Key takeaways
- US CRE investment performance maintained a positive trajectory in the third quarter of 2025, with capital appreciation returning to positive territory–the clearest indicator of the cycle upturn.
- The retail and residential sectors outperformed industrial and office. Transactions momentum was tepid overall but strengthened for office and retail properties.
- Economic growth remains positive but weaker than last year. Third-quarter CRE metrics do not reflect the full impact of the macroeconomic weakening, given the usual CRE lag.
- Lower interest rates, moderating construction and continuing AI investment activity bode well for CRE, though heightened uncertainty surrounds the impact of federal policies and the concentrated dependence of growth on AI.
- We are seeing the beginnings of improvement in the office sector, which has been the most troubled in recent years. Beyond office, the metro pattern of CRE fundamentals did not change notably in the third quarter.
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