REcap: Baker Tilly's award-winning commercial real estate market report

Stability marked late 2025 as the U.S. economy and commercial real estate grew, with high transactions and fundraising signaling growing confidence.

Markets reflect delayed decisions and a search for certainty, while the OBBBA adds clarity; trade policies and geopolitical risks still impact CRE.

Commercial real estate transactions and fundraising markets gained momentum in Q1 as cap rates and valuations stabilized or began to recover. 

With election uncertainty and economic data trends, 2025 looks great year for real estate, though tariffs and policy shifts could still affect the market.

On the heels of the recent Fed rate cut, the major stock market indices have trended upwards and the latest job numbers were surprisingly strong with the unemployment rate reversing recent trends and decreasing. The U.S. economy has continued to remain extremely resilient but headwinds and threats in commercial real estate remain present.

With key economic indicators appearing to be favorable, commercial real estate transaction activity remains stagnant. This may be driven by a reluctance to strike deals when it appears more probable than in recent memory that the interest rate environment will be improving sooner rather than later.

Several large transactions were announced in the first quarter of the year, with more prognosticators optimistic for more transaction volume in 2024 both at the property level and fueled by entity deals.

Transaction activity remained extremely depressed in the fourth quarter of 2023, while most sectors saw some fundamental deterioration and valuations decreased broadly.

The real estate markets remained stagnant in the third quarter with low transaction volumes amid continuing debt concerns and operational pressures. Significant cost pressures were impacting most sectors with insurance and property taxes being primary culprits.

Much of what could be said in the first quarter of 2023 still applies in the second quarter, with languid transaction activity and uncertainty being the primary hallmarks. Commercial real estate was generally sideways this quarter as activity remained depressed and confidence in fundamentals seemingly down.

The first quarter of 2023 saw some commercial real estate trends stick around from the end of last year, with transaction activity slowing further and inflation showing signs of easing.

2022 closed on a sour note for the commercial real estate industry, with some mildly encouraging macroeconomic news being more than offset by a lackluster transaction environment and a negative short-term outlook that was fueled by a challenging capital markets environment.

Commercial real estate transaction activity delivered on the promise of decreased activity that we observed last quarter with transactions decreasing significantly across asset classes.

The Q2 2022 Commercial Real Estate Market Report provides analysis, insight and outlook into the multifamily housing, office, retail, industrial and capital market sectors.

The Q1 2022 Commercial Real Estate Market Report provides analysis, insight and outlook into the multifamily housing, office, retail, industrial and capital market industries.

Read the fourth quarter of 2021’s real estate market trends, transactions, analysis and outlook as you prepare for the year ahead.

The third quarter of 2021 was prosperous for commercial real estate, finally surpassing 2019 activity levels with a notable increase in multifamily housing deals.

Access the second quarter of 2021’s real estate market trends, transactions, analysis and outlook as you prepare for third quarter.

Understand Q1 2021 real estate market trends, transactions, analysis and outlook to prepare yourself for your next investment.

The final quarter real estate market report of 2020 including a deep dive into the multifamily housing, office, retail, industrial, and capital market sectors.

A Q3 2020 commercial real estate market report for the multifamily housing, office, retail, industrial, senior housing and capital markets sectors.

A Commercial Real Estate Market Report for Q2 2020, providing analysis and trends in multifamily housing, office, retail, industrial, hospitality and capital markets sectors.