Commercial Real Estate Market Report: Q3 2025

Key takeaways

• Multifamily housing: The U.S. multifamily sector demonstrated resilience with over 102,000 units absorbed, marking the third consecutive quarter of strong demand. Notably, rent declines were observed in 16 of the top 30 metros, including Boston and several Midwest cities, indicating that pricing pressure is now affecting even markets with limited new supply. This broad-based softness, coupled with ongoing economic uncertainty, has prompted institutional investors to exercise caution in their rent growth assumptions.
• Senior housing: The senior housing market is experiencing significant growth driven by the aging population and increasing demand for specialized care and living facilities. With the average Baby Boomer nearing 70 years old, there is a surge in the need for diverse housing options that cater to varying levels of independence and healthcare requirements.
• Office: The third quarter marked a continuation of an office sector experiencing an uneven recovery, with strength concentrated in select markets and institutional-quality assets. San Francisco's AI-driven turnaround is bringing relief to a long-struggling office market, although the prevalence of short-term leases and small spaces may limit the market’s recovery compared to those of prior cycles. Owners of aging Class B and C buildings face difficult choices at a time of softening macroeconomic conditions and slowing job growth.
• Retail: The U.S. retail market demonstrated early signs of stabilization in the quarter. Despite this, year-to-date demand remained slightly negative, reflecting a cautious expansion environment. While fundamentals remain generally healthy, the market continues to face headwinds from planned store consolidations and the uncertain impact of evolving tariff and trade policies.
• Industrial: On the surface, the third quarter produced similar outcomes to those of the second quarter. There were many familiar storylines: encouraging in-place rent growth offset by higher vacancy, sublease availability, slowing construction activity, economic uncertainty, etc. However, in the face of these headwinds, there were a few bright spots.
• Capital markets: The expectation of loosening capital markets appeared to spur increasing activity, which has primarily manifested in smaller transactions and single asset deals within the real estate market. However, we anticipate a continued improved capital environment and more time to digest the environment will contribute to an increase in more meaningful transactions deploying the significant volumes of dry power available heading in the end of year and into early 2026.

Access the full third-quarter breakdown in our latest REcap.

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