Commercial Real Estate Market Report: Q4 2025

Key takeaways

• Multifamily housing: The national multifamily market is showing signs of steadier footing, even as it works through the final stretch of a historically large supply cycle. Demand remained solid as household formation has stabilized, renter mobility has slowed, and renewals remain a key driver of occupancy as many renters stay put in the face of high homeownership costs. 
• Office: After years of post-pandemic purgatory, the office sector turned the corner in 2025, though 2026 will test whether improving fundamentals can overcome persistent headwinds. Slowing job growth, turbulence in life science and unresolved distress related to looming debt maturities warrant additional vigilance from office investors in 2026.    
• Retail: The U.S. retail sector remains one of the strongest-performing commercial real estate asset classes, continuing to exhibit resilient fundamentals despite broader economic uncertainty, higher interest rates and moderating consumer spending growth. The sector’s performance reflects a prolonged period of limited new supply and a long-term shift away from discretionary big-box retail toward necessity-based, service-oriented and experiential uses. 
• Industrial: The national industrial sector ended 2025 with mixed results. Some called it a year of transition as many adapted to the changing landscape. Others called it a year of moderation with noticeable pullbacks in capital deployment and heightened scrutiny on new construction as questions lingered over existing inventories and growing macroeconomic uncertainties. 
• Capital markets: Fund raising appeared to be healthy in the final quarter of 2025 with a diverse range of announced funds covering all major sectors and various specialty sectors, and REIT equity performance ended mixed for the year and continued to underperform the broader equity markets. The prognosis for rate cuts in 2026 will be highly dependent on how jobs and inflation trend.  
• Data centers: As demand continues to surge, the data center market enters 2026 with an outsized growth trajectory despite increasing constraints hindering growth potential. Demand for digital infrastructure has continued to outpace supply, resulting in the modern data center becoming an increasingly attractive real estate investment. Higher returns have drawn more capital to the sector due to stable and predictable cash flows from long-term leases executed by highly-regarded technology users. 

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

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