Commercial Real Estate Market Analysis: Deal Slowdown with Office and Retail Sector Opportunities

This analysis is based on the CNBC report [1] published on November 4, 2025, which featured exclusive Moody’s data on commercial real estate market trends.

The commercial real estate (CRE) market is experiencing a pronounced slowdown with overall deal dollar value growing just 5% year-over-year through the third quarter of 2025 [1]. This represents a significant deceleration from the recovery momentum seen in 2024, which Moody’s characterized as “a pretty good year” for CRE volume growth [1]. The market is characterized by three key themes: flight to quality, economic uncertainty impacting hospitality, and unexpected strength in two traditionally challenged sectors.

The flight to quality trend is evidenced by the average deal size increasing to $12.7 million in September, up from $11.2 million over the prior two years [1]. Notably, 29 of the top 50 deals in September exceeded $100 million, with volume in this category up 35% year-over-year, while smaller deals remained flat or declined [1]. This bifurcation suggests investors are concentrating capital in premium properties while avoiding secondary assets.

The most significant development is the emergence of technology companies as strategic property buyers. Apple’s $365 million acquisition of an office portfolio in Sunnyvale and Nvidia’s $83 million purchase in Santa Clara represent a fundamental shift in market structure [1]. These well-capitalized tech firms are taking advantage of discounted prices to acquire their own campuses, following Microsoft’s recent activities in Seattle [1]. This trend could reduce traditional leasing demand while creating new competitive dynamics in property ownership.

Open-air retail centers have emerged as unexpected winners, with institutional investors including Nuveen, Tanger, InvenTrust Properties, and MCB Real Estate collectively investing nearly half a billion dollars in September [1]. Chad Phillips, Nuveen’s global head of real estate, has been “leaning heavily into open-air strip centers for the past two years” due to strong total returns, purchases below replacement cost, and the essential nature of these assets [1]. This represents a sophisticated bet on consumer resilience despite broader economic uncertainty.

The office sector is experiencing significant price discovery, with sellers “kind of throwing in the towel finally” according to Kevin Fagan, head of CRE capital market research at Moody’s [1]. Metlife’s acquisition of an office property in Newport Beach at roughly 39% discount exemplifies the opportunities emerging for well-capitalized buyers [1].

• Economic Uncertainty
  : The primary driver of the overall slowdown, causing investors to pause and become more selective [1]
• Hotel Sector Vulnerability
  : Deal value down 30% in September compared to 2024, making it the only asset class with significant decline due to reduced business and international travel [1]
• Market Bifurcation
  : Secondary properties may face continued capital constraints as investors concentrate on quality assets

• Distressed Office Acquisitions
  : Well-capitalized buyers can acquire premium office properties at substantial discounts as sellers adjust expectations
• Open-Air Retail Centers
  : Continued institutional interest in strip centers with restaurant components, particularly those purchased below replacement cost
• Strategic Campus Development
  : Technology companies with cash reserves can secure long-term operational facilities at favorable valuations

The CRE market is undergoing structural transformation rather than simple contraction. While overall deal volume has slowed significantly, capital remains available for quality assets from multiple sources including sovereign wealth funds [1]. The market is characterized by sophisticated sector selection rather than broad-based investment, with technology companies emerging as new strategic buyers and institutional investors demonstrating confidence in specific retail subsectors.

The flight to quality trend appears likely to persist until broader economic uncertainty resolves, potentially creating extended opportunities for well-capitalized buyers to acquire premium assets at attractive valuations. However, sectors facing fundamental challenges like hotels may require extended recovery periods as business travel patterns continue to evolve.