Commercial real estate exceeded expectations in 2025-
Office fundamentals showed their first meaningful improvement since 2020, led by continued strength in Class-A assets.
Data centers remained on an exponential growth path, expanding well beyond traditional hubs and increasingly supported by alternative energy solutions.
Investment activity rebounded sharply, with CRE transaction volume up 17% year-over-year, driven by improved lending conditions and strong private capital engagement.
While concerns around bank CRE loan distress dominated headlines, actual write-downs proved far more limited than predicted—though office exposure remains an area to watch.
Walking into 2026, the message from 2025 is clear:
commercial real estate didn’t just survive — it reset and started growing again.
@Account Closed I have to agree I never really saw any of that "commercial RE is falling out of the sky" headlines in real life. Granted i don't do huge multifamily, but from what I saw industrial and retail and ground up development was as competitive as ever.
OP my view might be local, but I see a different 2025 story coming into 2026.
Our bankers did not see a large foreclosure business, but they don't like owning assets. Their clients who got into trouble, they did a refinance if it helped and extended the Amort period so the lower payments might offset the decreased occupancy rates.
From a loan standpoint we both added to our Fixed loans and maintained our Working Line of credit about 1 month ago. Fed interest rates going down, has had little impact on Commercial loans which track the 10 year bond rate which is maintaining or increasing.
Inflation I keep hearing is going down. But from my viewpoint it is going up. Whether it is tariffs on SPF boards from Canada or fixtures/steel from China, etc. I see prices going up. Hidden inflation is the devaluation of the USD versus foreign currencies 10% in 2025 which inflates our purchasing costs items from overseas.
Fuel costs is going down, so that is a great thing across the board.
MFH and Data Centers are really strong here with a lot of growth. Housing we are low, so that is a safe bet as long as the numbers work out.
More vacant CRE square footage was added with store closures and movements. Not a lot of new non-MFH CRE square footage was added.
We are in the Midwest, so we stay pretty level with not a lot of up and down swings but still saw CRE challenged.
I agree — I never really saw the “commercial real estate is falling out of the sky” headlines reflected in what was actually happening on the ground. From what I’ve seen, including in large-scale multifamily, industrial, retail, and ground-up development, activity has remained far more competitive and resilient than many of the headlines suggested.
I also noticed you’re in Ohio, which has been a particularly active market — especially in the multifamily investment space. That sector has been a major stabilizer and growth driver for commercial real estate across the state. It’s not just institutional-scale multifamily either; the 2–4 unit residential investment segment has also been very active, with investors building multi-property portfolios and steadily expanding their footprint.
From my perspective working at both a national and international level, the real pressures on the CRE industry haven't been demand — they've been interest rates, inflation, labor costs, and tariffs, particularly as they affect development and ongoing operations. Those factors have had the greatest impact on hospitality, more than any other sector. With higher costs of living and economic uncertainty, leisure travel has become less of a priority for many households, and business travel is still well below pre-COVID levels.
The office sector is slowly beginning to come back, but it’s still dealing with the long-term effects of COVID and remote-work adoption. Outside of that, however, multifamily, industrial, healthcare, and retail have remained remarkably stable — and in certain markets, they are still experiencing real growth.
Overall, the fundamentals across these sectors have been far stronger than the broader narrative would suggest.