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The recovery of the commercial real estate sector has been slow and bumpy, much like the interest rate policy of recent years. The two, of course, are deeply connected.
After gaining significant momentum following the pandemic, this year has been difficult. October was the first month of negative year-over-year growth in transaction volume since the post-Fed rate hike recovery began in early 2024, according to monthly data provided by Moody's as an exclusive media outlet for CNBC's Property Play. Tracks the top 50 commercial real estate, or CRE, property sales in the US.
Transaction volume growth turned positive early last year and was even approaching pre-Covid levels by the end of the year.
“Rather than an imminent slowdown in CRE capital markets, the slide toward negative growth in October 2025 reflects stagnation occurring between buyers and sellers,” said Kevin Fagan, head of CRE capital markets research at Moody's. “The bottom of the U-shaped recovery from low volumes in 2023 has been lengthened by persistently high interest rates and political and economic uncertainty in 2025.”
But October continued to be an active month. $24.4 billion in sales occurred, representing about 70% of October 2019 sales. Total dollar volume is still higher this year than last year, but growth momentum has slowed significantly since 2023.
In terms of specific real estate trends, industrial and multifamily led the top 50 deals. The only sector that improved in transaction volume compared to last year was the hotel sector. It experienced 6% growth after a negative third quarter.
Landscape view of the Metropolitan Life Insurance Company Tower, the North Building and 41 Madison, located along Madison Park in the Flatiron district in the Manhattan borough of New York.
Brian Logan | Stock | fake images
One notable sale: The New York Edition hotel at 5 Madison Avenue was sold for $231.2 million by the Abu Dhabi Investment Authority, a sovereign wealth fund, to Kam Sang Company, a real estate development company.
“The New York Edition Hotel is interesting because of both the high asking price, a Middle Eastern sovereign wealth fund pulling out of New York, and the history of the building,” Fagan said, noting that it was originally an office building called the MetLife Clock Tower and was the tallest building in the world for about three years, from 1910 to 1913.
Both the Clock Tower and the Woolworth Building, once the tallest in the world, were converted into a hotel and residential area, respectively, starting in 2013.
“They are almost useless as offices, but extremely valuable as a hotel and apartment building, respectively,” Fagan added.
Meanwhile, the multifamily segment saw the biggest pullback in October, down 27% from 2024. It had been showing volumes above pre-Covid levels in the previous four months and, despite the pullback, buildings were mostly trading at a premium to previous sales.
Office continued its difficult recovery, with discounts or property conversions part of the story.
October's biggest sale was of Sotheby's headquarters to Weill Cornell, which likely means a conversion to a healthcare or doctor's office, according to Fagan.
New York Life bought a distressed Manhattan office building from BGO for nearly half its last sales price in 2015.
“This demonstrates that there is institutional interest in offices sold at discounts, reinforcing the long-term minimum value for office buildings in good markets and the recognized long-term utility of such properties,” Fagan said.
