In Q2 2025, U.S. commercial property prices rose for the second straight quarter, even as deal counts declined. Total volume was up modestly year-over-year, but fewer, larger transactions cleared. The mix reflects a selective market: sellers anchor to firmer comps, while buyers prioritize quality assets and structure.
📌 Key Highlights
Total Q2 2025 Volume (≥$5M): $115B (+3.8% YoY).
Deal Count: ~41,463 properties (−7.4% YoY).
Median Price/SF: +5% QoQ, +13.9% YoY (single-property trades).
Sector Pricing (QoQ): Retail +10%, Hospitality +7%, Multifamily +4%, Industrial +4%, Office +3%.
Volume Mix: Multifamily + Office ≈ ~50% of total traded.
Trend: Larger, brokered transactions are clearing first; smaller/off-market deals remain slower.
1. Pricing Dynamics
The median $/SF rose 13.9% YoY, marking one of the strongest annualized moves since pre-COVID. This signals that deals getting done are skewing toward higher-quality, well-positioned assets — setting new benchmarks for comps across core metros. Retail (+10% QoQ) and hospitality (+7%) led quarterly gains, highlighting renewed confidence in consumer- and travel-driven demand.
2. Deal Flow & Liquidity
Despite total volume reaching $115B, deal count dropped 7.4% YoY — confirming that fewer transactions are carrying more dollars. Institutional capital is gravitating toward larger, marketed processes where price discovery is cleaner. Smaller, private-capital deals (<$25M) remain challenged by financing constraints and bid-ask gaps.
3. Sector Rotation
Retail’s surge reflects strong tenant performance in grocery-anchored and necessity retail. Hospitality benefitted from RevPAR growth and refinancing clarity. Multifamily (+4% QoQ) remains a core trade despite ongoing supply digestion, while industrial (+4%) shows steady but normalized demand post-pandemic. Office pricing (+3%) reflects selective recovery, with suburban assets holding better than CBD towers.
4. Execution Implications
With fewer comps, sellers will anchor to Q2’s firmer prints in negotiations. Buyers need to win on terms — creative debt assumptions, rate buydowns, or credits for CapEx and rollover. Underwriting discipline is paramount: exit caps must be stressed, and rent assumptions kept local and conservative.
If I’m underwriting deals now, I’m assuming sellers will hold firm on Q2’s pricing benchmarks. That means my edge has to come from structure, not price — whether through better debt terms, CapEx credits, or downside protection. In this environment, quality clears; average lingers.
📈 Read-Through
Prices are firming despite thinner flow → expect tougher negotiations.
Quality bias is back → larger, marketed deals are clearing first.
Retail & hospitality strength → watch consumer spending as a lead indicator.
Office is still selective → suburban and mixed-use outperform CBD towers.
Fall pipeline: Bid counts and PSA velocity will show whether momentum carries into Q3.
Financing tailwind: If rate cuts land in September, liquidity could broaden to the $5–$25M tier.
Sector watch: Does retail’s QoQ surge sustain, or was it a one-quarter spike?
Global capital: Cross-border flows could return faster if U.S. prices prove durable into Q4.
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