As of Q3 2025, the U.S. commercial real estate (CRE) landscape is witnessing a notable recovery among institutional investors, driven by a 7% quarter-over-quarter (QoQ) increase in national CRE investment volume. However, this growth is contrasted by a mixed performance among private capital flows, indicating a bifurcated market where large institutional deals thrive while smaller transactions struggle.

National CRE investment volume hit $116 billion in Q3 2025, reflecting a robust 7% increase when measured by CBRE’s value-weighted index, which serves as a proxy for institutional transactions. This uptick signals a resurgence of confidence among large-cap players, especially in sectors like industrial and multifamily, which saw increased demand. Conversely, the equal-weighted index—a measure that captures smaller deals favored by private buyers—rose a mere 1% QoQ. This disparity suggests that while institutional capital is actively seeking opportunities, private investors are facing challenges that may hinder their engagement.

Private capital’s share of total acquisitions dipped to 41%, down from 45% YoY. The waning interest from private buyers could be attributed to tighter credit conditions and a hesitance to engage in less liquid markets amid rising borrowing costs. As institutional buyers gain traction in key sectors, this trend underscores a shift in the competitive landscape, with private players potentially sidelined unless market conditions improve. Such dynamics could lead to an evolving risk profile for various asset classes moving forward.

Dissecting sector performance reveals a stark contrast. The office sector remained stagnant at $12 billion, flat QoQ, indicating ongoing challenges in tenant demand and occupancy rates. In contrast, industrial transactions surged to $28 billion, reflecting a 9% increase, while multifamily investments climbed to $39 billion, an 8% rise QoQ. This divergence emphasizes how institutional interests are increasingly concentrated in sectors perceived as more resilient or growth-oriented, causing a notable shift in capital allocation strategies.

Metro-level analysis illustrates regional disparities, with Sun Belt markets—such as Dallas and Atlanta—demonstrating mid-single-digit volume gains. Conversely, gateway cities like New York City and San Francisco continue to lag, reflecting broader economic challenges and a potentially slower recovery trajectory in these historically dominant markets. The divergence in regional performance is critical for investors and lenders, as local conditions can significantly impact asset valuations and investment strategies.

As cap rates edged up by 10–15 basis points nationally, this reflects a broader risk re-pricing in the face of economic uncertainty. Institutional investors are cautiously re-engaging with select sectors and regions, while private capital remains more reserved. This two-speed market structure necessitates a nuanced approach to underwriting and credit risk assessment. If the current trends continue, market participants may need to recalibrate their expectations around deal velocity, pricing, and the overall risk premium associated with different asset classes.