The latest JLL report reveals a stark bifurcation in global Commercial Real Estate (CRE) investment volumes for Q3 2025, with the U.S. displaying resilience while Europe and Asia-Pacific lag behind. Total global investment volumes hit approximately $150 billion, reflecting a 12% decrease year-over-year. This divergence underscores the evolving landscape of capital allocation, influenced by regional economic conditions and asset quality.

In the U.S., investment volumes grew by 2% quarter-over-quarter, primarily propelled by the industrial and living sectors. This uptick is indicative of a strategic shift among institutional investors favoring core assets that promise risk-adjusted yields. Notably, local metros such as Dallas and Atlanta outperformed, with volume increases between 4% and 5%. The selective nature of capital flow is evident, as metropolitan areas with strong fundamentals attract more investment.

Conversely, European markets faced significant challenges, with investment volumes declining 16% year-over-year. Persistent liquidity constraints have particularly affected the office sector, leading to a more cautious approach from investors. As European capital markets grapple with elevated rates and geopolitical uncertainties, the disconnect in performance compared to U.S. markets raises concerns about long-term recovery trajectories. This slump highlights the differentiated risk profiles that investors must navigate.

Asia-Pacific markets demonstrated relative stability but remained muted overall. Japan showed some resilience, contrasting with weaker performances in other regional markets. The mixed signals from Asia-Pacific suggest a cautious optimism, yet investors remain wary of potential volatility stemming from external economic pressures. The overall sentiment reflects the need for careful assessment of market dynamics across various jurisdictions.

The recent trends in value-weighted and equal-weighted indices illustrate a complex recovery landscape. While value-weighted indices, reflecting large institutional transactions, show moderate stabilization in the U.S., equal-weighted indices reveal ongoing softness in smaller local deals. This disparity indicates a two-speed recovery where core assets are favored, while secondary and tertiary markets struggle. Lenders and investors must recalibrate their strategies to align with these emerging realities.

As we look ahead, the selective nature of capital flows is expected to persist. If interest rates stabilize and pricing uncertainties diminish, we may see a gradual re-engagement from investors in lagging markets. However, the ongoing bifurcation suggests that understanding the nuances of local markets and asset quality will be crucial in navigating future opportunities.