The Q3 2025 data from CBRE reveals a bifurcated recovery within the US capital markets. While institutional investors have increased their activity, smaller deals and secondary markets continue to struggle. This duality suggests a nuanced landscape for capital allocation and risk management.

In Q3 2025, the value-weighted transaction volume—a proxy for large, institutional deals—rose by 3% year-over-year. This indicates a robust appetite from larger investors. Conversely, the equal-weighted index, which reflects activity across all deal sizes, remained flat. This disparity suggests that while institutional players are re-engaging with prime assets, smaller market participants are facing persistent challenges. The ongoing difficulty for small-to-mid-size deals highlights the uneven recovery across the sector.

Cap rates across major property types—including office, industrial, retail, and multifamily—held steady during this period. This stability indicates that pricing for prime assets remains resilient amid fluctuating demand. The implication here is significant: while large institutions are actively pursuing high-quality investments, the broader market's stability does not translate to opportunities for smaller players.

Liquidity in Q3 2025 remained concentrated in primary markets and among institutional buyers. This trend emphasizes that smaller deals, particularly in secondary markets, continue to experience muted activity. Lending spreads, which remained tight for core assets, widened for non-core and transitional properties. This widening signals a selective risk appetite among lenders, complicating access to capital for smaller market players.

The bifurcated recovery reflects a critical gap between the performance of institutional investors and smaller local operators. While institutional capital is re-engaging, local investors and secondary markets are lagging significantly behind. This divergence underscores the necessity for market participants to adjust their risk models, particularly when considering investment strategies in less competitive markets.

The mixed signals coming from the capital markets raise important questions about future growth trajectories. If the trends of the past few quarters persist, institutions may continue to dominate the landscape, leaving smaller operators at a disadvantage. Analysts and lenders should closely monitor these discrepancies in market activity to better align their strategies with the evolving dynamics.