Commercial real estate acquisition activity saw an uptick in the first quarter, but whether that momentum will carry through to the rest of the year remains a question.
Real estate investors deployed $92.5 billion into the major asset classes in Q1, a 17% increase from a year ago, according to data from Colliers and MSCI. Fewer properties transacted compared to the same time last year, with the number of trades down 12% from Q1 2024.
Aaron Jodka, director of U.S. capital markets research at Colliers, said a major reason why the number of properties sold slipped in the first quarter is that fewer large portfolio deals closed in Q1 2025 compared to the same period a year prior.
Single-asset transactions — which largely drive the market, Jodka said — were up 21% year over year from a volume standpoint, he said.
Questions remain about whether commercial real estate investment activity will remain active as economic uncertainty from an international trade war has caused many to pause. Data from Q1 would be too early to reflect any potential impact on buying and selling activity, Jodka said, as it takes weeks, if not months, for most deals to close. Many of the major tariff directives from the Trump administration came in early April, the start of the second quarter.
“The data is moving around and the news cycle is changing day to day,” Jodka said. “We’re trying to help our clients understand the impacts — it’s a little too early to say what’s going to happen.”
Still, other shifts are being observed in transaction activity.
In industrial real estate, for example, momentum started to pick up late last year on properties with longer-term leases. In late 2023 and early 2024, investors were more willing to purchase properties that had short-term lease rollover as a means of driving rental-rate increases at renewal time.
As the industrial market has slowed, so has rent growth, making properties with longer-term leases more attractive today.
“It seems [demand] has shifted to a 15-year, credit tenant, low cap-rate transaction, to be able to predict what’s happening,” Jodka said. “There’s a shift to core investing to start 2025.”
Industrial real estate also remains one of the more attractive asset classes, with volume in that sector increasing 24% year-over-year in Q1 2025, to $22.3 billion.
Multifamily — the perennial leader among the real estate sectors, according to Colliers and MSCI — saw $30 billion poured into it in Q1, a 36% increase from one year ago.
While multifamily has always been an attractive property type for investors, it’s poised to become even more popular with groups because supply-demand dynamics in rental housing remain strong, despite record supply hitting the market, Jodka said.
“Demand trends have been phenomenal, especially given the amount of construction,” he said. “Market participants have been pleasantly surprised at how absorption and occupancy have held up, despite record-high deliveries.”
Office volume slipped on an annual basis, although Jodka said that was likely because Healthpeak Properties’ acquisition of Physicians Realty Trust, a deal that closed in the first quarter of 2024, made that quarter abnormally robust. Single-asset office transactions were up 17% year over year, signaling deal momentum in the beleaguered office market is picking up.
Right now, investors overall are closely watching the 10-year Treasury yield, which has moved around “quite a bit in the last month,” Jodka said. Many groups are trying to strike when that rate dips, although much is dependent on where a deal is in the overall cycle, he added.
“We’re certainly seeing interested parties,” Jodka said. “We’re seeing deep bid sheets when deals go to market and plenty of valuation activity. It’s still an active market …. [There’s] a little bit more caution than the first quarter, but it doesn’t feel like everybody packed up their stuff and went on vacation.”
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Single-asset transactions — which largely drive the market, Jodka said — were up 21% year over year from a volume standpoint, he said.
Questions remain about whether commercial real estate investment activity will remain active as economic uncertainty from an international trade war has caused many to pause. Data from Q1 would be too early to reflect any potential impact on buying and selling activity, Jodka said, as it takes weeks, if not months, for most deals to close. Many of the major tariff directives from the Trump administration came in early April, the start of the second quarter.
“The data is moving around and the news cycle is changing day to day,” Jodka said. “We’re trying to help our clients understand the impacts — it’s a little too early to say what’s going to happen.”
Still, other shifts are being observed in transaction activity.
In industrial real estate, for example, momentum started to pick up late last year on properties with longer-term leases. In late 2023 and early 2024, investors were more willing to purchase properties that had short-term lease rollover as a means of driving rental-rate increases at renewal time.
As the industrial market has slowed, so has rent growth, making properties with longer-term leases more attractive today.
“It seems [demand] has shifted to a 15-year, credit tenant, low cap-rate transaction, to be able to predict what’s happening,” Jodka said. “There’s a shift to core investing to start 2025.”
Industrial real estate also remains one of the more attractive asset classes, with volume in that sector increasing 24% year-over-year in Q1 2025, to $22.3 billion.
Multifamily — the perennial leader among the real estate sectors, according to Colliers and MSCI — saw $30 billion poured into it in Q1, a 36% increase from one year ago.
While multifamily has always been an attractive property type for investors, it’s poised to become even more popular with groups because supply-demand dynamics in rental housing remain strong, despite record supply hitting the market, Jodka said.
“Demand trends have been phenomenal, especially given the amount of construction,” he said. “Market participants have been pleasantly surprised at how absorption and occupancy have held up, despite record-high deliveries.”
Office volume slipped on an annual basis, although Jodka said that was likely because Healthpeak Properties’ acquisition of Physicians Realty Trust, a deal that closed in the first quarter of 2024, made that quarter abnormally robust. Single-asset office transactions were up 17% year over year, signaling deal momentum in the beleaguered office market is picking up.
Right now, investors overall are closely watching the 10-year Treasury yield, which has moved around “quite a bit in the last month,” Jodka said. Many groups are trying to strike when that rate dips, although much is dependent on where a deal is in the overall cycle, he added.
“We’re certainly seeing interested parties,” Jodka said. “We’re seeing deep bid sheets when deals go to market and plenty of valuation activity. It’s still an active market …. [There’s] a little bit more caution than the first quarter, but it doesn’t feel like everybody packed up their stuff and went on vacation.”
Source: “Commercial real estate acquisition volume rises 17% in Q1”
