Commercial real estate deal volume fell for the first time in nearly two years

A version of this article first appeared in the CNBC Property Play newsletter with Diana Olek. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. subscription To receive future issues, directly to your inbox.

The commercial real estate recovery has been slow and bumpy, as has interest rate policy over the past few years. Of course, the two are deeply connected.

After gaining significant momentum after the pandemic ended, this year has been tough. October was the first month to see negative year-over-year growth in transaction volume since the recovery began after the Federal Reserve raised interest rates in early 2024, according to monthly data provided by Moody’s exclusively to CNBC’s Property Play. It tracks the top 50 commercial real estate, or CRE, real estate sales across the United States

Deal volume growth turned positive in the first part of last year and was approaching pre-Covid levels by the end of the year.

“More than just an imminent downturn in real estate capital markets, the slide into negative growth in October 2025 reflects the ongoing stagnation between buyers and sellers,” said Kevin Fagan, head of capital market research at Moody’s. “The bottom of the U-shaped recovery from lower volumes of 2023 has been lengthened by persistent high interest rates and political and economic uncertainty in 2025.”

But October was still an active month. Sales were $24.4 billion, nearly 70% of October 2019 sales. Total dollar volume remains higher this year than last year, but growth momentum has slowed significantly since 2023.

Looking at specific property trends, industrial and multifamily properties topped the top 50 deals. The only sector that improved in deal volume compared to last year was the hotel sector. It saw 6% growth after a negative third quarter.

One notable sale: The New York Edition Hotel at 5 Madison Avenue was sold for $231.2 million by the Abu Dhabi Investment Authority, a sovereign wealth fund, to Kam Sang, a real estate developer.

“The New York Edition Hotel is an interesting hotel because of the high selling price, the withdrawal of the Middle East sovereign wealth fund from New York City, and the history of the building,” Fagan said, noting that it was originally an office building called the MetLife Clock Tower and was the tallest building in the world for about three years from 1910 to 1913.

The Clock Tower and Woolworth Building, which was also the tallest in the world, were converted into a hotel and residential building, respectively, starting around 2013.

“They are almost worthless as offices, but they are of great value as a hotel and apartment building respectively,” Fagan added.

Meanwhile, the multifamily sector saw the biggest decline in October, down 27% from 2024. It had shown volumes above pre-Covid levels in the previous four months, and despite the decline, buildings were mostly trading at a premium compared to previous sales.

Office continued its rocky recovery, with either discounts or property transfers part of the story.

The top sale in October was for Weill Cornell’s Sotheby’s headquarters, which likely means it will be repurposed for healthcare or medical office, according to Fagan.

New York Life bought a distressed Manhattan office building from BGO for nearly half its last sale price in 2015.

“It shows that there is institutional interest in discount office space, which enhances the long-term minimum value of office buildings in good markets, and the recognized lasting benefit of these properties,” Fagan said.