Commercial real estate raked in $93.5 billion of investments during the first quarter across all major asset classes, a 17% increase from a year ago. However, that came on fewer transactions as asset trades were down 12% from last year, according to a Colliers market update penned by US capital markets research director Aaron Jodka.
The report noted that recent market volatility has caused deals to stall and suggests second-quarter activity could be muted.
Multifamily led in both volume and year-over-year gains, with volume reaching $30 billion, a 36% increase. Jodka said multifamily fundamentals have held up remarkably well even through a surge in development, and pricing is starting to rebound in the sector, led by garden properties.
Recommended For You
Office growth, however, pulled back during the first quarter and was the only asset class to post a quarter-over-quarter decline in sales volume. The sector posted an 18% volume decrease to $13.7 billion, while individual property transactions increased, as did deals in central business districts. Jodka noted pricing appears to be bottoming in the office sector, with both suburban and CBD values gaining on a quarterly basis.
Industrial volume was up 24% year-over-year to $22.3 billion, with both individual and portfolio sales rising during the quarter. Longer weighted average lease term (WALT) deals are gaining traction, and an uptick in domestic production and reshoring bodes well for future demand and development. Jodka noted higher trade barriers could weigh on the sector.
Retail volume gained 2% to $16.5 billion, with single-asset deals rising 1%. Consumers appear to have adjusted their spending patterns ahead of potential tariff-related price increases, which has propped up overall performance but could lead to a dip in future spending patterns, said the report.
Finally, the hospitality sector is showing mixed sales signals, with volume increasing 27% year-over-year, which was one of the strongest performances across asset classes during the quarter. However, that compares with a weak first quarter 2024 performance, noted Jodka. Hospitality investment activity has fallen for three consecutive quarters, impacted by market volatility in hotel room nights. Travel changes related to government policy may weigh on the hospitality sector, particularly if fewer Canadian visitors travel to the United States, said the report.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
