The year ahead looks set to be far less stressful for commercial real estate after the volatility of 2025, according to LightBox’s December 2025 CRE Activity Index.
Even though 2025 ended with what the data analytics firm called a typical year-end slowdown amid ongoing uncertainty. The drop was less severe than in 2024, however. The Index -- an aggregate measure of momentum across property listings, appraisals and environmental due diligence — was materially stronger despite falling 13% from 99.4 in November 2025 to 89.9 in December and remained 49% higher than in December 2024.
On the other hand, elevated geopolitical risk continues to influence buyer and seller sentiment, along with tariff concerns and the uncertain outlook on how the Fed will react to a softening labor market and its forthcoming leadership transition.
Nevertheless, the report said deal momentum in December remained intact, with a 44% month-over-month increase in nine-figure CRE deals, indicating continued capital deployment at the high end of the market. This followed a spurt of new listings in September. Property sales remained strong even during the final holiday week.
There was a steady flow of large transactions across asset classes, including multifamily portfolios, hotel trades and land acquisitions linked to data center development.
“Office sales also picked up late in the month, often at sharply reset pricing, suggesting owners were willing to clear the decks before year-end,” LightBox noted.
The report added that lending ended the year on firmer footing, pointing to a steady recovery rather than a late-cycle surge. Q4 bank earnings reports also indicated resilient credit conditions, healthy balance sheets and sustained demand for lending. Bank management comments have stressed refinancing activity and selective loan growth, not retrenchment. In addition, CMBS issuance stood near multi-year highs at year's end and interest rates were easing.
“Importantly, capital remained available for both stabilized assets and capital-intensive projects such as ground-up construction and office-to-residential conversions.”
Although investor surveys were generally positive, they also indicated a higher level of concern than at any time in the previous six months. In particular, there was concern about the state of the labor market as job growth slowed. Even though the unemployment rate fell slightly, hiring rose by just 584,000 jobs, the weakest annual level not caused by a recession since the early 2000s.
“The labor market now appears stuck in a 'low hire, low fire' phase,” the report stated.
“Combined with soft manufacturing data, flat retail spending, and unreliable inflation readings, the jobs report reinforced expectations that the Federal Reserve will hold rates steady at its January meeting, keeping markets cautious as 2026 gets underway.”
The report warned that performance is key. There will be greater emphasis on disciplined underwriting assumptions around rent growth, cash flow durability and returns.
“Office, industrial, multifamily, and retail fundamentals are stabilizing at different speeds, reinforcing a selective approach among lenders and investors,” it cautioned.
Though it is unlikely that a sharp increase in deal volume or pricing will occur in 2026, it is predicted that modest incremental improvements in the market can be expected this year.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.