The 12 Deals And Trends That Defined 2025

Three rate cuts got CRE back in the borrowing mood despite fluctuations in the 10-year Treasury and a falling U.S. dollar, and they found a lending environment that got increasingly competitive as the year went on.

Private debt funds dominated lending this year, but the banks started to come off the sidelines and give them a run for their money.

Bank issuance hit $227B in the first three quarters, an 85% increase year-over-year that brought them back to prepandemic levels.

Banks spent the last few years trying to move nonperforming CRE loans off their books and generally distancing themselves from the industry. Even so, 1.56% of CRE bank loans are delinquent, holding flat over the year near their highest level since 2014. The number of nonperforming loans is still rising and nearing a decade high at large banks. 

The long-discussed wave of maturities that was supposed to hit this year has largely been deferred to 2026 — there’s now almost $1T coming due next year — so more pain may be on the horizon. 

The main word here is tariffs, but CRE was buffeted by all sorts of major economic headwinds this year. The uncertainty and “relentless” instability made CRE decisions more difficult.

Tariffs scorched construction budgets this year, stalling out development, and took some retail chains victim. They softened industrial demand, contributing to the highest warehouse vacancy in more than a decade. Their full impact may not come until 2026 — assuming the Supreme Court upholds them. 

A record 43-day government shutdown erased billions in economic output, and, for CRE, further chipped away at stability, froze lending, and piled up an unprecedented backlog of inspections, payments and loan applications.

Meanwhile, sticky inflation ran into lower consumer confidence and a worsening job market, setting up fears of stagflation. CRE did prove resilient through it all, and, hey, at least the macroeconomic mess queued up a few interest rate cuts.

This was a year of REIT "strategic reviews" — Wall Street jargon for we need to make a deal — and brokerages buying up everything in sight as deep-pocketed firms positioned themselves for an improving market. All told, there were more than two dozen major M&A transactions in CRE through mid-November. 

A perceived gap between REITs’ share prices and their actual values led to a string of take-privates in the fall, like Ares Alternative Credit agreeing to buy Plymouth Industrial REIT for $2.1B and Rithm Capital striking a deal to purchase office REIT Paramount Group for $1.6B. BlackRock is seeking to acquire Aligned Data Centers for $40B, and Brookfield is looking to drop $10B on manufactured housing REIT Yes Communities. 

But it was the brokerages that really went after it this year. 

CBRE bought Industrious at an $800M valuation and spent $1.2B on data center engineering firm Pearce Services. Cresa bought three firms in October and November, including its biggest acquisition ever: Fischer, its largest tenant-only competitor. Colliers bought a whopping seven businesses this year, including Greystar’s multifamily investment sales firm and a number of engineering and infrastructure-focused companies.

The Trump administration swept in and immediately started making big waves that will crash through CRE. 

Perhaps most headline-stealing was Elon Musk's DOGE, but its big promises of trimming the government’s physical footprint fell short and the pseudo-agency was disbanded early. It did still trim away properties — 4.8M SF of leases were spiked and some owned buildings were put up for disposition amid a flurry of federal HQ relocations — but on the other hand, 6.2M SF of leases were reinstated and nowhere near the 443 targeted buildings were listed for sale. D.C. did see an impact, as 8.7% of the federal government’s local portfolio was wiped away and tens of thousands of federal workers were laid off or took buyouts.

DOGE’s efforts to reduce the federal workforce is also leaving a mark on commercial real estate, especially at the Department of Housing and Urban Development, where significant layoffs have slowed inspections and loan approvals. The Trump administration also slashed its budget, eliminated popular programs and redirected funds, removing money for affordable housing development amid a housing crisis and sparking fears of increased vulnerability to fraud. 

One of the biggest storylines of the federal rewrite for CRE is something that hasn’t yet come to pass. Trump has made the privatization of Fannie Mae and Freddie Mac one of his priorities, though the Treasury Department began the process to remove the government-sponsored enterprises from conservatorship in January, before he took office. But what will that look like? The question of the year still has no answer.

Maybe a $30B IPO, though Bill Ackman, the GSEs’ largest shareholder, thinks that’s a bad idea for now. Maybe selling 5% of the government’s stake. Whatever happens, Trump said the government will continue to backstop the agencies' loans.

Wildfires raged through Los Angeles from Jan. 7-13, with the Palisades and Eaton fires alone burning 37,469 acres, leveling the Pacific Palisades and Altadena and damaging large portions of Pasadena. There was $52B of damage done in the city of Los Angeles alone, and the loss of more than 10,000 homes further strained an already painful affordability and availability crisis. Apartment owners saw their insurance premiums rise nearly 40% after the fires, but their payouts from the disaster have been paltry.

Commercial real estate players battled through the upheaval and their own losses to keep deals alive, but rebuilding has not been easy, especially since commercial property isn’t eligible for federal disaster relief funds. And even where businesses have been able to reopen in devastated areas like Altadena, customers still haven’t returned.

Up to $100M in property tax revenue could be lost every year the structures aren’t rebuilt, contributing to budget deficits at the state level and fiscal challenges at the city and county levels.

Transactions finally broke loose this year with sales and leases picking up 31% year-over-year thanks to spikes almost across property types. 

Most notable was the office market, which came back to 2022 levels of activity. Sales volume in the first half of the year was 42% above the previous year, led by sales of large, top-tier towers — deals over $100M leapt 130% in the first half of the year. Major discounts drove much of the activity as it became common to see properties sell at haircuts of 70% or more. 

Nowhere epitomized office’s comeback as much as Manhattan, where investment sales across property types rose 54% year-over-year — half of which were office deals — and a deluge of office-to-residential conversions took dead space off the market, buoying occupancy. 

Office leasing also spiked nationwide, leading to the first national vacancy decline since 2019 and shifting power back to landlords. Projections have been revised up, with some now expecting positive absorption and even rent growth again in 2026.

But it wasn’t just office. Multifamily transactions led a resurgence of midsized deals in the second half of the year. Net lease sales rose 37%, and owner-occupier sales shot up across office, retail and industrial. Retail started the year with occupancy declines amid a wave of big-name store closures but then recorded 4.7M SF of positive net absorption in Q3. Retail sales rose 22% year-over-year as the sector held largely resilient in the face of increasing macroeconomic headwinds.

There was one asset class left out of the party: industrial. Leasing continued its yearslong descent but in Q3 finally flattened for the first time since 2022. Vacancy is now 60% above prepandemic levels. Prologis is calling a rebound in 2026, saying the sector has hit “a clear turning point.” 

Trump signed his One Big Beautiful Bill Act into law on July 4, expanding the Opportunity Zones program, juicing bonus depreciation and making corporate tax cuts and a deduction for qualified business income from pass-through entities permanent. It allows manufacturers to immediately write off qualifying real estate investments and beefs up the Low-Income Housing Tax Credit. That’s all great news for CRE. 

The $1T cut to Medicaid could be worrisome, and some health systems are pulling back expansion plans, but the healthcare real estate sector is largely shrugging it off, saying demand drivers will win out.

More direct are the cuts to deductions for green building retrofits, which developers said will make it harder to pencil out projects. The elimination of clean energy tax credits could hamper power production, a major issue with data center development explosion sucking up electricity across the country.

Brokerages traded market heads like playing cards this year.

Cushman & Wakefield named new leaders for Atlanta, the Twin Cities and its Seattle/Portland office. 

JLL, CBRE, Transwestern and Partners all put new hands on the reins in Houston, and Transwestern also named new heads of its Chicago and Southeast offices.

The Philadelphia branches of CBRE and Avison Young got new leaders. Savills went a level up and named a new CEO, and Lincoln Property Group snagged Cushman’s former Atlanta head to expand its brokerage arm.

The moves tie in neatly with the M&A push this year — brokerages said the appointments came alongside rebounds in hiring and were intended to position each to capitalize on a rebounding market. 

That’s exactly what brokers have been waiting for. Base salaries for CRE pros rose 4.7% over 2024, an improvement from 4% growth in 2024. But bonuses have stayed pretty flat, and recruiters told Bisnow this fall there was a feeling of dissatisfaction among employees that compensation and opportunities were lagging. 

“There's a lot of people that are really unhappy and really upset,” Allison Weiss, founder of CRE Recruiting, said in October. “And so it's just going to take some recovery and for the first few deck chairs to start being swapped around for a massive amount of shifting to happen.”

We had already started talking about a data center bubble last year after the industry's record growth. Somehow, we were unprepared for just how much things would accelerate in 2025.

Data centers and artificial intelligence accounted for more than half of U.S. GDP growth this year and increasingly are powering the balance sheets of developers, brokers and contractors alike. Construction spending doubled year-over-year, and the largest tech companies have pipelines approaching trillions of dollars. Hyperscalers like Meta and Google also leased more space in Q3 than in all of 2024, and 2025 will easily double last year’s volume. The speed and heavy load of AI use is pushing those properties closer to population centers, and even into high-risk areas.

But the future is shaky and alarm bells are ringing all over the place. Big banks are starting to hedge their data center bets, especially concerned that hyperscalers are using special purpose vehicles to hide their levels of debt. Thus far, revenue from AI doesn’t remotely match expenses, and fears are rising that Big Tech won’t even be able to pay rent on their massive footprints. Developers are likewise turning to opaque financial mechanisms because the exit isn’t there — everyone wants to build a data center, but no one wants to buy one.

What might help stop the bubble from bursting: It’s getting harder to build in the face of power and fiber constraints, though the Trump administration is doing what it can to mitigate that. Resident pushback is increasingly reaching the voting booth.

And, indeed, the pipeline may plateau after next year, settling far above historic norms but giving the industry a chance to catch its breath. 

Two presidents in a row have made reshoring manufacturing — especially for semiconductor chips, autos and pharmaceuticals — a priority, and this year it paid off big in the form of dozens of major announcements. Apple, Eli Lilly, Honda, Nokia, Novartis and Hyundai have all announced major U.S. manufacturing pushes, and Hines projects $1T in additional manufacturing construction will launch between now and 2030, leading to a 35% spike in warehouse and logistics demand and the construction of 430M SF in that space.

Manufacturing construction spending hit record highs early in the year, and industrial-heavy cities like Chicago and Houston are licking their chops.

But U.S. manufacturers are struggling as tariffs have dragged down the sector and consumers grew skittish. U.S. manufacturing output only rose 1% this year, and despite all the talk, actual reshoring activity fell 311 index basis points, manufacturing construction fell year-over-year this summer, and the country has lost nearly 60,000 manufacturing jobs this year.

As the year approached its end, so did the federal government’s antitrust lawsuit against RealPage. 

The rental management software company, which was sued for allegedly enabling rent-fixing via its AI Revenue Management tool, struck a deal with the Department of Justice in which it admitted no liability but agreed to change the data inputs for its software. It also settled a case with the state of Nevada and paid $200K into its rental assistance program.

At least 30 states and municipalities have passed or attempted to pass legislation banning or regulating algorithmic rent-setting tools. 

Major landlords also have been caught up in the rent-fixing allegations, and many also settled civil suits this year. A class-action suit against 27 landlords and property managers has a pending settlement that comes with a combined $141M in fines, though four attorneys general are urging the judge to reject it.

Greystar, which also admitted no wrongdoing, was ordered to pay $50M as part of that suit and paid $7M to close out a separate lawsuit with nine states. Separately, the largest U.S. apartment landlord agreed to a $24M fine by the Federal Trade Commission for failing to disclose fees when listing apartments.

Though the deals are considered a significant win for landlords, RealPage’s legal challenges aren’t over yet. It is still being sued by a group of nine state attorneys general in a civil case. It will head into those battles led by a new CEO, Dirk Wakeham, who took the helm in November when former CEO Dana Jones abruptly left.

One of the most immediate differentiators between the Trump and Biden administrations for CRE was the stark reversal in federal policy on sustainability and diversity.

Many developers are now caught in a bind — local legislation, tenants, investors or their own balance sheets are demanding more energy-efficient buildings, but many tools to get there have been taken off the table. 

The elimination of incentives for green and resiliency-focused developments has made it harder to modernize older apartments, and multifamily tenants will also feel an impact through fewer energy-saving appliances and the death of a $4.1B program that helped tenants pay their utility bills.

Rollbacks in policies around resiliency are increasing risk for real estate, removing warnings of impending storms, eliminating billions in funding for renovations that would reduce flooding risk, and contributing to a spike in insurance premiums and higher mandatory insurance levels. 

To lower that risk and reduce costs, many institutional investors still forged ahead with decarbonization initiatives and investment into sustainability.

Property’s reaction to Trump’s dismantling of diversity, equity and inclusion programs has looked similar.

In the months that followed Inauguration Day, commercial real estate companies moved quickly to tweak or eliminate references to DEI on their websites. Real estate associations geared toward women and people of color braced for setbacks in their missions, and some even changed their names.

Still, CRE’s biggest companies' leadership ranks continued to incrementally diversify, and many are just reframing initiatives from “diversity” to “inclusion.” The gender pay gap also shrank dramatically — it’s down 50% in the last five years — but that is because men got paid less in a year where little deal flow meant smaller bonuses. 

But Trump's attack on DEI hasn't just been about corporate diversity initiatives. The Department of Housing and Urban Development launched an investigation into Boston’s housing policy, alleging racial bias against white people. Philadelphia removed race-based factors from its procurement process, saying the risk of federal litigation became too high. 

While the financial payoff behind energy efficiency will likely keep sustainability initiatives alive in CRE, that may not remain the case for DEI.