CRE Deal Volume Slips as Buyers, Sellers Hit Stalemate

Commercial real estate’s fragile recovery hit a speed bump in October, when national deal volume posted its first year-over-year drop in nearly two years.

After a stretch of momentum that had investors cautiously optimistic, elevated rates are still jamming the gears of the capital markets.

The slowdown was first reported by CNBC’s Property Play, which cited Moody’s data tracking the top 50 U.S. commercial property sales each month. October logged $24.4 billion in trades — an active month by historical standards and roughly 70 percent of the October 2019 tally — but not enough to avoid slipping into negative annual growth for the first time since early 2024.

Moody’s researcher Kevin Fagan pinned the reversal on a stubborn pricing standoff that’s kept dealmakers circling but not transacting. High borrowing costs are stretching out what was supposed to be a U-shaped post-pandemic recovery, flattening the bottom and testing investor patience. Even with total dollar volume running ahead of last year, the pace of growth has slowed sharply.

Industrial and multifamily again led the month’s top transactions, though the apartment sector also delivered the sharpest pullback — down 27 percent year-over-year — after a run of pre-Covid-beating volumes this summer.

Hotels were the only asset class to notch an annual gain, up 6 percent after a weak third quarter, thanks in part to a splashy sale at 5 Madison Avenue. That deal saw the Abu Dhabi Investment Authority unload the New York Edition hotel to Kam Sang Company for $231.2 million.

The transaction wasn’t just a headline for its price: Fagan noted the exit of a Middle Eastern sovereign investor from Manhattan and pointed to the building’s long arc from office tower to boutique hotel as a symbol of the asset class pecking order today.

He cited the MetLife Clock Tower and the Woolworth Building — both once the world’s tallest — as case studies in how obsolete office stock can thrive when repurposed.

Office assets, meanwhile, remain the sector most defined by distress and reinvention. October’s largest trade, the Sotheby’s headquarters, went to Weill Cornell, suggesting a medical use is likely. In another sign of the market’s price reality, New York Life bought a Midtown tower from BGO for roughly half of what it last sold for in 2015.

The market will soon factor in the latest interest rate cut, which came down from the Federal Reserve on Wednesday.

— Holden Walter-Warner