Auction Services | Macro-Transaction Volume and Pricing Summary

Momentum Wanes, but Resilience Slows

U.S. CRE investment momentum softened in Q2 2025 as industrial and hotel sectors slowed, but overall pricing remained steady. RCA’s CPPI declined just 0.7% YOY, with retail leading gains for the second consecutive quarter at 3.5%. Despite policy uncertainty and tariff-related noise, the market showed durability.

 

Office and Apartments Drive Surprise Gains

Office pricing rebounded, led by CBD markets where annual declines narrowed sharply from 26.7% to just 4.2%. Apartment sector volume grew 4% YOY after adjusting for prior-year distortions, with foreign capital favoring multifamily over industrial for the first time this cycle.

 

Alternatives Lag, but Individual Deals Shine

Alternative sectors saw a 1.9% YOY decline in volume, but individual asset trades rose 14% as portfolio sales slowed. R&D properties led niche performance with a 68% surge, while self-storage activity held firm when isolating single-asset deals.

 

Stress Factors: U.S. Office Market Nears Breaking Point

A Distress Cycle No Longer Contained

The U.S. office market is careening into deeper distress. By March 2025, CRE distress swelled to $116 billion, marking a 23% YOY increase and the highest level since the Global Financial Crisis. This uptick is no longer confined to isolated incidents, it’s a broad-based breakdown driven by capital market retrentchment, rising delinquencies, and economic headwinds. The Trepp CMBS delinquency rate rose to 7.13% in June, with the office sector leading at a record 11.08%, up nearly 50 bps MOM. Lenders and regulators are taking note. The FDIC flagged a rise in past-due and nonaccrual loans, especially in multifamily and office portfolios, while Deutsche Pfandbriefbank’s $4.7 billion exit from U.S. CRE lending underscores how foreign banks are quietly retreating from an increasingly fraught market.

 

The Maturity Wall Looms Large

The biggest weight on the office sector is a tidal wave of loan maturities. Yardi reports that 14,000 office properties, roughly one-third of all office loans, are due by the end of 2027, totaling nearly $290 billion. Borrowers and lenders have relied on short-term extensions, but many are approaching the end of the road. Moody’s has observed a decline in the percentage of loans extended YOY, and with interest rates likely to remain high, extensions are losing viability. As a result, a new phase of price discovery looms, one likely to usher in sharper valuation write-downs and more aggressive defaults, particularly in high-vacancy markets.

 

Lenders Retreat, Credit Funds Fill the Void

As regional and international banks trim exposure, private credit funds and alternative lenders have stepped in. While this non-bank capital is helping to bridge the liquidity gap, the Financial Stability Board has warned of new systemic risks as these opaque institutions gain a larger foothold. These lenders often operate with higher leverage and looser regulatory oversight, making the market more vulnerable in a downturn. Meanwhile, banks are engineering short-term survival. Many are extending loan maturities and avoiding recognition of over $410 billion in unrealized securities losses, according to the FDIC. With higher rates and falling asset values, lenders are increasingly faced with a choice between crystallizing losses or entering workout purgatory.