The U.S. commercial real estate market is showing signs of a moderate recovery, according to the latest Q2 2025 report from Altus Group. Transaction volume for the quarter totaled $115 billion, marking a 3.8% increase compared to Q2 2024. This growth has been largely driven by strong performance in the multifamily and office sectors, which saw year-over-year gains of 39.5% and 11.8%, respectively. These gains reflect renewed investor confidence and growing demand for properties in these segments as the market stabilizes following the disruptions caused by the pandemic.
The median price per square foot for transacted single properties also saw an uptick, rising 5.0% quarter-over-quarter and 13.9% year-over-year across all property sectors. This increase suggests that while there are still challenges, particularly in certain asset classes, the overall market is trending upward. The rise in property prices indicates that buyers are willing to pay more for high-quality assets, particularly in high-demand sectors such as multifamily and office properties, which have experienced the largest increases in transaction volume.
However, not all sectors are experiencing the same level of growth. The industrial and retail sectors have seen declines, reflecting ongoing challenges in those areas. The industrial sector, which saw significant growth during the pandemic as e-commerce and logistics needs surged, has faced pressure in recent months due to changes in consumer behavior and supply chain dynamics. Similarly, the retail sector continues to struggle as more consumers shift to online shopping, reducing the demand for physical retail spaces. Despite these declines, there are still pockets of opportunity within these sectors, particularly for properties that are well-located or well-positioned to adapt to changing trends.
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In contrast, the commercial general and mixed-use property category has performed well, growing 11.3% year-over-year to $8.2 billion. This growth suggests that investors are increasingly looking for properties that offer a combination of residential, office, and retail space, which can provide more stable returns in a post-pandemic world. Mixed-use developments are particularly attractive due to their flexibility and ability to meet diverse tenant needs, making them a more resilient option in uncertain times.
The overall recovery in the U.S. commercial real estate market signals a positive outlook for the remainder of 2025. Investors are showing strong interest in larger, higher-quality deals, particularly in the multifamily and office sectors. This trend is indicative of a market where capital is flowing into assets that are likely to provide stable, long-term returns, even as the market continues to evolve. The shift toward these higher-quality deals suggests that investors are becoming more selective, focusing on properties that offer strong fundamentals and potential for future growth.
As we move further into 2025, the commercial real estate market is expected to continue its recovery, albeit at a moderate pace. While challenges remain, particularly in the industrial and retail sectors, the strong performance in multifamily and office properties, along with the growth in mixed-use developments, suggests that the market is stabilizing. With investor confidence on the rise and transaction volumes steadily increasing, the outlook for commercial real estate in the U.S. remains positive for the rest of the year.
