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CRE Pricing Splits While New Supply Hits 12-Year Low
Data reveals a growing gap in commercial property values as construction slows and demand shifts.
Jordan B.
December 24, 2025
Good morning. We're signing off for the rest of the week to spend time with our loved ones. Thanks for reading and making us part of your inbox this year. Wishing you a Merry Christmas, Happy Hanukkah, and joyful holidays all around! 🎄🕎✨
📊Our Q4 2025 Burns + CRE Daily Fear & Greed Index is now available. Explore investor sentiment, capital access, and sector-level outlooks shaping the 2026 CRE landscape.
CRE Trivia 🧠
Which country is credited with starting the tradition of decorating Christmas trees?
(Answer at the bottom of the newsletter)
Market Snapshot
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Pricing Divide
CRE Pricing Splits While New Supply Hits 12-Year Low
Despite a marginal rebound in demand, new CRE deliveries fell to their lowest level since 2013, with pricing diverging between high-value and lower-tier assets.
Two speed recovery: The U.S. commercial real estate market remains split. High-value assets in major markets posted a sixth straight monthly price gain in November, while smaller secondary-market properties lost value, according to CoStar’s Commercial Repeat Sale Indices.
Source: CoStar
Capital chases quality: Institutional investors are fueling demand for premium properties. The value-weighted U.S. Composite Index rose 0.4% in November after three Fed rate cuts, though prices remain 1.3% lower year over year.
Smaller assets slip: Secondary and tertiary markets lagged, as the equal-weighted index fell 0.9% in November and remained flat year over year, highlighting continued volatility for lower-priced assets.
Shrinking supply: New supply is drying up fast. 2025 completions are projected at 486M SF, down 34% from 2024, with quarterly deliveries below 100M SF for the first time since 2013. Net absorption is expected to hit -100M SF, the worst since 2009, though demand losses eased late in the year.
Rates spur deals: While monthly sales can be volatile, CoStar notes November transaction volume was up more than 10% year over year, with more deals expected by year-end as lower rates spur activity.
➥ THE TAKEAWAY
Quality wins: With construction at multi-decade lows and capital flowing to core markets, the CRE recovery is increasingly uneven, favoring premium assets over smaller properties.
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How CRE Investors Really Feel Heading Into 2026
Capital access is improving for the first time in survey history—and sentiment just hit its strongest level of the year.
The Q4 2025 Burns + CRE Daily Fear & Greed Index reveals where investors see opportunity, where distress is building, and how expectations are shifting across multifamily, office, retail, and more.
Download the full 28-page report for sector-by-sector data, charts, and investor commentary.
*This is a paid advertisement. Please see the full disclosure at the bottom of the newsletter.
✍️ Editor’s Picks
Data dollars: Data centers are set to surpass office buildings in investment as the AI boom reshapes CRE, with investment expected to top $1T by 2030.
Inflection point: Strong CMBS issuance and rate cuts are masking deeper distress in CRE, leaving the market balanced between optimism and mounting pressure.
Rate reset: A rate-driven downturn is reshaping real estate, with falling interest rates setting the stage for a core market rebound in 2026.
Steady start: Mayor-elect Zohran Mamdani has eased CRE concerns by appointing seasoned city hall veterans to key leadership roles.
Deferral debate: Mitt Romney is calling for the end of 1031 exchanges to help fund Social Security, breaking with GOP orthodoxy and rattling CRE investors.
🏘️ MULTIFAMILY
Sluggish sales: Apartment deal volume dropped 22% in November as values dipped and 2025’s hoped-for recovery failed to materialize.
Access expansion: Southampton approved a zoning overlay to enable affordable housing in high-priced Hamptons enclaves.
Stable demand: San Diego’s apartment occupancy hit 96.3% despite rent softness and economic headwinds, showing resilience in a high-supply market.
Pembroke buy: Pembroke is entering Boston’s multifamily market with a $170M purchase of Proto in Kendall Square.
Rapid rise: Just months after launching, Oakline Properties acquired Drucker + Falk, expanding its footprint to 65,000 units.
Brickell boost: Chicago developers landed a $250M loan for a 39-story apartment tower, topping a busy week of South Florida CRE deals.
🏭 Industrial
Growth hotspots: Self-storage growth slowed in 2025, but Sunbelt metros like Atlanta and Phoenix led the nation, with smaller markets like Elizabeth City seeing the fastest gains.
Maryland bet: Samsung Biologics is buying GSK’s Rockville campus for $280M to launch its first U.S. manufacturing site as GSK exits Maryland.
Data dominance: Despite early-year fears of a collapse, data centers surged in 2025, becoming the backbone of the U.S. economy.
Activist pressure: Americold is bringing on new board members and forming a finance committee to explore asset sales and debt reduction after pressure from activist investor Ancora.
Vegas exit: CapRock Partners sold its fully leased 101K SF North Las Vegas industrial facility to EastGroup Properties.
🏬 RETAIL
Stable sector: Low construction and steady incomes are keeping retail vacancies stable and investor confidence high despite softer demand and record consumer debt.
Payment panic: A year after raising billions for a bold Neiman Marcus merger, Saks is now weighing Chapter 11 as it scrambles to cover a $100M debt payment.
Page turner: Bookstores are booming again, with 422 indie openings and Barnes & Noble in growth mode, fueled by post-pandemic demand for community spaces.
Mixed momentum: D.C.’s retail market is divided, with downtown struggling while suburban areas thrive on grocery-anchored demand, experiential retail, and steady foot traffic.
🏢 OFFICE
Breaking records: InterVest and MetroLoft secured $867M to convert 111 Wall St. into 1,568 apartments—marking the largest single-building office-to-resi financing deal in U.S. history.
City comeback: San Francisco’s office market is rebounding, led by record AI leasing activity, renewed investor confidence, and political support.
Discount deals: Chicago’s office market showed signs of life in 2025 with notable trades and leases, though most sales closed at steep discounts.
Staying power: The Big Ten Network renewed its 58K SF lease at 600 W. Chicago Ave., opting to stay amid major shifts in sports media.
🏨 HOSPITALITY
Tech tourism: Peachtree Group has opened a 122-room Home2 Suites by Hilton in Ashburn, VA, tapping into the booming "Data Center Alley" tech corridor.
French takeover: Paris hotelier Philippe Le Guennec acquired Miami Beach’s Kimpton Angler’s Hotel for $43.5M, one of the city's top hotel sales of 2025.
Disposition strategy: Facing $5.8B in looming debt, Service Properties Trust sold 66 hotels for $534M, part of a broader pivot to shed non-core assets and stabilize finances.
📈 CHART OF THE DAY
Apartments built since 2010 make up just 22% of the total stock but account for 52% of recent U.S. sales, as investors increasingly favor newer, higher-quality assets with stronger demand, better margins, and lower capex risk.
CRE Trivia (Answer)🧠
Germany. The tradition dates back to the 16th century, when German families decorated evergreen trees with apples, nuts, and candles.
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