US Commercial Real Estate Hits $193B in Q2 2025, Office Sector Leads Recovery

US Commercial Real Estate Surges to $193B in Q2 2025 Transactions

In a remarkable development, the US commercial real estate sector recorded $193 billion in transactions in the second quarter of 2025. This robust performance was driven by a 50% year-over-year increase in office transactions, which reached a global total of $45 billion. This rise is noteworthy amidst ongoing global economic uncertainties, including tariff impacts on cross-border investments and broader economic instability. The overall transaction volume, however, exhibited a slight decline of 5% compared to the same period in 2024, underscoring the market's resilience in face of persistent challenges. The dynamism in the office sector stands out particularly, as it rebounded more robustly than other sectors like retail and industrial.

Office Sector Leads Growth with $45B Global Transactions

The office sector has become a beacon of hope in the commercial real estate landscape, with global transactions hitting $45 billion in Q2 2025. This resurgence is primarily due to limited new supply and a slowdown in office development, which have driven rental growth. According to Altus Group Insight, office transactions in the US alone reached $16.7 billion, marking an impressive 11.8% increase from Q2 2024. The prevailing return-to-office mandates, notably President Trump's order for federal employees, have accelerated the demand for office spaces, as highlighted by EMMC Realty Group. This surge in office demand illustrates a shift in investor focus towards Class A properties, which are now more desirable than ever.

Multifamily Sector Also Posts Strong Gains

The multifamily sector complemented the office sector's performance, contributing significantly to the overall transaction volume. According to The MortgagePoint, multifamily transactions soared by 39.5% compared to Q2 2024. This sector, coupled with office transactions, accounted for nearly half of all commercial real estate activity in the quarter, totaling $115 billion. The median price per square foot for transacted properties rose by 5% quarter-over-quarter, further showcasing the sector's robustness. The sustained demand for multifamily units reflects demographic shifts and urbanization trends, which continue to drive interest in this sector.

Tariffs and Economic Uncertainty Affect Cross-border Investments

Despite the positive developments in the office and multifamily sectors, broader economic uncertainties and global trade tensions have tempered overall market enthusiasm. The imposition of tariffs has notably impacted cross-border investment flows, as investors remain cautious. The number of properties transacted nationally dropped by 7.4% in comparison to Q2 2024, according to AandE Realty. These figures suggest that while domestic activity remains strong, international investors are reevaluating their strategies amidst a volatile economic landscape. This environment necessitates strategic maneuvering and adaptability among stakeholders.

Leasing Volume and Vacancy Rates: A Mixed Bag

The office leasing volume is projected to rise by 5% in 2025, with smaller tenants occupying 10,000-20,000 sq. ft. spaces driving much of this demand, as indicated by CBRE. However, the overall office vacancy rate is expected to peak at 19% this year. The market is witnessing a pronounced divide between high-quality and lower-quality assets, with Class A properties becoming increasingly favored. This shift highlights a growing trend where tenants prioritize premium amenities and strategic locations, likely influencing future development and investment strategies.

Future Implications: Strategic Opportunities and Risks

Looking ahead, the US commercial real estate market presents a landscape of both opportunities and challenges. Developers and investors who embrace flexibility, modernization, and innovation are poised to drive success, as noted by NAIOP. However, the potential for an economic slowdown poses a risk, particularly in delaying recovery trajectories. Strategic positioning in high-demand sectors like multifamily and office, especially in urban centers, will be crucial. With the market dynamics shifting, RealEstateAbroad.com anticipates that investors who skillfully navigate these complexities will find lucrative opportunities in the evolving commercial real estate landscape.