In late 2024, it was anticipated that the coming year would see a recovery and increased real estate transaction activity in 2025, based on the Federal Reserve’s rate cuts and rising investor confidence.
However, that recovery and transaction activity didn’t start occurring until the mid-year point of this past year. And according to Marcus & Millichap’s Senior Vice President, John Chang, the industry can expect a higher real estate transaction velocity in the coming quarters.
Chang made the following pronouncements in a recently released video, “Four Reasons the CRE Deal Flow is Poised to Accelerate:”
#1—The Drive of Private Investors
Private investors made up 59% of transactions during the first half of 2025. Along those lines, the flow of capital into CRE investment funds began to increase, with the raise totaling $30 billion per quarter.
“This is above the $28 billion quarterly average over the last ten years,” Chang said. While the private capital is below 2021’s peak quarter of $68 billion, “the upward trend is a positive sign,” Chang said.
#2—Slow and Steady Upturn in Capital Raising
Chang indicated that while each real estate investment fund raised less capital per quarter, more of them were doing so. During the late 2021-early 2022 period, about 183 funds raised $397 million per quarter. In 2025, about 180 funds raised an average of $173 million per quarter.
Still, in the aggregate, more money is coming in. “Ultimately, that will support increased deal flow,” Chang said.
#3—Banks Show Interest
Two years ago, banks had stepped back from CRE exposure, due to high-profile bank closures, among other reasons. But things seem to be changing.
Chang noted that banks have repaired their balance sheets, and in combination with more liberal regulatory policies, are “engaging the commercial real estate lending market.” Furthermore, with bank lenders loosening their standards, there’s been a modest increase in the average loan-to-value ratios, especially in the multifamily sector.
#4—Shifting Interest and Cap Rates
Both cap rates and interest rates have ticked upward since 2022. These days, interest rates are trending downward, cap rates are stable or shrinking and there’s a widening of “the yield spread sufficiently to support positive leverage,” Chang commented.
In some cases, agency multifamily financing is in the low 5% range, while commercial real estate debt is clocking in at the low- to mid-6% range.
A Recipe for Real Estate Resilience?
In addition to the above four points, Chang pointed out another factor—the reduced construction outlook for all sectors. Stacking that on top of everything else means that “the long-term potential of the commercial real estate sector becomes even more positive,” Chang said.
The post Real Estate Transaction Velocity is Looking Pretty Good appeared first on Connect CRE.