**Madison International’s Liquidity Index Shows Commercial Real Estate Conditions Are Normalizing**
Commercial real estate markets continued to show signs of stabilizing liquidity during the third quarter of 2025, according to the latest results from the Madison Real Estate Liquidity Index (MRELI), published by real estate private equity firm Madison International Realty.
The index, which measures the ease with which asset owners and investors can enter and exit real estate limited partnerships, reported a liquidity score of 35.6 for Q3. This represents the sixth consecutive quarter of improvement and the highest index level since the first quarter of 2022, when the Federal Reserve began a cycle of interest rate hikes.
While the market has yet to return to fully normalized liquidity conditions—typically characterized by index readings in the 40s and 50s—Madison International has observed a consistent positive trend since early 2024. Over the past two years, index readings have increased by nearly 80 points, signaling greater flexibility and improved investor sentiment in the sector.
“After the worst period of illiquidity since the Global Financial Crisis, commercial real estate markets appear to have turned a corner,” said Christopher Muoio, Managing Director and Head of Data and Research at Madison International Realty. “Following the very challenging liquidity conditions driven by the COVID-19 pandemic and the subsequent interest rate hikes of 2022 and 2023, the latest MRELI reading gives market participants a reason for cautious optimism heading into 2026—especially as debt markets remain liquid and private equity activity picks up following the Fed’s December rate reduction.”
This encouraging trend suggests that confidence is gradually returning to the market, supported by more favorable financing conditions and renewed investor interest.
