**Real Estate Transaction Velocity Expected to Accelerate in 2025**
After expectations of a rebound in real estate transaction activity for 2025, the actual uptick did not materialize until mid-year. However, according to John Chang, Senior Vice President of Marcus & Millichap, the commercial real estate (CRE) market is now poised for stronger momentum in the coming quarters.
In a recently released video titled *Four Reasons the CRE Deal Flow is Poised to Accelerate*, Chang outlines key factors supporting the resurgence.
**1. Surge in Private Investor Activity**
Private investors accounted for 59% of all CRE transactions in the first half of 2025. Additionally, fundraising for CRE investment funds is on the rise, averaging $30 billion per quarter—surpassing the 10-year average of $28 billion. Though it still falls short of the historic 2021 peak of $68 billion in a single quarter, the upward trend signals renewed investor confidence.
**2. Consistent Growth in Capital Raising**
While individual real estate investment funds are raising less per fund, the number of active funds is holding steady. In 2025, about 180 funds raised an average of $173 million per quarter. By contrast, in late 2021 and early 2022, 183 funds raised $397 million per quarter. In aggregate, more capital is entering the market, which is expected to ultimately support increased transaction volume.
**3. Return of Bank Lending**
Banks, which retreated from CRE lending in the past two years due to market volatility and high-profile bank failures, are re-engaging with the sector. With stronger balance sheets and more favorable regulatory conditions, banks are loosening lending standards. Loan-to-value ratios, especially in the multifamily sector, have started to inch upward, signaling a return to more active lending practices.
**4. Favorable Interest and Cap Rate Dynamics**
Interest rates and cap rates have been rising since 2022, but there’s now a shift. Interest rates are trending downward, while cap rates have stabilized—or even compressed slightly—widening the yield spread enough to suggest positive leverage for investors. Agency multifamily loan rates are now in the low 5% range, while broader CRE debt is averaging in the low to mid-6% range.
**Outlook: Stronger Foundations Ahead**
Chang also emphasized another crucial element backing the positive trajectory: a decline in new construction activity across all CRE sectors. With limited new supply on the horizon, the fundamentals of existing assets are expected to strengthen, enhancing long-term sector resilience and investment appeal.
Overall, momentum is building, and the second half of 2025 may well mark the beginning of a more vibrant period for real estate transactions.
