Investment & Lending Activity Rise

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Single and multi-tenant office sales decline as cap rates rise link

• Multi-tenant office sales dropped to $10.58B in Q1 2025, down nearly 16% from the same period last year and over 44% from Q4 2024. The biggest regional drops were seen in the Midwest (down to $829M from $1.88B) and the Southwest (down to $1.56B from $2.41B).

• Single-tenant office sales saw a sharper fall, hitting $1.79B in Q1 2025—a 56% decline from Q1 2024. The Midwest was hit especially hard, falling to $87M from $834M, while the Southeast plunged to $134M from $800M.

• Cap rates for multi-tenant offices climbed to 7.60%, up from 7.23% a year ago, signaling higher perceived risk. Regionally, the Mid-Atlantic hit 8.75%, while the West rose sharply to 7.50% from 6.42%.

Smaller markets have seen big gains in population link

• Smaller markets with under 1 million residents gained population rapidly in 2021 and 2022, while large urban areas lost residents. This migration helped push apartment occupancy in smaller cities above levels in major metros for the first time in years.

• As of March 2025, tertiary markets (less than 25,000 units) had the highest occupancy at 95.9%, followed by secondary markets at 95.5%, and the largest 50 markets at 95.4%. Before the pandemic, big cities consistently led in occupancy.

• The shift marks a reversal of pre-pandemic norms, where large markets dominated rental demand. Smaller cities are now holding steady post-2023, even after nationwide occupancy rate dips.

Investment & Lending Activity Rise link

• Commercial real estate investment hit $88 billion in Q1 2025, a 14% increase from last year. Private investors led the charge, contributing $51 billion of that total.

• Lending activity rose sharply, with the CBRE Lending Momentum Index jumping 13% from last quarter and 90% year-over-year. Banks were the top lenders, handling 34% of all Q1 loan closings.

• Cross-border investment climbed 7% to $4 billion, mainly driven by the industrial sector. Loan spreads narrowed, with commercial and multifamily spreads down 29 and 26 basis points compared to last year.

U.S. Multifamily Absorption Posts Strongest Q1 Since 2000 link

• In Q1 2025, 100,600 multifamily units were absorbed—over three times the pre-pandemic average. This marks the strongest Q1 performance since 2000.

• Vacancy dropped to 4.8%, beating the long-term average of 5.0%. This is the fourth straight quarter where demand outpaced new supply.

• Multifamily investment rose 33% year-over-year to $28.8 billion. The sector made up 33% of total commercial real estate investment in Q1.

The shifting landscape of headquarters relocations: link

• Texas led the country in HQ relocations, gaining 26 in 2024 alone, with 13 landing in the Dallas metro. California saw the largest loss, with 17 companies exiting—12 of them heading to Texas.

• Business climate and access to consumer base were top reasons for moving, cited in 40 relocations. Real estate flexibility and hybrid work strategies also influenced 22 moves.

• Dallas (100 HQs), Austin (81), and Nashville (35) were the biggest metro winners since 2018, while San Francisco Bay Area lost 156 HQs. Tech and manufacturing firms were the most active in shifting HQs for cost and talent reasons.

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Vidit

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