Crexi National Commercial Real Estate Report: December 2025

Key Takeaways

• Retail bounced back strong. Sale prices jumped to $292 per square foot — up 24% from October and 34% from last year. Landlords are offering fewer rent concessions in prime shopping areas, and vacancy stayed tight at 6.6%, well below last year's levels.
• Office showed selective improvement. Sale prices held steady around $174 per square foot (up 13% year-over-year), and landlords are getting better lease terms as tenants compete for higher-quality buildings. Vacancy ticked up to 19.7% but remains below last November, suggesting the best properties are finding tenants.
• Industrial hit a pricing standoff. Buildings sold for $97 per square foot (down 8% from October), but landlords are listing at $122 per square foot — creating a wider gap between what buyers will pay and what sellers want. Still, tenants are signing leases at stronger terms, with effective rents up 10% year-over-year.
• Multifamily cooled as supply caught up. Sale prices dipped to $202 per square foot, and cap rates edged up to 6.47% as new apartment deliveries and seasonal renter slowdown created more competition. Vacancy climbed to 14.6%, with landlords offering more concessions to fill units.
• The big picture: The market is splitting between winners and everyone else. Retail and top-tier offices are strengthening, industrial leasing fundamentals remain solid despite pricing uncertainty, and apartments are working through record new supply. With transaction activity picking up and less new construction coming in 2026, investors focused on quality properties in strong locations are likely to see the best returns.

Retail Market Analysis

For Sale

Pricing: Average sale price per square foot reached $288.61, up a modest 0.3% MoM but a striking 30.5% YoY, demonstrating sustained investor appetite for well-positioned retail. Asking prices climbed to $292.96 PSF (+4.5% MoM, +8.3% YoY), suggesting sellers maintained confidence heading into 2026.

Cap Rates: Closed-deal cap rates compressed 5 bps MoM to 6.54% and improved 10 bps YoY, reflecting competitive bidding for stabilized grocery-anchored and necessity-based retail. Asking cap rates held at 6.39% (flat MoM) and were 14 bps lower YoY, indicating sellers held firm while fundamentals strengthened through year-end.

Vacancy: Retail vacancy fell 100 bps MoM to 5.6% and was a remarkable 300 bps below December 2024, marking the tightest inventory level in over two years and underscoring persistent supply constraints across most submarkets.

For Lease

Asking vs. Effective Lease Rates: Asking rents were flat at $19.32 PSF (down just 0.2% MoM) but remained 2.3% above last year, while effective rents jumped 2.3% MoM to $22.52 PSF (+10.6% YoY). The widening gap shows landlords in prime locations are getting asking rates or better, while even secondary properties are securing stronger lease terms with fewer concessions as tenant demand remains strong

The Big Picture

Retail closed 2025 with its strongest fundamentals in years, buoyed by record holiday consumer activity and constrained new supply. A record 202.9 million consumers shopped over the Thanksgiving to Cyber Monday period, Cyber Monday set a new online sales record of $14.25 billion (up 7.1% YoY), and Black Friday retail sales climbed to $11.8 billion (up 9.1% YoY) — all pointing to healthy consumer engagement. Total Cyber Week sales hit $44.2 billion, up 7.7% year-over-year, with shoppers leveraging buy-now-pay-later options and AI shopping tools at unprecedented rates.

The holiday surge validated retail's resilience as value-oriented retailers attracted more high-income shoppers seeking deals. Year-end data showed retail pricing hit a record high of $142.23 PSF nationally, driven by investor appetite and limited new supply, while only 43 million square feet of new construction started in 2025 — the lowest on record. Nationally, rents increased 1.9% to a record $25.69 PSF, with Southern U.S. markets posting 2.3% rent growth, while vacancy remained near historic lows around 5.5-5.6% as retailers took more space than they gave back in Q4.

Investment Implications: With December data confirming retail's supply-demand imbalance persists, prioritize grocery-anchored centers and daily-needs retail in dense suburban corridors where effective rents continue outpacing asking rents. Target assets in Sun Belt markets with strong population growth while maintaining selectivity on older secondary properties that may require capital investment to compete for quality tenants.

Office Market Analysis

For Sale

Pricing: Average sale price per square foot was $170.54, down 2.3% MoM but still up 11.5% YoY, reflecting ongoing price discovery as buyers differentiated between trophy assets and commodity stock. Asking prices rose 2.3% MoM to $230.03 PSF (+1.1% YoY), suggesting sellers of quality buildings maintained pricing discipline while deal activity remained selective.

Cap Rates: Sale cap rates held flat MoM at 7.39% but improved 16 bps YoY, while asking cap rates ticked up just 2 bps MoM to 7.17% (flat YoY), indicating a narrowing bid-ask spread. The narrowing spread reflects growing confidence in Class A assets, though execution remains cautious for commodity buildings.

Vacancy: Office vacancy on Crexi surged 150 bps MoM to 21.3%, but remained 100 bps below December 2024. While marketed inventory increased month-over-month, year-over-year progress continued as lower-quality space transitioned to alternative uses or sat unmarketable.

For Lease

Asking vs. Effective Lease Rates: Asking rents remained flat at $19.95 PSF (down 0.2% YoY), while effective rents declined 1.2% MoM to $20.45 PSF yet were still 3.7% above last year, reflecting landlords deploying more concessions on a monthly basis but still holding pricing power on an annual basis where tour activity and renewals picked up.

The Big Picture

Office performance is shifting slightly after a stronger mid-year performance, given strong absorption and decreasing availability of Class A, amenity-rich assets. November’s report of slightly declining sale pricing and +2% vacancy indicate that we’re seeing a decrease in available assets with higher desirability, which have buoyed overall closed pricing and kept asking-to-effective rent gaps stable. 

Nationally, office has greatly improved with positive net absorption in Q3 and vacancy down 20 bps to 18.8%, the first year-over-year decline since early 2020, while leasing rose to 52.4 million sf. Recovery remains uneven but is spreading, with positive Class A absorption and improving gross activity, even as many buildings still need aggressive economics to compete.  

Capital and credit are also stabilizing at the margin. U.S. CRE transactions rebounded in Q3 with volumes up roughly 25% year over year, including a lift in office sales, while November CMBS updates showed the overall delinquency rate easing 20 bps to 7.26% after October’s rise, even as office remains the main pressure point. 

Conversely, reports highlighted a September spike in office late payments tied to a large NYC default. Job cuts and space utilization trends will also keep office recovery selective near term: ADP reported a 32,000 drop in private payrolls in November, and hybrid usage still is shedding second-tier space in favor of better-quality assets.

Investment Implications: Net-net, investors should expect two speeds: quality buildings in strong submarkets benefit from limited new supply and rising tour volume, while older assets lean on conversion paths, deeper TI packages, or discounted trades.

Industrial Market Analysis

For Sale

Pricing: Average sale price per square foot was $98.75, down 2.0% MoM but flat YoY (up 0.3%), reflecting buyer caution on lower-quality or oversupplied markets even as core logistics assets maintained strong demand. Asking prices fell 0.4% MoM to $121.84 PSF but remained 9.6% above last year, signaling sellers held firm on quality product while adjusting for market softness elsewhere.

Cap Rates: Closed-deal cap rates increased 11 bps MoM to 7.33% but improved 12 bps YoY, while asking cap rates compressed 3 bps MoM to 7.28% (down 13 bps YoY), consistent with a market repricing quarterly as investors distinguished between core distribution facilities in supply-constrained markets and commodity space in oversupplied metros.

Vacancy: Industrial vacancy on Crexi's for-sale listings improved sharply by 270 bps MoM to 24.2% and was 340 bps below last December, indicating the sector passed its vacancy peak and began rebalancing as speculative supply slowed and tenant demand held steady.

For Lease

Asking vs. Effective Lease Rates: Asking rents held flat at $14.20 PSF (up 1.2% YoY), while effective rents declined 2.9% MoM to $13.24 PSF but remained 5.4% above last year, pointing to more competitive lease negotiations month-over-month as tenants gained leverage, though year-over-year pricing power persisted on well-located modern facilities.

The Big Picture

Industrial closed 2025 with clear signs of normalization as the sector digested pandemic-era oversupply and recalibrated to sustainable growth. National vacancy reached approximately 7.1-7.5% in Q3, the highest since 2013, though vacancy held steady quarter-over-quarter as speculative construction eased and absorption improved for the second consecutive quarter. Net absorption reached 45.1 million square feet in Q3, up 30% quarter-over-quarter and 33% year-over-year, while year-to-date absorption measured 108 million square feet, in line with 2024 levels.

On the supply side, the under-construction pipeline fell 13.4% year-over-year with construction starts below recent historical levels, while build-to-suit developments now account for 39% of the total pipeline, up from 34% a year ago. Nationally, asking rents averaged $10.10 PSF in Q3, up 1.7% year-over-year, with nearly 60% of U.S. markets posting positive year-over-year rent growth and nine markets reporting double-digit rent increases. Year-to-date through November, industrial sales totaled $68.4 billion, positioning 2025 as the strongest year for transactions since 2022.

Cap rates reflected the bifurcation, with Class A assets trading between 4.5% and 6.5% in growth markets while secondary or vacant properties commanded 7-8%+ yields. Looking ahead, fundamentals appear set to stabilize through early 2026, with vacancy forecast to peak near 7.5% as construction slows further and absorption is expected to improve, closing the supply-demand gap that defined 2024-2025.

Investment Implications: Watch for selective opportunities in modern, well-located logistics facilities where fundamentals are stabilizing first. Headline asking prices may stay elevated while sold pricing softens in commodity stock; focus on submarkets with infrastructure advantages, limited new supply, and build-to-suit activity as leading indicators of near-term rent growth recovery in 2026.

Multifamily Market Analysis

For Sale

Pricing: Average sale price per square foot was $200.78, flat MoM (down 0.05%) and down 1.3% YoY, consistent with disciplined underwriting amid elevated operating expenses and cautious debt markets. Asking prices fell 2.1% MoM to $168.54 PSF but remained 2.3% above last year, reflecting modest seller optimism as absorption improved heading into 2026.

Cap Rates: Sale cap rates edged up 1 bp MoM to 6.47% and were 14 bps higher YoY, while asking cap rates compressed 2 bps MoM to 7.24% (+19 bps YoY). The spread reflects the higher-for-longer rate environment and buyer demands for better returns as operating fundamentals stabilize.

Vacancy: Reported vacancy on Crexi listings improved 90 bps MoM to 13.9% but remained 80 bps above December 2024, indicating absorption picked up through late 2025 as the year's record deliveries found tenants, though overall inventory remained elevated compared to pre-pandemic levels.

The Big Picture

Multifamily ended the year showing early signs of stabilization after absorbing historic supply levels. National fundamentals reflected this transition, with vacancy estimated to finish near 4.9% and annual rent growth around 2.6%, suggesting the pricing-reset phase may be ending and the market entering early-stage recovery. Vacancy fell 130 basis points from its early 2024 peak to 4.6% by Q3 2025 despite developers delivering more than 1.4 million units nationally over the past three years, a testament to resilient renter demand.

On pricing and capital markets, cap rates continued to compress as of Q3 2025, with the majority of compression occurring in Class C and value-add properties, while Class A assets hit by rental concessions saw minimal cap rate movement. The monthly mortgage payment on a median-priced home was nearly $1,200 higher than average apartment rent, with only about 28% of U.S. households qualifying for a mortgage on a median-priced home, underscoring how affordability constraints continued strengthening long-term multifamily demand. 

Looking ahead, multifamily investment volume is predicted to improve through early 2026, given rent growth on core properties having improved to 2.8% by late 2025. Additionally, Class C properties saw 3.4% rent increases and value-add properties posted 5.4% growth.

Investment Implications: Focus on workforce and Class B housing in metros past their supply peaks, where occupancy is stabilizing and concessions are declining. Target markets with strong employment growth, limited new construction pipelines, and positive demographic trends, while maintaining longer hold periods (6+ years) to capture rent growth as fundamentals normalize through 2026-2027.

Regional Breakdown: Median Cap Rates & Changes MoM by Top MSAs – December 2025

Disclaimer: This article's information is based on Crexi's internal marketplace data and additional external sources. While asking price in many ways reflects market conditions, variations in pricing are affected by changes in inventory, asset size, etc. Nothing contained on this website is intended to be construed as investing advice. Any reference to an investment's past or potential performance should not be construed as a recommendation or guarantee towards a specific outcome.

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