Crexi National Commercial Real Estate Report: October 2025

Key Takeaways

• Retail: Sold pricing jumped 8.49% month over month to $237.93 per square foot and sits 19.13% above last year, while vacancy ticked up 50 bps since September but remains 330 bps tighter than October 2024. Effective rents rose 2.03% with asks essentially flat. Bottom line: retail remains the strongest performing CRE sector.
• Office: Sale prices climbed 2.09% month over month and 13.38% year over year as sale cap rates compressed 8 bps, pointing to selective risk-on bidding for quality assets. At the same time, marketed vacancy fell 250 bps from September, but effective lease rates slipped 1.65% as concessions carried leasing across many buildings. Bottom line: Quality office assets are finding buyers, but leasing concessions remain elevated.
• Industrial: For-sale pricing eased 3.58% month over month but remains 1.63% higher than last year, with sale cap rates edging down 2 bps. Vacancy rose 280 bps versus September, yet effective rents improved 0.94% while asks held flat. Bottom line: Post-pandemic normalization continues with regional divergence. 
• Multifamily: Sale pricing posted the strongest monthly gain across sectors at 4.74% and is up 1.26% year over year, with sale cap rates down 5 bps. Listed vacancy increased 120 bps month over month and 70 bps year over year. Bottom line: Supply wave nearing its peak as construction starts plummet 74%.
• Macro read: October data show a bifurcated landscape where retail stays resilient, office recovery is selective, industrial keeps normalizing after a supply surge, and multifamily navigates late-cycle supply pressure. Taken together, pricing firmness in for-sale markets contrasts with still-mixed leasing, reinforcing the need to underwrite submarket quality and vintage carefully. Investment opportunities favor quality assets in supply-constrained markets across all sectors.

Retail Market Analysis

For Sale

Pricing: Retail sale prices demonstrated impressive gains at $237.93 per square foot in October 2025, rising 8.49% from September's $219.31, continuing a three-month streak of high growth since July of this year. Year-over-year gains of 19.13% from October 2024's $199.71 per square foot suggest continued investor confidence despite broader economic uncertainty surrounding consumer spending patterns.

Cap Rates: Sale cap rates edged up 6 basis points to 6.63% from September's 6.57%, signaling a slight softening in investor sentiment and pricing expectations. The 4 basis point increase year-over-year from 6.59% in October 2024 indicates marginally higher return requirements as investors navigate concerns about the sustainability of consumer spending patterns.

Vacancy: Retail vacancy rates climbed 50 basis points to 5.50% from September's 5.00%, though this represents a substantial improvement of 330 basis points from October 2024's 8.80% vacancy rate. This year-over-year improvement reflects the sector's resilience, driven by experiential retail concepts and the continued importance of physical stores in omnichannel strategies. At 5.50%, retail vacancy remains near historic lows. 

For Lease

Asking vs. Effective Lease Rates: Asking lease rates remained essentially flat at $19.06 per square foot, up just 0.26% from September's $19.01, while effective rates jumped 2.03% to $20.10 from $19.70 the previous month, capping off six months of consecutive gains. The widening spread between asking and effective rates suggests landlords are successfully pushing through rent increases in high-demand locations while maintaining headline rates to attract tenants. This pricing power indicates strong tenant demand in prime retail corridors. 

The Big Picture

The retail sector continues to demonstrate surprising resilience in October 2025, defying earlier predictions of widespread distress. Retail vacancy rates for open-air shopping centers remain near an all-time low of 5.4%, with only marginal increases expected through 2027. This strength is underpinned by a robust pipeline of store openings that exceeds closures by approximately 850 locations this year, reflecting retailers' continued commitment to physical locations despite e-commerce growth. The asking price surge of 37.48% year-over-year to $267.34 per square foot from $167.15 in October 2024 signals intense competition for prime retail assets, particularly in supply-constrained markets across major U.S. metros. 

Consumer spending patterns are evolving in ways that support brick-and-mortar retail, though challenges remain. Foot traffic in the first half of 2025 exceeded year-over-year levels, with car wash services, theaters, and entertainment venues seeing the most significant visit spikes. However, a recent Fed working paper highlighted that much of consumer resilience is being driven by high-income households, while middle and lower-income groups are pulling back. This bifurcation in consumer behavior explains why high-end retail centers and necessity-based grocery-anchored properties continue to outperform, while mid-market retailers face pressure. Despite these headwinds, the sector maintains the fastest rent growth and lowest vacancy rate among all CRE sectors, underscoring its fundamental strength even as growth moderates from pandemic-era peaks.

Investment Implications: Grocery-anchored centers and experiential retail in affluent submarkets offer the strongest risk-adjusted returns. Avoid mid-tier malls without clear repositioning strategies.

Office Market Analysis

For Sale

Pricing: Office sale prices climbed to $177.14 per square foot in October 2025, up 2.09% from September's $173.51, marking a continuation of the gradual recovery in transaction values. The impressive 13.38% year-over-year appreciation from October 2024's $153.44 suggests that well-positioned office assets are finally finding buyers despite the sector's post-COVID challenges. This marks the strongest annual pricing recovery since the pandemic.

Cap Rates: Sale cap rates compressed 8 basis points to 7.27% from September's 7.35%, indicating improving investor confidence in select office properties. The 38 basis point compression from October 2024's 7.65% represents one of the strongest year-over-year improvements across all asset classes, suggesting a bifurcated market where quality assets command premium pricing while Class B and C properties face less stellar performance.

Vacancy: Office vacancy improved dramatically by 250 basis points to 17.40% from September's 19.90%, though Crexi's data appears more optimistic than other market reports - likely due to well-positioned office sellers being ready to hit the market and recoup their investment. The 520 basis point improvement from October 2024's 22.60% suggests that flight-to-quality trends and selective leasing activity are beginning to stabilize portions of the market.

For Lease

Asking vs. Effective Lease Rates: Asking lease rates held steady at $19.95 per square foot, virtually unchanged from September's $19.94, while effective rates declined 1.65% to $19.67 from $20.00. This divergence between asking and effective rates indicates landlords are increasingly offering concessions to attract and retain tenants while maintaining face rates for financing and valuation purposes.

The Big Picture

As mentioned in our 2026 office market outlook, the office sector continues navigating unprecedented challenges as hybrid work patterns become permanently embedded in corporate culture. About 66% of U.S. companies now offer some form of workplace flexibility, leading to persistent underutilization of office space. 

The bifurcation has become increasingly pronounced, with Cushman & Wakefield's midyear outlook describing it as "three markets" operating simultaneously. At the top, 30% of Class A buildings are fully occupied and another 20% maintain vacancy rates below 15%, while the bottom 10% consists of highly challenged, likely obsolete buildings that disproportionately contribute to overall vacancy statistics. The middle 40% represents the battleground where repositioning and amenity upgrades will determine winners and losers. 

Markets like Seattle exemplify the crisis with vacancy reaching 27.2% in August 2025, driven by tech layoffs and shrinking office footprints. However, some markets show signs of stabilization, with Houston experiencing a 3.3% decline in year-over-year vacancy and Manhattan seeing a 1.3% improvement. The 52-week high in office delinquency rates reaching 7.2% in Q2 2025 underscores the financial stress still permeating the sector, though selective opportunities emerge for investors willing to reposition or convert underperforming assets.

Investment Implications: Focus on Class A properties in secondary markets with tech and healthcare job growth. Office-to-residential conversations present compelling opportunities in gateway cities with housing shortages.

Industrial Market Analysis

For Sale

Pricing: Industrial sale prices declined 3.58% to $104.66 per square foot in October 2025 from September's $108.55, marking the first significant monthly decline in recent quarters. Despite this pullback, the modest 1.63% year-over-year increase from October 2024's $102.95 maintains the sector's positive trajectory amid normalization from pandemic-era peaks.

Cap Rates: Sale cap rates compressed marginally by 2 basis points to 7.10% from September's 7.12%, demonstrating continued investor appetite for industrial assets. The 12 basis point compression from October 2024's 7.22% reflects improving market fundamentals and investor confidence in the sector's long-term growth prospects.

Vacancy: Industrial vacancy rose 280 basis points to 25.80% from September's 23.00%, though this is still better than October 2024's 26.60%. This monthly spike likely reflects new supply coming online rather than demand deterioration, as absorption patterns remain positive in most major markets.

For Lease

Asking vs. Effective Lease Rates: Asking lease rates held flat at $14.11 per square foot, unchanged from September, while effective rates increased 0.94% to $12.87 from $12.75. The year-over-year increases of 1.49% in asking rates and 5.91% in effective rates demonstrate landlords' ability to push through rent increases despite elevated vacancy levels.

The Big Picture

The industrial sector is experiencing a normalization phase after years of explosive growth, yet fundamentals remain strong supported by structural tailwinds. Third-party logistics providers' share of bulk industrial leasing activity has risen to 34.1% through Q3 2025, up from 30.6% a year earlier. This shift reflects companies' increasing preference for outsourcing distribution operations to maintain flexibility amid supply chain uncertainty. The e-commerce share of retail sales reached a record-high 23.2% in Q3 2024 and is expected to hit 25.0% by year-end 2025, with each additional $1 billion in e-commerce sales requiring approximately 1.25 million square feet of distribution space. For investors, this translates to sustained demand for modern, last-mile facilities in population-dense metros. 

Despite the October vacancy spike in Crexi's data, broader market indicators suggest the industrial sector remains on solid footing, though regional variations persist. While overall retail sales growth is moderating, the structural shift toward online shopping continues unabated, with U.S. e-commerce accounting for approximately 16% of total retail in early 2025. 

The emergence of AI-driven warehouse automation, with companies like Amazon leveraging their AWS infrastructure for supply chain optimization, is creating new competitive dynamics. Early adopters report up to 50% improvements in order fulfillment efficiency, signaling a technological transformation that could offset labor challenges and drive future demand for modern, tech-enabled facilities.

Investment Implications: Target infill locations within 30 miles of major metro areas. Avoid speculative developments in secondary markets with limited population growth. 

Multifamily Market Analysis

For Sale

Pricing: Multifamily sale prices surged 4.74% to $209.34 per square foot in October 2025 from September's $199.87, representing the strongest monthly gain across all asset classes. The modest 1.26% year-over-year increase from October 2024's $206.71 suggests pricing has stabilized after the volatility of recent years.

Cap Rates: Sale cap rates compressed 5 basis points to 6.38% from September's 6.43%, indicating renewed investor interest as the sector emerges from its supply-driven correction. The minimal 3 basis point expansion from October 2024's 6.35% demonstrates remarkable stability despite the significant new supply delivered over the past year.

Vacancy: Multifamily vacancy increased 120 basis points to 14.30% from September's 13.10%, while rising 70 basis points from October 2024's 13.60%. This uptick reflects the ongoing absorption of record new supply rather than fundamental demand weakness, as demographic trends continue to support rental housing demand.

The Big Picture

The multifamily sector is navigating through the tail end of a historic supply wave while maintaining fundamental strength supported by favorable demographics and housing affordability challenges. According to recent analysis, more than 102,000 units were absorbed in Q3 2025, marking the third consecutive quarter exceeding 100,000 net move-ins. Year-to-date absorption remains largely in line with 2024's near-record pace, down only 4%, demonstrating sustained renter demand despite economic uncertainty. The national apartment vacancy rate of 7.2% represents a record high for the index, yet this masks significant regional variations, with markets like Chicago experiencing 8.1% year-over-year rent growth while Austin faces 6.5% declines due to oversupply.

The intersection of Federal Reserve policy and housing market dynamics creates both opportunities and challenges for the multifamily sector. The Fed's October 29, 2025 rate cut to 3.75%-4.00% marks the second consecutive reduction, potentially easing refinancing pressure for the significant volume of multifamily debt maturing in 2025. Average multifamily rents are projected to grow 3.1% annually over the next five years, above the pre-pandemic average of 2.7%, as the premium to buy versus rent remains elevated at 35% higher monthly payments for homeownership. 

The dramatic slowdown in new construction starts, which Census data suggests have fallen 74% from their 2021 peak, positions the sector for stronger performance in 2026 as supply constraints tighten and demand continues its steady pace, creating a more balanced market environment that should support both occupancy gains and rent growth acceleration.

Investment Implications: Value-add opportunities in Class B properties in job-growth markets offer strong risk-adjusted returns.

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