Commercial real estate (CRE) deal-making lost momentum again in November, signaling that the post-rate-hike recovery is losing steam. Transaction volume fell year over year, extending a slowdown that began in October and underscoring how sensitive the sector remains to interest rates, policy uncertainty, and cautious lenders.
Yet this isn’t a full market freeze.
Capital is still moving — just not everywhere. Investors are becoming more selective, prioritizing scale, asset quality, and sectors tied to long-term demand rather than cyclical growth. The result is fewer deals overall, but larger and more strategic transactions where conviction is highest.
So what’s actually happening beneath the headline slowdown?
November by the Numbers
According to monthly transaction data provided by Moody’s to CNBC’s Property Play, commercial real estate activity weakened notably in November.
Here are the most important data points:
- Total CRE transaction volume fell 10% year over year
- Roughly 1,800 deals closed nationwide
- November marked the second consecutive month of annual declines
- Deal activity was lower than November 2020, during the height of the pandemic
- Sales above $100 million rose 51% year over year
- Average deal size increased to $14.2 million, up from a $12 million average since 2019
- The majority of top transactions involved Class A properties
The takeaway is clear: liquidity hasn’t disappeared it has narrowed.
Why Deal Activity Is Slowing Again
This latest pullback reflects a convergence of pressures facing the CRE market.
According to Kevin Fagan, head of CRE capital markets research at Moody’s, higher-for-longer interest rates remain the dominant constraint. Financing costs are still elevated, underwriting assumptions are conservative, and lenders are selective about where they deploy capital.
Layer on policy uncertainty, a labor market that’s no longer accelerating, and investors become hesitant to transact unless the deal checks every box.
Are buyers waiting for rates to fall or have they simply reset their expectations? In many cases, it’s both.
Liquidity Is Still There — But It’s Selective
Despite the slowdown, the market is far from frozen.
Moody’s estimates that CRE liquidity is still operating at roughly two-thirds of pre-pandemic levels, but that activity is increasingly concentrated in larger transactions. Deals under $100 million declined sharply, while mega-deals expanded.
This “barbell” dynamic reflects late-cycle behavior: investors avoid middle-ground risk and instead favor either ultra-defensive or deeply discounted opportunities.
In November, that meant:
- Larger portfolios
- High-quality assets
- Clear demand drivers
- Pricing clarity
If a deal doesn’t offer durability or scale, it’s likely being postponed.
Sector Breakdown: Where Deals Still Happened
Even in a slower month, certain property types continued to attract interest.
Multifamily led all sectors, accounting for 20 of November’s tracked transactions. That dominance reflects housing’s essential role, especially in a market where renting remains cheaper than owning across major metros.
Office followed with 11 deals, while industrial logged eight transactions.
Each sector tells a different story.
Office: Price Discovery Is Finally Working
Office remains the most scrutinized CRE segment, but November’s data suggests a market that is slowly finding equilibrium.
Fagan noted that pricing discovery has become faster and more reliable. Rather than stalled negotiations, buyers and sellers are increasingly aligned often around discounted valuations.
Most office deals shared at least one of the following characteristics:
- Mission-critical facilities
- Specialty or single-user properties
- Conversion or redevelopment potential
- Significant price discounts
A notable example was 114 West 41st Street in New York City, which sold at a 53% discount to its prior transaction.
Does this mean office is “back”? Not broadly but for the right asset, buyers are stepping in.
Corporations Are Buying Control, Not Just Space
Another emerging trend: companies are purchasing essential office properties rather than leasing.
With discounted pricing and uncertainty around long-term space needs, firms want more control over occupancy costs and operational flexibility.
Recent examples include:
- Novartis acquiring a campus-style facility in Durham, North Carolina
- First Citizens purchasing office space in San Francisco
- Alo Yoga buying and occupying property in Beverly Hills
This reflects a strategic shift office as infrastructure, not speculation.
Medical Office: The Quiet Standout
While not included in Moody’s core CRE count, medical office real estate dominated the month’s largest transaction.
A $7.2 billion portfolio of 296 medical office properties across 34 states was sold by Welltower to a joint venture between Remedy Medical Properties and Kayne Anderson Real Estate.
The acquisition made the partnership the largest owner of outpatient medical buildings in the U.S., with more than 1,100 properties nationwide.
Medical office continues to benefit from:
- Aging demographics
- Shift toward outpatient care
- Stable tenant demand
- Lower exposure to work-from-home trends
In a cautious market, predictability matters.
Big Portfolio Deals Are Becoming the Norm
Large portfolio transactions were a defining feature of November.
Seventeen of the top 50 deals involved portfolio sales, a growing trend compared with pre-pandemic years. These transactions allow buyers to deploy capital efficiently while spreading risk across multiple properties and markets.
For sellers, portfolio deals offer liquidity in an otherwise selective environment.
This structure may become more common as single-asset deals remain harder to price and finance.
Data Centers: AI Demand Keeps Capital Flowing
Data centers were another standout sector in November.
The second-largest deal of the month involved a $615 million acquisition by SDC Capital Partners, which purchased 97 acres in Leesburg, Virginia, zoned for data center development.
AI workloads, cloud computing, and digital infrastructure demand continue to override broader CRE hesitation. Investors see these assets as long-term infrastructure plays rather than traditional real estate bets.
If any CRE segment feels insulated from macro headwinds, this is it.
What This Means for Investors
The November slowdown sends a clear message: CRE is not rebounding evenly.
Investors are prioritizing:
- Asset quality over quantity
- Scale over fragmentation
- Durability over cyclical upside
Smaller or marginal assets may struggle to attract capital, while best-in-class properties continue to trade sometimes at attractive pricing.
Does your investment strategy assume broad recovery, or selective opportunity? The latter is winning right now.
What This Means for Borrowers and Developers
For borrowers, financing remains available but only for deals that meet stricter underwriting standards. Equity requirements are higher, assumptions are conservative, and lender scrutiny is intense.
Developers may find opportunity in:
- Conversion projects
- Essential-use assets
- Partnerships tied to healthcare or digital infrastructure
Speculative development, however, remains challenging.
Why This Matters Heading Into 2026
November’s data reinforces a broader theme: commercial real estate is transitioning, not collapsing.
The market is repricing risk, redistributing capital, and redefining what “core” really means. Transactions haven’t stopped they’ve become more intentional.
As 2026 unfolds, deal volume may remain uneven, but conviction-driven capital will continue to shape the next phase of CRE.
Conclusion: Fewer Deals, Bigger Decisions
Commercial real estate deal-making slowed again in November, but the slowdown masks a deeper shift. Investors are still active they’re just more disciplined, more selective, and more focused on long-term fundamentals.
At Nadlan Capital Group, we see this as a market that rewards patience, clarity, and scale. The easy deals are gone, but thoughtful opportunities remain for those aligned with durable demand.
Do you think CRE activity will reaccelerate once rates ease or has the market permanently changed its risk appetite? Share your perspective with us and stay connected with Nadlan Capital Group for expert insight into evolving real estate markets.
