CRE Investors Work to Decode Disruption: ValTrends Report 3Q 2025

Uncertainty remained top-of-mind for commercial real estate (CRE) investors through the third quarter, shaped by ongoing trade negotiations, tariffs, immigration crackdowns and the longest government shutdown in U.S. history. Decoding disruption has become essential for safeguarding investments and maintaining stability, according to the latest ValTrends report, SitusAMC's quarterly analysis of key developments in the economy, CRE property sectors, capital markets and the investment environment. Download the free 3Q 2025 ValTrends report, “Decoding Disruption,” here. 

“Investors are navigating an environment where signals are noisy, and the macro backdrop is shifting quickly,” said Peter Muoio, PhD, Head of SitusAMC Insights and co-author of the ValTrends report. “Yet even in the midst of volatility, CRE continues to offer relative resilience and clarity compared to other asset classes.”  

Although capital-markets volatility has eased, CRE transaction activity remains muted. Survey respondents in SitusAMC’s quarterly poll expect real estate values to remain heavily tied to net operating income (NOI), with investment rates anticipated to stay relatively stable. Spreads between RERC real estate yields and the 10-year Treasury widened modestly in the third quarter—driven by a 10 bps decline in the Treasury rate—while real estate yields held steady for the eighth consecutive quarter. 

“Investors continue to signal confidence in the long-term fundamentals of CRE,” said Jen Rasmussen, PhD, Vice President, SitusAMC Insights and report co-author. “They value the predictability of income streams at a time when stocks, bonds and other traditional investments are more vulnerable to policy swings and market overreaction.”  

Investor Confidence Strengthens as CRE Outperforms Alternatives 

Investor optimism for CRE advanced to its highest level in more than a year, rising above historical averages. Compared to traditional investment options, CRE topped the rankings by a wide margin. Preference for stocks declined as volatility and policy uncertainty weighed on public markets, while sentiment toward cash softened and bonds held relatively steady. 

Investors cite CRE’s stability, durable cash-flow profile, and potential for long-term appreciation as key differentiators—even as financing costs and secular shifts continue to pose challenges. While the market remains cautious, the trend signals a slow but notable return of confidence. 

Capital Flows Improve as Discipline Loosens 

Survey respondents reported a meaningful shift in capital dynamics: underwriting standards have gradually loosened over the past two years, and both debt and equity availability continue to trend higher. Capital discipline has now fallen below long-term averages, while availability has rebounded significantly from 2022 lows. 

Borrowing activity picked up in the third quarter as well. According to the Mortgage Bankers Association, CRE and multifamily originations rose 18% quarter-over-quarter and 36% year-over-year—the fifth straight quarter of increases on both measures. 

Returns Stabilize While Prices Edge Higher 

Overall CRE total returns were essentially unchanged in the third quarter, remaining near their highest levels in three years and only 10 bps below the 10-year average. CRE has recorded slight capital appreciation through the first three quarters of 2025, reversing a streak of 10 consecutive quarters of losses driven by rising interest rates.  

Prices also strengthened. MSCI Real Assets’ National All-Property CPPI climbed nearly 100 bps month-over-month in October, reaching its highest point since early 2023. Though values remain 8% below their post-COVID peak, every major property segment posted price gains during the month, indicating ongoing preference for high-quality assets. 

Investor Strategies Shift: More Lean Toward Buying  

As uncertainty slowly recedes, investors appear increasingly willing to re-engage. The recommendation to hold CRE slipped from 76% to 74% in the third quarter, while the recommendation to buy climbed from 18% to 22%. The inclination to sell dropped to just 4%. 

The apartment sector was the primary driver of this shift, emerging as the only segment in which a majority of institutional investors expressed a buy preference. Still, the overall tilt toward holding suggests investors are eager but constrained—ready to deploy capital yet challenged by limited deal flow and tight market conditions.  

“Decoding Disruption” offers a comprehensive look at performance metrics, investor sentiment, capital-markets movement, and the macroeconomic forces reshaping CRE. The report includes total return data, yield and spread analysis, price trends, and anonymized commentary from institutional participants to help investors navigate rapidly shifting conditions. Download the full 3Q 2025 ValTrends report here. 

Our next “ValTrends First Look” webinar takes place January 20, 2025 at 2pm ET, offering a forward-looking snapshot of the quarter ahead. Register here to attend. Learn more about SitusAMC Insights’ research, analytical tools or RERC data products on our website.