U.S. commercial real estate transaction volumes experienced a dramatic cycle from 2020–2026:
Prepared for: Logan Freeman | Midwest CRE Advisors | Kansas City
If you're a commercial real estate investor trying to figure out where the market is headed in 2026, you need to understand the complete cycle we just lived through.
Because here's the truth: We've been through a dramatic six-year boom-bust-recovery cycle—and the data tells a clear story about who wins and who loses in the next 24months.
Let me walk you through it.
Here's what happened:
2020–2021: Rapid recovery from COVID-19 lows; volumes doubled
2022: Peak volumes ~$800B+
2023–2024: Sharp correction; volumes declined ~45% to ~$450B
2025: Recovery underway; +17% YoY growth through 9 months
2026 Outlook: Continued recovery driven by $250B+ in dry powder and stabilizing cap rates
If you're aninvestor, this cycle matters because it tells you where the opportunities are—and where the landmines are hiding.
Let me break it down year by year, then show you what it means for 2026.
Estimated Volume: ~$425B
In Q2–Q3 2020,the market froze. Lockdowns, uncertainty, and fear drove transaction activity to multi-year lows.
But by Q4 2020,something shifted: Industrial and multifamily led the recovery. E-commerce exploded. People moved from urban cores to suburbs. Investors saw the writing on the wall and started deploying capital.
Key Insight: 2020 established the trough—the baseline for the recovery that followed.
Volume: ~$800B(nearly double 2020 levels)
This was the year everyone went crazy.
Why?
● Pent-up demand from 2020
● Fed Funds Rate near zero
● Capital flooding into CRE as an alternative to equities
● Industrial/logistics explosion driven by e-commerce
● Multifamily demand from urban-to-suburban migration
Transaction volumes hit ~$800B—approximately 50% above the 2015–2019 average of $530B.
Top sectors: Industrial, multifamily, data centers.
Key Insight: 2021 represented the post-COVID rebound peak—historic highs fueled by easy money and FOMO.
Volume:$750–$800B (Q1–Q3 peak; full-year)
2022 was a tale of two halves.
Q1–Q2 2022: Record activity. Property values peaked in March–April 2022.
Then, the Fed started hiking rates aggressively.
The Rate Environment Shift:
● January 2022 Fed Funds Rate: 0%
● December 2022Fed Funds Rate: 4.5%
● December 2022 10-Year Treasury: 4.5%+
By Q3–Q4 2022, transaction activity decelerated sharply. Buyers pulled back. Sellers refused to accept lower valuations. The market froze.
Key Insight: 2022 marked the end of the post-COVID boom—and the beginning of the correction.
Volume: ~$450B (decline of ~45% from 2022 peak)
This was the year of the pricing reset.
What drove the decline?
● Fed Funds Rate reached 5.25%–5.50% (highest since 2007)
● Bid-ask spreads widened dramatically (buyers and sellers 15–25% apart)
● Regional bank crisis (March 2023: SVB, Signature Bank, First Republic)
● CMBS spreads widened; debt financing constrained
● Office sector distress accelerated
Pricing Impact:
● MSCI RCA CPPI showed ~20% valuation correction peak-to-trough
● Cumulative distressed assets approached $200billion
Capital markets froze. Buyers and sellers struggled to agree on valuations in the higher-rate environment.
Key Insight: 2023 was the year the market repriced. If you were a buyer with dry powder, you got rewarded. If you were a seller who needed liquidity, you got crushed.
Volume: ~$463B (flat to slightly up vs 2023)
2024 was the reset year.
The Fed paused rate hikes in Q2 2024 (Fed Funds held at 5.25%–5.50%). Transaction volumes stabilized but remained subdued. Bid-ask spreads began to narrow (from 20%+to 10–15%).
Sector Performance:
● Core sectors (industrial, grocery-anchoredretail, medical office) showed resilience
● Office distresscontinued
● Multifamily oversupply emerged in Sunbelt markets
Lending Activity:
● Regional banks remained cautious
● CMBS and life company lending remained muted
Property Pricing:
● MSCI RCA CPPI began to stabilize; modest gainsin select sectors
Key Insight: 2024 was a floor-setting year—market participants adjusted to the new rate environment, and transaction activity found a base.
Volume: ~$550B(up +17% YoY)
This is where the story gets interesting.
Q1–Q3 2025 Data (MSCI/RCA & Principal Asset Management):
● 9-month volumes up +17% vs 2024
● Q3 2025 alone: +17%YoY growth
● Trailing 12-month volume (through Oct 2025): $138.3B, up 27% YoY (CoStar)
● Number of transactions >$10M reached highest quarterly count since 2022 (Altus Group)
CRE Loan Originations:
● Up +47% YoY through Q3 2025
● All lender types increased activity
Lending Recovery:
● Regional banks re-entering the market
● CMBS spreads tightening
● Life companies deploying capital
● Senior Loan Officer Survey: CRE loan demand rose for first time since Q1 2022
Property Pricing:
● MSCI RCA CPPI: +1.6% (November2025)—first back-to-back annual gains since 2022
● U.S. Listed REITs: +4.5% YTD (through late 2025)
● European Listed REITs: +25.5% (USD terms)
Top-Performing Sectors:
● Data Centers: 37% of all CRE capital raised in 2025; mega-funds closed (Blue Owl $7B, Principal $3.6B)
● Industrial: +26.5% YoY transaction growth (Altus Group)
● Retail (grocery-anchored): Double-digit growth; investor demand strong
● Office: +28.0% YoY (flight-to-quality driving activity in top-tier; commodity office still distressed)
Key Insight: 2025 marked the inflection point. Transaction volumes accelerated, bid-ask spreads narrowed, and capital markets reopened. The recovery was uneven (datacenters and industrial led; office lagged), but the trend was clear.
Projected Volume: $625B (estimated +15–20% growth vs 2025)
Here's what's driving 2026:
Key Drivers:
● $250B+ in dry powder ready to deploy (North America)
● 2025 fundraising: $164.4B globally ($115Bin North America); 29% YoY growth
● Total CRE fundraising 2025: $222B globally
● Top sponsors 2025: Brookfield ($16B), Blackstone ($19B combined funds), Carlyle; these three = 16% of all CRE capital commitments
● Opportunistic capital shift: 33% of capital now in opportunistic funds (up from 18% in 2023); core allocations returning
● Loan maturities: $1.5 trillion+ in CRE loans maturing 2024–2027; refinancing wave driving transactions
● Narrower bid-ask spreads: Buyers/sellers now 5–10% apart (vs 20%+ in 2023)
● Fed policy stabilization: 10-year yield expected to hold 4.0–4.25%; no dramatic cuts anticipated
● Distress normalization: Distressed assets presenting value-add opportunities; buyers stepping in
✓ Data centers, industrial (last-mile), grocery-anchored retail, medical office, alternative assets (self-storage, senior housing)
✗ Commodity office, over supplied Sunbelt multifamily, highly leveraged assets
Divergence theme: Top-quartile assets outperforming; flight-to-quality accelerating
Midwest advantage:
● Secondary markets (Kansas City, Columbus, Indianapolis) attracting capital
● Lower entry costs
● Stable fundamentals
Sunbelt caution:
● Multifamily oversupply in Phoenix, Austin, Nashville, Tampa
● Selective opportunities only
Gateway cities:
● Core assets in NYC, LA, SF, DC seeing renewed interest from core/core-plus funds
If you're investing in 2026, here's your playbook:
Focus on:
● Small-bay industrial (<50,000 SF) in secondary markets
● Grocery-anchored retail with 3+ years of anchor term remaining
● Medical office near hospital systems or ASC clusters
● Value-add multifamily in stable Midwest metros (avoiding oversupplied Sunbelt)
● NNN single-tenant with investment-gradeor near-investment-grade credit
Avoid:
● Commodity office
● OversuppliedSunbelt multifamily
● Highly leveraged assets facing refinancing risk
We just lived through a six-year boom-bust-recovery cycle:
● 2020: Trough (~$425B)
● 2021: Peak (~$800B)
● 2023: Correction(~$450B)
● 2025: Inflection(~$550B)
● 2026: Recovery (~$625B projected)
The data is clear: 2026 is a cycle for selectivity. Income-driven returns, not appreciation. Winners will be necessity-based sectors and top-quartile assets. Broad beta strategies will underperform.
The green flag is out. Institutional capital is ready to deploy. Are you positioned to act?
If you're looking to buy, sell, or position your portfolio for 2026, let's talk. I'm actively working deals across the Midwest in industrial, retail, medical office, and multifamily.
Logan Freeman
Partner| Midwest CRE Advisors
573-694-9669
Logan@MWCREAdvisors.com
LinkedIn
● Principal Asset Management: 2026 Inside Real Estate Outlook: A Cycle for Selectivity
● MSCI Real Capital Analytics (RCA): RCA CPPI November 2025
● CBRE, CoStar, Altus Group, Avison Young, MetLife Investment Management
● PERE, ULI Real Estate Economic Forecast, JPMorgan Chase, Deloitte
Copyright 2026, Midwest CRE Advisors
