Despite the U.S. Federal Reserve’s decision to keep interest rates high amid a slowing economy and President Trump’s calls for Chair Jerome Powell’s resignation, commercial real estate investors are shaking off uncertainty and jumping back into the market, according to BisNow. After nearly three years of sluggish activity, big deals are happening again — signaling a change in confidence.
Investors Pour Billions Back into Commercial Real Estate
U.S. commercial real estate spending surged 25% in the first half of 2025 compared to last year, with second-quarter deal volume rising nearly 18%. Major brokerages like CBRE and Colliers are riding this wave, raising their earnings forecasts as financing and sales activity accelerate.
Economic Growth and Consumer Spending Bolster Optimism
The U.S. economy grew by 3% in Q2, outperforming expectations, while consumer spending increased 1.4%. These positive signs, despite geopolitical tensions and a disappointing jobs report, have boosted investor confidence in the commercial real estate market’s future.
Sentiment Swings: From Doubt to Cautious Optimism
Recent surveys reveal a dramatic alternation in market mood. Nearly half of commercial real estate professionals now view conditions favorably, which is more than double the optimism from earlier this year. Expectations for economic stability and investor demand have soared, while concerns about deteriorating fundamentals have sharply declined.
Trade Tensions Ease, Uncertainty Declines
Although tariffs and trade disputes remain a factor, recent moves such as the European Union’s suspension of countertariffs have eased fears. This reduction in policy volatility is helping investors regain footing and make more confident decisions.
Institutional Money Returns, Driving Major Deals
While private capital still dominates, big institutional players and banks are re-entering the market. BlackRock’s increased retail investments and Starwood’s $2.2 billion acquisition highlight this trend. Multifamily portfolios in Atlanta are also trading hands in deals totaling over $2 billion, signaling robust activity.
More Capital, More Competition, Higher Prices
With fresh capital flooding the market, deal velocity is expected to pick up in the second half of 2025. Experts predict rising competition will push prices higher as buyers vie for prime assets.
Rates May Stay High, but Deals Aren’t Waiting
The Fed’s recent decision to hold rates steady, despite pressure to cut, coupled with a weaker-than-expected jobs report, has pushed market expectations toward a possible rate cut later this year. But many investors are acting now, no longer letting interest rates dictate their moves.
Pent-up demand is fueling transactions, and fears of tariff impacts or rate hikes have given way to a more practical focus on deals that make financial sense. The commercial real estate market seems to have found its footing, confident enough to push forward during ongoing economic and policy challenges.
