Multiple Forces Shape Strong H1 for Leading CRE Markets Article originally posted on Globe St. on August 11, 2025 The biggest U.S. commercial real estate markets are once again setting the tone for national investment trends — though the picture is far from one-dimensional. The country’s 12 largest metropolitan areas accounted for 37% of all commercial property sales in the first half of 2025, totaling nearly $68 billion in volume, according to Avison Young’s midyear investment sales report. Sales activity in these markets climbed 10.2% from a year earlier to 3,961 transactions, while overall dollar volume rose 8.9% over the same period. While these headline numbers suggest renewed momentum, what’s driving performance varies widely by market and asset class. In Dallas, Miami and Denver, investor confidence appears to be rebounding despite a backdrop of continued macroeconomic volatility. Dallas led the group with an 89% jump in transaction count, while Miami and Denver also posted double-digit gains. Even slower-growth markets such as Los Angeles and Chicago have seen an uptick in deal flow, with investors gravitating toward assets supported by solid fundamentals. Across many of these cities, multifamily and industrial properties — particularly in regions with strong job and population growth — are drawing sustained interest. New York presents a different story: sales volumes declined in 2024, but a string of large transactions now under contract is expected to buoy totals by the end of this year. Multifamily remains a consistent bright spot; Dallas saw a 139% leap in multifamily sales volume over the past year, while Miami posted a 44.3% increase, underscoring investor appetite for rental housing supported by demographic tailwinds. Another theme shaping activity is a pronounced flight to quality amid asset repricing. Buyers are increasingly selective, targeting higher-quality, well-leased buildings in locations with strong demographics, even as top-tier and middle-tier pricing continues to diverge. In Los Angeles, trophy office buildings have been trading at an accelerated pace, with first-half office sales volume up 115.8% year-over-year. By contrast, Washington, D.C., is contending with millions of square feet of obsolete space hitting the market as federal agencies shed leases, while Chicago’s office sector has seen transaction counts rise but dollar volumes slip, suggesting declining valuations. Avison Young notes that office and retail cap rates in major markets are now often exceeding 8% to account for higher perceived risk, compared with tighter cap rate spreads of 5% to 6.5% for industrial and multifamily assets. Industrial and data center demand is also redefining the landscape. In Phoenix, industrial sales surged nearly 66% year-over-year as investors pursue land acquisitions and property conversions to meet logistics and manufacturing needs. Northern Virginia and the broader Washington, D.C., area are seeing record land pricing as robust data center demand reshapes market dynamics, spurring office-to-residential conversions and other adaptive reuse projects. Land and underutilized properties in these regions are being repositioned to serve the technology, logistics and manufacturing sectors. Even in markets that experienced overbuilding in prior years, multifamily is staging a comeback. Austin and Charlotte, for example, have seen vacancy rates decline as new construction slows, creating a more balanced supply-demand environment. Across the top cities, Avison Young reports that investors continue to favor stable, income-producing multifamily assets that can deliver resilience during economic uncertainty, particularly in areas with strong employment and population growth. Taken together, these markets are advancing on multiple, sometimes competing, fronts — from trophy office trades in Los Angeles to land grabs for data centers in Virginia, to the multifamily resurgence in Dallas and Miami. For now, the interplay of selective risk-taking, asset repricing and targeted growth bets is shaping U.S. commercial property investment far more than any single unifying trend.