On October 15, Founder & CEO Kyle Matthews shared a Q4 2025 market update to share the most recent CRE trends, as well as forward expectations. Below are the top trends he discussed.

 

Multifamily: Supply Wave Fading, Stable Fundamentals

Two forces collided over the last two years: a historic delivery cycle and higher-for-longer rates. The worst of that collision appears to be over. Construction pipelines have thinned toward decade lows, net absorption stayed solid, and major metro vacancies moved back below 5%. After 2024’s flatline, rent growth is ticking back up.

 

Trends to Track

• Track leasing activity as new supply pressure moderates
• Concessions rolling off in oversupplied submarkets
  
• Expense pressure (insurance, taxes) vs. recovering top line

 

Key Takeaway: With fewer new keys arriving, NOI visibility improves. Expect selective rent growth and more stable pricing as 2026 approaches—especially for well-located, mid-density products.

 

Multifamily Fundamentals Are Improving Again

Trailing 12-Months Through 3Q For 2025; Includes Top 50 Markets​

Sources: Matthews™, RealPage, Inc.

 

Retail Remains a Standout

Retail’s top performance continues. Even with a small vacancy lift from around 4.0% to 4.3%, it is crucial to understand the activity’s context. New construction is scarce, and competition for quality space remains fierce. Strip centers have structurally tightened over the decade, from 8.1% to 5%, while malls have consistently fallen behind.

 

Trends to Track

• Small-bay neighborhood and grocery-anchored centers with sticky daily-needs tenants
• Re-tenanting opportunities where operators are rationalizing weaker locations
• Minimal new supply preserving landlord leverage on term and tenant improvements

 

Key Takeaway: The modest vacancy uptick looks like tenant reshuffling, not stress—opening more value-add deals without breaking the tightness narrative.

 

Retail Vacancy is up Slightly, but 4.3% is Still Extremely Tight

Trailing 12-Months Through 3Q For 2025​

Sources: Matthews™, CoStar Group Inc.

 

Industrial: Supply/Demand Rebalancing

A post-pandemic building boom has temporarily outpaced leasing activity, especially in large-format logistics centers. As a result, industrial vacancies have ticked higher and rent growth sits at its lowest point in over a decade.

 

Still, the sector’s long-term forecast remains intact. Structural demand from e-commerce, nearshoring, and distribution network optimization continues to expand. The current recalibration is a necessary reset that should restore balance and renew pricing power by 2026.

 

Trends to Track

• Mid-box/infill absorption vs. mega-box softness
• Timing of corporate supply chain decisions into 2026
  
• Sublease inventory burn-off

 

Key Takeaway: Underwrite slower lease-up now, but position for demand to re-accelerate as supply/strategy resets work through the system.

 

Industrial Rent Growth is Still Positive, but Rising Vacancy is Taking its Toll

Trailing 12-Months Through 3Q​

Sources: Matthews™, CoStar Group Inc.

 

Capital Markets: Emerging From the Rate Shock

When the 10-year surged, deal volume slumped to near COVID-era depths for 11 to 12 quarters. Financing was the choke point: high all-in coupons and tight cap rate/borrowing spreads made pro formas pencil only on best-in-class assets. Sector pricing diverged as multifamily corrected most, while retail and industrial were more resilient.

 

Green shoots are appearing: benchmark rates and credit spreads have eased from the peaks, and cap rate expansion moderated in Q3. The key to unlocking velocity is a healthier spread between property yields and debt costs.

 

Top Takeaways

• Get deals and refi’s in the pipeline as soon as possible to tack advantage of daily and weekly swings
• Structure optionality (rate caps, staged proceeds, earn-outs) to bridge bid-ask
• Focus on pre-stabilized but de-riskable assets where basis defensibility is clear

 

CRE Dollar Volume vs. 10-Year Treasury Yield

Estimate For 3Q 2025; 10-Year Treasury Through October 13​

Sources: Matthews™, Real Capital Analytics, Federal Reserve

 

Macroeconomic and Yield Activity

The labor market is normalizing: openings vs. unemployed has rebalanced, wage growth moderated, payroll gains cooled after revisions. Growth was bumpy (soft Q1, strong Q2, healthy Q3 tracking), but the odds favor a soft landing rather than a hard stop.

 

So why do long rates stay sticky even as inflation cools and cuts begin? Heavy Treasury issuance to fund persistent deficits has boosted the term premium, but the Fed has been enacting massive QE policies since the GFC to hold the bond yields down. 

 

CRE Implication: Expect a gradual rather than dramatic drop in long-term borrowing costs, unless a policy or issuance shift occurs. Underwriting should reflect structurally higher base rates than the 2010s.

 

Job Growth is Slowing

Through August​

Sources: Matthews™, BLS​

 

Inflation and Fed Funds Have Come Down, but the 10-Year Remains Elevated

Through August; 10-Year Treasury Through October 13​

Sources: Matthews™, BLS, Federal Reserve

 

Outlook for the Next 6 to 12 Months

Rates: Markets are penciling multiple quarter-point cuts over the next year. QT has already tapered, and discussions about its future path matters for term premiums.

 

Spreads: Lender competition and risk sentiment are improving. Expect gradual spread widening. 

 

Cap Rates: Further broad-based expansion looks limited; moves should be modest and sector-specific.

 

Velocity: As the yield-to-debt spread opens, expect a late 2025 pickup that gains traction into 2026.

 

Overall: A slow, durable thaw. Retail leads, stabilized multifamily follows, and industrial participation broadens as big-box supply is absorbed and tenants re-commit to long-term footprints.

 

Great Liquidation for the Next Five to 10 Years

A multi-trillion dollar intergenerational wealth transfer is underway, and a meaningful piece sits in legacy CRE. Step-up basis, management intensity, and co-ownership dynamics often catalyze sales.

 

CRE Implications:

• A secular tailwind for listings and transaction velocity 
• Rising importance of estate-savvy advisory (1031s, DSTs/UPREITs, recapitalizations) 
• Relationship groundwork today becomes tomorrow’s pipeline 

“A $40T wealth transfer could be the quiet catalyst for the next up-cycle in velocity.”

 

Wealth Transfers Will Drive Steady Growth in Transaction Activity for the Next Decade

Estimate Based on Current Averaged for Wealth By Generation and Yearly Death Rate by Age Cohort​

Sources: Matthews™, BEA, Census Bureau, Federal Reserve​

 

Overall Predictions

The industry is exiting the rate-shock era with scars, but also with healthier fundamentals in key sectors and the beginnings of a capital markets thaw. The path forward is incremental: watch the term premium, spread compression, and underwrite with discipline. Those who prepare now by cultivating estate relationships, targeting supply-light submarkets, and structuring creatively will find the next leg of the cycle rewarding moving into 2026.