Commercial real estate dealmaking cooled for the second consecutive month in November, with transaction volume declining 10% compared to the same period in 2024. The market recorded just 1,800 deals across core property sectors including multifamily, office, industrial, retail and hotel, according to monthly data from Moody's tracking the top 50 commercial real estate property sales across the United States.

The November decline marks a notable retreat from the recovery that began in early 2024 following Federal Reserve rate hikes. Transaction volume fell below November 2020 levels, the first year of the Covid pandemic, signaling deeper hesitation among market participants. October had been the first month to post negative year-over-year transaction growth since the post-Fed rate hike recovery commenced.

Kevin Fagan, head of commercial real estate capital market research at Moody's, attributed the slowdown to multiple headwinds. He cited higher-for-longer interest rates, policy uncertainty, a tenuous labor market, and heightened caution among commercial real estate lenders and investors as primary factors constraining deal activity. Despite these challenges, market liquidity remains selectively open at approximately two-thirds of pre-pandemic volume, with capital concentrating in greater scale transactions.

The flight to quality became evident in transaction patterns. All deal sizes except those exceeding $100 million declined markedly during November. Transactions above that threshold surged 51% year-over-year, pushing the average deal size to $14.2 million compared to a $12 million average since early 2019. The majority of assets among the top 50 sales carried Class A designations, reflecting investor preference for premium properties.

Sector distribution showed multifamily leading with 20 transactions among the top 50 deals, followed by office with 11 and industrial with eight. Fagan characterized the trading patterns as consistent with late-cycle barbelling, where capital flows toward durable trends including housing demand, logistics infrastructure, and digital facilities.

The office sector demonstrated what Fagan described as an overall loosening, with market processes for determining fair pricing becoming more efficient, faster and more reliable. Nearly all office deals in the top 50 fell into distinct categories: mission-critical facilities, specialty-use properties, conversion opportunities, or deeply discounted acquisitions. The sector continued to see significant markdown transactions, including 114 West 41st Street in New York City, which Axonic Capital purchased from Clarion Partners at a 53% discount to the prior sale price.

Companies increasingly pursued control over essential office properties, capitalizing on discounted pricing to secure strategic locations. Novartis acquired a large campus-style facility in Durham, North Carolina, while First Citizens completed a purchase in San Francisco and Alo Yoga bought and occupied space in Beverly Hills, California. These transactions reflected corporate appetite for direct ownership of operational real estate at favorable valuations.

Medical office properties dominated November's largest transaction. Welltower sold a $7.2 billion portfolio comprising 296 properties across 34 states to a joint venture between Remedy Medical Properties and Kayne Anderson Real Estate. The acquisition positioned the partnership as the nation's largest owner of outpatient medical buildings, controlling 1,104 properties across 44 states. Medical office dealmaking has accelerated due to strong demand fundamentals, though the sector falls outside Moody's core property count.

Portfolio transactions emerged as a defining characteristic of November activity, accounting for 17 of the top 50 deals. Fagan noted this represents an increasing trend in recent years compared to pre-pandemic patterns, as institutional capital seeks efficiency through bulk acquisitions.

Data center activity remained robust, with the month's second-largest sale totaling $615 million. SDC Capital Partners acquired three industrial properties comprising 97 acres of land in Leesburg, Virginia, zoned for data center development. The transaction underscored continued investor appetite for digital infrastructure assets despite broader market caution across traditional commercial real estate sectors.