MarketSnapshot: Multi-Tenant Overall Market

The multi-tenant investment sales market tallied $39.8 billion during first quarter 2025, marking a 28.2% decline from the previous quarter. Year-over-year, however, sales volume remained essentially unchanged, with just a slight 0.2% uptick. Quarterly declines, driven by the office and industrial sectors, continue to illustrate market uncertainty. Investor caution persists due to economic influences, elevated interest rates and challenges with underwriting. With the weak start, maintaining healthy activity levels throughout the year will be crucial to meeting or surpassing last year’s annual total of $170 billion.

Cap rates across the multi-tenant market climbed marginally in first quarter, increasing three basis points from fourth quarter 2024 to reach 7.09%. An upward trajectory has been steadily visible for the last two and a half years. Sector-specific cap rates shifted marginally as well, with office climbing eight basis points quarter-over-quarter to 7.60%, industrial rising a single basis point to 6.21% and retail posting a two-basis point increase to reach 7.22%.

Private investors led market activity, comprising 54% of buyers in first quarter 2025. Institutional buyers represented 25%, maintaining stable activity levels compared to last year’s annual buyer distribution. Notably, REIT involvement adjusted the most significantly from 2024, contracting to just 5% of activity. Across sectors, private buyers dominated office, industrial and retail segments, with significant institutional interest primarily targeting industrial and retail assets.

While industrial transactions outpaced other sectors in first quarter, with $16.2 billion in sales, they declined more than 32% from the previous quarter. Office sales lagged further with $10.6 billion, down 44.4% quarter-over-quarter. Meanwhile, retail demonstrated resilience, increasing 3.7% from fourth quarter 2024 to reach $13.1 billion, the sector’s strongest quarterly volume in recent periods.

Further cap rate expansion and evolving buyer strategies will influence multi-tenant investment activity throughout 2025. However, long-term fundamentals – particularly in the industrial and retail sectors – offer a measure of optimism, despite near-term uncertainty.