Year-over-year, overall valuations in the commercial real estate (CRE) sector skyrocketed by 4.2% in October. If that holds, that would be the best annual increase we’ve had since 2022! This positive trend indicates a robust recovery in the market, as most asset classes and geographical markets are registering significant annual growth.
This increase in valuations is part of a larger rebound across the commercial real estate sector, supported by an improving economy and strong market fundamentals. Analysts attribute this expansion to a more accommodative monetary policy stance. At the same time, they underscore the strong economic undercurrents, which are poised to pull the sector along into 2026. Transaction volumes are currently up 13.2% year-to-date through October. This increase is more extreme than in most of the other major asset classes.
All signs indicate the CRE market is headed in a friendly direction. This expansion is further supported by the forecasted 2.3% average annual U.S. real GDP growth through 2026. This forecast is based on a generally more supportive fiscal policy environment crossed with a more accommodative monetary policy environment. Combined, these three factors make for a highly hopeful environment for commercial real estate investors and stakeholders alike.
Recent market data reveals a record breaking increase in transaction volumes for various asset classes. This is further testimony to the deep and broad recovery across the entire sector. Investors are overreacting to good economic news. This renewed excitement has produced increased transactions and fostered a growing positivity surrounding the future of commercial real estate.