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**Real Estate Transaction Velocity Is Looking Up in 2025**
In late 2024, analysts anticipated that 2025 would bring a rebound in real estate transaction volume, fueled by the Federal Reserve’s interest rate cuts and growing investor confidence.
However, this recovery didn’t materialize until mid-2025. According to John Chang, Senior Vice President at Marcus & Millichap, the second half of the year has shown strong momentum — and the pace is expected to pick up in the coming quarters.
In a recently released video titled *Four Reasons the CRE Deal Flow is Poised to Accelerate*, Chang identified four key drivers behind this renewed transaction activity:
**1. The Drive of Private Investors**
Private investors were responsible for 59% of real estate transactions in the first half of 2025. Investment into commercial real estate (CRE) funds is trending upward, with capital inflows reaching $30 billion per quarter — surpassing the decade-average of $28 billion per quarter.
While this figure is still below 2021’s peak of $68 billion in one quarter, Chang noted, “The upward trend is a positive sign.”
**2. Gradual Increase in Capital Raising**
Though individual real estate funds are raising less money per quarter on average compared to previous years, a larger number of them are active in the market. In the 2021–2022 period, 183 funds raised an average of $397 million per quarter. In comparison, around 180 funds in 2025 are raising an average of $173 million per quarter.
Despite the lower average amounts, the broader participation is bringing in more capital overall. “Ultimately, that will support increased deal flow,” said Chang.
**3. Renewed Bank Interest**
Two years ago, due to the turmoil surrounding high-profile bank failures, many banks retreated from commercial real estate. That trend is reversing.
Chang explained that many banks have now strengthened their balance sheets. Coupled with more favorable regulatory policies, banks are reentering the CRE lending space. Lending standards have eased, and average loan-to-value ratios — particularly in the multifamily sector — are on the rise.
**4. Changing Interest and Cap Rates**
Since 2022, both cap rates and interest rates have increased. But now, interest rates are trending downward while cap rates remain stable or are slightly compressing. This has created a wider yield spread, enabling positive leverage for investors.
In some scenarios, agency-driven multifamily financing is available in the low 5% range, and broader CRE debt is averaging in the low- to mid-6% range.
**A Longer-Term Outlook for Strength**
Beyond these four factors, Chang highlighted another key trend: declining construction activity across all real estate sectors. He emphasized that reduced new supply, paired with growing investor activity and recovering bank engagement, lays the groundwork for a more resilient commercial real estate market moving forward.
According to Chang, “The long-term potential of the commercial real estate sector becomes even more positive.”
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