Commercial real estate is showing early signs of stabilization, but the recovery is far from uniform. New property deliveries have dropped to their lowest level in more than a decade, while pricing performance continues to split sharply between top-tier assets and the rest of the market.

A bifurcated market: Prime assets in major metros continue to outperform. High-value properties logged their sixth consecutive monthly price increase in November, even as pricing pressure persists across smaller assets and secondary markets.

Capital concentrates at the top: Institutional buyers remain focused on quality and scale. The value-weighted U.S. composite index advanced modestly in November following recent Fed rate cuts, though pricing is still slightly below last year’s levels—reflecting cautious optimism rather than a full recovery.

Smaller markets under pressure: Lower-priced assets continue to struggle. Equal-weighted pricing declined again in November, underscoring ongoing volatility and limited liquidity for non-core properties.

Supply contraction deepens: New development is slowing dramatically. 2025 completions are expected to fall more than one-third from last year, with quarterly deliveries dipping below levels not seen since the post–financial crisis period. Net absorption remains negative, although demand erosion moderated toward year-end.

Transactions begin to stir: Deal volume remains uneven month to month, but activity picked up in November as easing rates helped unlock transactions delayed earlier in the cycle.

➥ THE TAKEAWAY

Scarcity and selectivity are defining this phase of the cycle. With construction at historic lows and capital prioritizing institutional-quality assets, the CRE recovery is increasingly uneven—rewarding prime properties while leaving smaller and less liquid assets behind.