Will U.S. CRE transaction volume sustain above pre-pandemic levels through H1 2026?

CRE transaction volume recovery depends heavily on interest rate trajectory and economic conditions. The 43% YoY increase in Q2 2025 was against a very depressed base and does not necessarily indicate a return to pre-pandemic levels (~$250B H1). Office vacancy at 16% remains a structural drag. While multifamily and industrial have recovered faster, office transactions (historically ~30% of volume) remain well below 2019 levels. For total H1 2026 to exceed 2019 H1, non-office sectors would need to over-compensate, which is possible but uncertain.

Interest rates remain the key variable. If the Fed has cut rates by H1 2026, CRE transaction volume could accelerate meaningfully as cap rate compression revives deal flow. However, 'higher-for-longer' rate scenario would keep volume below pre-pandemic levels. The analysis data is from Q2-Q3 2025, so approximately 9 months of rate and economic developments are not captured. The macro uncertainty makes this genuinely hard to predict. The $250B threshold for H1 is demanding — CRE volumes in 2023-2024 were roughly 50-60% of 2019 levels.

Giving slightly more weight to the recovery momentum. The 43% YoY increase shows the recovery is underway, and pent-up transaction demand from 2022-2024 provides a backlog of deals waiting for improved conditions. If rates stabilize or decline, the combination of pent-up demand and improving debt markets could push volume above pre-pandemic levels. Multifamily and industrial have already recovered in many markets. Data centers and life sciences are new CRE categories not present in 2019 that add incremental volume. Still below coin-flip but higher than pure base-rate analysis suggests.

CRE transaction volume recovery has been slower than equity markets would suggest. The gap between listed REIT performance and actual transaction volume indicates price discovery issues remain. Office sector (~30% of historical volume) is structurally impaired. For H1 2026 to match 2019 H1, you need roughly $250B in transactions — current run rates suggest we're at maybe $180-200B annualized. That's a 25-40% gap to close, which is possible but requires interest rate relief and improved lending conditions.

The question has high uncertainty because macro conditions 6-9 months out are difficult to predict. The 43% YoY increase shows momentum, but from a low base. Key swing factors: (1) Fed rate trajectory, (2) commercial mortgage maturity wall forcing transactions, (3) institutional capital returning to CRE allocations. The maturity wall is the strongest bull case — an estimated $900B+ in CRE loans maturing in 2025-2026 will force refinancing or sales, increasing transaction volume regardless of rate environment.

Taking the more skeptical view: CRE cycles typically take 3-5 years to recover from troughs. The 2020-2024 downturn is only 4 years old, and office markets remain in early stages of repricing. While other sectors have recovered, office drag could prevent total volume from reaching 2019 levels through H1 2026. Historical precedent (post-GFC) shows CRE volume didn't return to pre-crisis levels for 5+ years. The current cycle may be faster due to different dynamics, but the $250B H1 threshold is demanding.

Recovery underway but office drag and rate uncertainty make pre-pandemic levels by H1 2026 a stretch. Multifamily and industrial doing better but can't fully offset office weakness. Probability around 30%.

Base rate analysis: CRE volume in 2024 was roughly 60% of 2019 peak. Need ~40% increase to reach pre-pandemic. The 43% YoY growth in Q2'25 shows this is possible but that was from a trough quarter. Sustaining that growth rate is uncertain.

CRE loan maturity wall could force transactions that push volume higher regardless of rate environment. But even forced sales don't necessarily mean volume reaches $250B in H1. Data staleness makes this hard — significant macro developments since Q3 2025 not captured.