Deloitte’s Jonathan Keith Says CRE Investors Should Remain Nimble as M&A Conditions Shift

The 2025 commercial real‑estate M&A landscape was stark, with global deal volume collapsing and total transaction value dropping 57% year‑over‑year. Average U.S. deal size hovered around $300 million, yet the count fell more than 70%, underscoring a market in correction. Hot spots emerged in data centers, multifamily and industrial assets, while office properties showed a bifurcated trend: premium Class A towers in major metros attracted capital, whereas lower‑grade Class B spaces faced rising vacancies. Residential activity also diverged, with Sunbelt markets cooling amid higher borrowing costs and the Northeast experiencing tighter supply constraints.

Underlying drivers ranged from volatile interest‑rate expectations and geopolitical uncertainty to the explosive demand for AI‑driven cloud capacity fueling data‑center investments. Power scarcity and community opposition are reshaping deal structures, prompting joint‑venture models, preferred‑equity placements, and utility‑linked partnerships to mitigate risk. Policy signals, such as the 2026 executive order targeting investor competition in single‑family rentals, add another layer of complexity, especially in regions offering tax incentives like Nebraska. Meanwhile, platform consolidation—exemplified by Rhythm Capital’s acquisition of Sculptor Crestline and Paramount Group—creates vertically integrated players that may become acquisition targets for smaller firms seeking scale.

For investors eyeing 2026, agility is paramount. Maintaining readily deployable capital, stress‑testing financial scenarios, and cultivating a pipeline of potential partners enable rapid action when spreads and valuations align. Consolidation trends suggest opportunities to acquire niche service providers or under‑capitalized assets, while repurposing underperforming office space into mixed‑use or residential projects could unlock value, provided government incentives offset inflation‑driven construction costs. In this fluid environment, a disciplined, nimble strategy positions CRE investors to capture upside as market conditions shift.