Investors are returning to the commercial real estate market in significant numbers, driven by improved liquidity from diverse financial sources including commercial mortgage-backed securities, insurance companies, government agencies and debt funds. Recent data from JLL shows that bidding activity in June achieved its strongest monthly improvement over a one-year period, while July registered the second-highest count of unique bidders in the index’s five-year history. Lender competition has also surged well above previous record levels.
Lauro Ferroni, head of capital markets research for the Americas at JLL, noted that credit availability serves as a leading indicator for bidding intensity, establishing the foundation for market liquidity. Despite ongoing macroeconomic uncertainty and volatility in the broader economy, the substantial volume of active capital in the market appears to be offsetting these headwinds. Ferroni attributed the renewed investor interest partly to the sector’s resilience, noting that anticipated distress and defaults have not materialized following pandemic-related concerns.
Retail and industrial properties are experiencing the most significant investor inflows. Retail represents a shift, having previously underperformed due to e-commerce growth during the pandemic, but now attracts capital as property owners are reluctant to sell given favorable returns. Industrial properties continue their multi-year strength, benefiting from e-commerce expansion and new trends in manufacturing relocation closer to U.S. markets to reduce supply chain risks and tariff exposure. Manufacturing leasing activity increased 27% year over year.
Multifamily remains the weakest sector for bidding and credit activity, as the sector works through substantial new construction supply. While national vacancies have begun declining, stabilized vacancy rates—excluding properties still in lease-up phases—increased 34 basis points in the second quarter. Ferroni indicated no major warning signs for overall commercial real estate competition and suggested the U.S. Treasury Department’s recent long-term bond purchases may support property underwriting and investor confidence. He projected gradual rather than explosive growth momentum ahead, without evidence of market froth.
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