Private real estate is showing signs of a robust recovery, with improving returns, loosening lending standards, and rising transaction volumes—all pointing to a more favorable environment for capital deployment in the quarters ahead.
KEY TAKEAWAYS
- Private real estate, as measured by the NCREIF-ODCE index, has now posted four consecutive quarters of positive returns, the strongest recovery signal we’ve seen since the 2022 downturn.
- Lending standards for CRE acquisitions have loosened over recent quarters, reflecting growing confidence in real estate valuations and cash flow stability. Commercial real estate lending standards are loosening, with banks more willing to finance acquisitions. This, combined with slower supply growth, creates a supportive backdrop for existing properties.
- Transaction volume has now increased for five consecutive quarters on a year-over-year basis, marking a sustained period of activity growth.
Private real estate momentum continues to build. Lending standards are evolving favorably. And transaction volume is showing clear signs of recovery.
This month we are focusing on the private real estate cycle and the outlook for the coming quarters.
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First, we are looking at sustained momentum in private real estate returns. Private real estate, as measured by the NCREIF-ODCE index, has now posted four consecutive quarters of positive returns. This sustained performance represents the strongest recovery signal we’ve seen since the downturn began in late 2022.
EXHIBIT 1
We believe the NFI-ODCE Index bottomed in 2Q 2024
Quarterly returns of the NCREIF NFI-ODCE Index (Net) since 3Q22 (post-Covid peaky)(1)
At June 30, 2025. Source: NCREIF, Cohen & Steers. Data quoted represents past performance, which is no guarantee of future results. The information presented above does not represent the performance of any fund or other account managed or serviced by Cohen & Steers, and there is no guarantee that investors will experience the type of performance listed above. There is no guarantee that any historical trend illustrated above will be repeated in the future, and there is no way to predict precisely when such a trend might begin. There is no guarantee that any market forecast set forth in this presentation will be realized.
(1) Private real estate represented by the NCREIF NFI-ODCE Index (Net). (2) Q2 returns are preliminary.
The consistency of these positive returns suggests we’re not just seeing a temporary bounce, but rather a fundamental shift in the private real estate cycle. This aligns with our long-held view that once returns turn positive, they remain positive.
The second thing we are watching this month is commercial real estate lending standards.
The lending environment for commercial real estate is showing encouraging signs of normalization.
Lending standards for CRE acquisitions have loosened over recent quarters. Banks and other lenders are becoming more willing to finance property purchases, reflecting growing confidence in real estate valuations and cash flow stability.
EXHIBIT 2
Senior Loan Officer Opinion Survey showed 9% of net respondents reporting tighter standards
At June 30, 2025. Source: NCREIF, Senior Loan Officer Opinion Survey, Cohen & Steers. Data quoted represents past performance, which is no guarantee of future results. The information presented above does not represent the performance of any fund or other account managed or serviced by Cohen & Steers, and there is no guarantee that investors will experience the type of performance listed above. There is no guarantee that any historical trend illustrated above will be repeated in the future, and there is no way to predict precisely when such a trend might begin. There is no guarantee that any market forecast set forth in this presentation will be realized.
At the same time, supply growth is decelerating across most major property types. Lenders remain cautious about financing speculative construction, requiring higher equity commitments and stronger pre-leasing requirements.
Improving lending standards and muted supply growth creates a particularly favorable dynamic going forward.
The result is an environment where existing properties benefit from both improved capital availability and constrained competition from new construction.
Finally, the third factor we’re monitoring is transactions volumes, evidence that capital is returning to the private real estate market.
EXHIBIT 3
US commercial real estate transaction volume
Year-Over-Year & Change
At July 31, 2025. Source: Real Capital Analytics, Cohen & Steers. Data quoted represents past performance, which is no guarantee of future results. The information presented above does not represent the performance of any fund or other account managed or serviced by Cohen & Steers, and there is no guarantee that investors will experience the type of performance listed above. There is no guarantee that any historical trend illustrated above will be repeated in the future, and there is no way to predict precisely when such a trend might begin. There is no guarantee that any market forecast set forth in this presentation will be realized.
Transaction volume has now increased for five consecutive quarters on a year over year basis, marking the most sustained period of activity growth since the market downturn began.
Institutional investors who had been sitting on the sidelines are increasingly finding opportunities. The combination of more reasonable valuations, clearer interest rate direction, and improving property fundamentals in certain sectors has created conditions that are bringing capital back to the market.
For investors who have been waiting for clear signals that the private real estate market has stabilized, these indicators provide compelling evidence that we’re entering a more favorable environment for deploying capital.
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Data quoted represents past performance, which is no guarantee of future results. The information presented does not reflect the performance of any fund or account managed or serviced by Cohen & Steers, and there is no guarantee that investors will experience the type of performance reflected. There is no guarantee that any market forecast set forth in this video will be realized. There is no guarantee that any historical trend referenced herein will be repeated in the future, and there is no way to predict precisely when such a trend will begin. The mention of specific securities is not a recommendation or solicitation to buy, sell or hold any particular security and should not be relied upon as investment advice.
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