2025 Commercial Real Estate Review: Trends Shaping 2026
2025 in Review: What Set the Stage for 2026
If 2025 had a theme in commercial real estate, it was this: things slowed down — but they didn’t stop.
After years of rapid change, the market spent much of last year adjusting. Higher interest rates, more cautious capital, and shifting tenant priorities forced decision-makers to slow down, reassess, and focus on fundamentals. And while activity looked different across asset classes, 2025 quietly set the tone for how deals are being approached heading into 2026 — especially here in St. Louis.
Here’s what actually mattered in 2025, and why it’s shaping the conversations we’re having now.
A More Selective Market — Not a Frozen One
Despite the headlines, commercial real estate didn’t come to a halt in 2025. Deals were still happening — just not for everything.
What moved were properties that checked the right boxes: strong locations, realistic pricing, and clear long-term use. Underwriting tightened. Timelines stretched. And buyers and tenants took more time before making decisions.
“Most of the activity we saw in 2025 came down to fundamentals — location, pricing, and long-term use. When those lined up, deals moved. That same approach is shaping conversations as we head into 2026.” — Tony Salerno, Vice President, NAI DESCO
In short, 2025 wasn’t about urgency. It was about discipline.
Tenants Took a Step Back — and Got More Strategic
Across office, retail, and industrial real estate, tenants spent much of 2025 asking better questions.
Instead of rushing into long-term commitments, many focused on:
- How space actually functions day to day
- Whether lease structures still made sense
- Timing decisions more carefully
“In 2025, we saw clients become much more thoughtful about timing and structure. Deals were still getting done, but they were driven by fundamentals rather than urgency. That discipline is clearly carrying into 2026.” — Corbin Cox, Associate, NAI DESCO
That shift toward intention — rather than reaction — is still very much in play.
Office Sorted Itself Out
Office real estate remained one of the most debated topics in 2025. And while challenges persist, particularly for outdated or poorly located buildings, the year didn’t bring the collapse many predicted.
What we continued to see:
- Flight-to-quality leasing
- Steady demand for well-located Class A space
- More serious conversations around repositioning and adaptive reuse
Office demand didn’t disappear. It became more selective — and more dependent on quality and location.
Industrial Stayed Steady
Industrial real estate remained one of the most consistent performers throughout 2025.
Demand tied to logistics, regional distribution, and supply chain efficiency continued to support activity. In the St. Louis market, strong infrastructure and central geography remained key advantages, even as pricing and availability normalized compared to prior years.
Industrial enters 2026 from a position of relative strength.
Retail Continued Its Quiet Progress
Retail real estate didn’t make dramatic headlines in 2025 — and that was a good thing.
Service-oriented users, food and beverage concepts, and well-located neighborhood centers drove most of the activity. Many retailers focused less on expansion and more on getting their footprint right.
The takeaway: retail isn’t disappearing. It’s becoming more targeted and more strategic.
Capital Markets Reset — They Didn’t Retreat
Capital markets in 2025 reflected adjustment, not exit.
Higher interest rates and pricing gaps slowed some transactions, but capital remained available for deals that made sense. Investors recalibrated expectations, leaned into fundamentals, and relied more heavily on local market insight.
That reset helped create a more stable foundation as we head into 2026.
What Never Materialized
One of the more telling parts of 2025 was what didn’t happen.
There was no widespread wave of distress.
Pricing didn’t collapse across the board.
Occupancy didn’t fall off a cliff.
Instead, the market proved more resilient than many expected — especially in submarkets with strong fundamentals.
Why 2026 Feels Different
The discipline that defined 2025 is shaping how decisions are being made today.
As we move into 2026, we’re seeing:
- More confidence in deal structure
- Continued interest in adaptive reuse and repositioning
- Ongoing demand for efficient, well-located space
- Fewer rushed decisions — and better ones overall
2025 forced the market to slow down. 2026 is about putting that clarity to work.
The Bottom Line
Commercial real estate refined itself in 2025.
For owners, investors, and occupiers, last year helped clarify priorities and expectations. Understanding what shaped 2025 is key to navigating what comes next.
At NAI DESCO, we continue to help clients interpret market conditions, evaluate opportunities, and plan with confidence — here in St. Louis and beyond.
Looking ahead to 2026, having the right local perspective matters more than ever.
If you’re evaluating opportunities or planning for the year ahead, our team is here to help you assess market conditions and strategy.