CRE
December 9, 2025
RadZ Consulting
Commercial Real Estate Market Update - Q4 2025
Diverging fortunes across asset classes with industrial thriving and office facing challenges
Commercial Real Estate: Diverging Fortunes Across Asset Classes
| Metric | Q4 2024 | Q4 2025 | Change (%) |
|---|---|---|---|
| Office Vacancy Rate | 17.2% | 18.0% | +0.8 pts |
| Industrial Vacancy Rate | 3.4% | 3.0% | –0.4 pts |
| Industrial Rents ($/SF/mo) | $1.52 | $1.66 | +9.2% |
| Retail Occupancy Rate | 93.0% | 93.7% | +0.7 pts |
| Cap Rates (Prime Assets) | 5.6% | 5.3% | –0.3 pts |
California's commercial property sector closed 2025 with a complex mix of distress and dynamism. The state's economy—diverse and innovation-driven—produced winners and laggards among the four major asset classes: office, industrial, retail, and multifamily. Hybrid work arrangements and technological shifts continued to weigh on traditional office performance, while logistics, life sciences, and neighborhood retail assets benefited from structura...
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