Commercial property sales hit $107 billion in August, but $70 billion was mergers; the rest fell 21%

U.S. commercial real estate sales totaled $107 billion in August, up 127% from a year earlier, according to MSCI data reported by Bisnow on Thursday. The headline looks like a boom. It is mostly one deal.

About $70 billion of the month's volume came from merger and entity-level transactions, which MSCI analysts described as a record pace for a single month. The main driver was the combination of AvalonBay Communities and Equity Residential into a new apartment REIT, Vivmark Residential, with an enterprise value of around $70 billion. AvalonBay's investor site shows shareholders of both companies have approved the merger.

The number behind the number

Take the M&A out and August's sales were roughly $37 billion. MSCI puts non-M&A volume down about 21% from August 2025. That is the market ordinary buyers and sellers are actually trading in, and it contracted.

• Multifamily volume was up 402% from a year earlier, almost entirely because of the merger.
• Industrial was the one clean gain: up 14% to $11.5 billion. Senior housing rose 8%.
• Hotels fell 45%. Data centers had no assets trade at all in August.
• Office, retail and development sites were all down from a year earlier.
• Prices barely moved: MSCI's RCA CPPI national all-property index was up 0.1% on the year.

Year to date, sales are $483 billion, up 53%, but that is again driven by portfolio and entity deals, up 221%. Single-asset sales are up a more modest 12% through August.

The thing to read carefully: the cap rate

MSCI said the average capitalization rate, the property's net income as a share of its price, was 6.01% in August, 80 basis points lower than July. A drop that size in one month would normally mean prices jumped. Prices did not. Our reading is that the fall largely reflects the mix of what traded: a huge volume of apartments, where cap rates are already relatively low according to the JPMorgan analysts Bisnow quoted, and almost no hotels or data centers.

What has clearly changed is the cost of money since. The 10-year Treasury yield averaged 4.68% in August on Treasury's data. On Thursday it closed at 5.18%. Against a 6.01% cap rate, the cushion between what a property earns and the benchmark rate has shrunk from about 1.3 percentage points to about 0.8.

Who it hits

JPMorgan's analysts said in their note that the rise in rates came late in the third quarter, so deals already in motion were probably not derailed, but that higher rates could weigh on activity in the months ahead. They singled out multifamily as most at risk, because low cap rates leave the least room for higher debt costs.

For a smaller owner, the practical meaning is this. If you own a building bought or refinanced at a cap rate near 6% and your loan resets in the next year against the 10-year Treasury, that benchmark is now about half a point higher than it averaged in August. For a buyer, a property earning 6% no longer clears the 10-year yield by much, so a seller asking August's price may find fewer takers at it. Owners of industrial space are in the strongest position; hotel owners the weakest, based on August's volume.

More on where borrowing costs are heading: our 10-year Treasury chart and this week's mortgage rate report.

Sources: Bisnow (MSCI data, JPMorgan note), AvalonBay Communities, U.S. Treasury. Ex-merger volume and yield gaps are our arithmetic. This is market information, not investment advice.