A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox. After a promising 2025 for commercial real estate deal volume, this year started with a fizzle. The one standout in January was big sales by the Blackstone Real Estate Income Trust. Blackstone appears to be rebalancing its portfolio, selling off legacy holdings and moving to data centers, high-end apartments and logistics. For the core five real estate sectors, total deal dollar volume in January was $20.8 billion, a drop of 15% year-over-year, according to monthly data provided by Moody’s as a media exclusive to CNBC’s Property Play. It tracks the top 50 commercial real estate property sales across the U.S., in the core segments of multifamily, office, industrial, retail and hotel. January also marked the lowest transaction activity by sale count since April 2024, signaling that while large institutional deals are getting done, the middle-market volume is getting hit by tighter credit standards and bid-ask spreads. “January 2026 marked a sluggish start to the year for CRE transaction activity,” said Kevin Fagan, head of CRE capital market research at Moody’s. “The market’s still grappling with hopes and dreams of interest rate stabilization, general economic and political turmoil, a widening bifurcation of property sectors, and a search for yield that has made esoteric and more complex deals commonplace.” Demand and liquidity are definitely there, but in a continuing high interest rate environment, “the ‘extend and pretend’ era is gradually giving way to forced recapitalizations and strategic portfolio pruning,” he said. Investors are now favoring logistics, multifamily and alternative assets, such as data centers and student housing. While the office sector is slowly recovering, deal volume is furthest from its pre-Covid norms. Industrial, however, is just 11% below its previous demand level. For example, the third-largest deal of the month was the $412 million sale of The Brickyard in Los Angeles to Clarion Partners. This is a large-footprint infill logistics site, giving a glimpse into how much institutional capital is willing to pay for that. The biggest deal of the month, Blackstone’s $730 billion sale of Park Avenue Tower to SL Green, showed that while demand is coming back for office, it is only for trophy office and assets at bargain basement prices. Another office sale, Seattle’s Westlake Tower, considered an obsolete property, sold in a foreclosure transfer at a deep discount. As was the case in December, while volume was down across all segments, large deals, those above $100 million, did see positive year-over-year growth. “This highlights a top-heavy liquidity market where mega-funds, sovereign wealth, private equity, and some REITs are deploying capital strictly into high-conviction, large-scale assets,” Fagain said, using the abbreviation for a real estate investment trust. “Debt capital is readily available for top-tier sponsors buying premium assets, effectively squeezing out middle-market syndicators.” The second-largest deal of the month, Blackstone’s $424.4 million sale of the mixed-use Skyview Park development in Queens to TPG, was indicative of private equity’s enthusiasm for high-density cash flows in prime markets. Blackstone also sold Streets of Woodfield, a retail center in the Chicago suburbs, to Hutensky Capital for $69 million. One more growing trend in the deal report is the government’s purchase of warehouse properties for U.S. Immigration and Customs Enforcement immigrant detention centers. The General Services Administration and ICE are bypassing traditional leasing models and straight out buying the properties. ICE made a $102.4 million acquisition of a warehouse in Williamsport, Maryland, and a $70 million acquisition of the Surprise Pointe Commerce Center in Arizona, with plans to convert them into detention centers.