Mysteries of the Universe: Determining the Size and Composition of the U.S. Commercial Real Estate Market

What exactly is the size of the investable universe of U.S. commercial real estate? Does anyone truly know? How much value is allocated to each of its component segments in terms of product type, property quality or geography?

Shockingly, the answer varies wildly by source, based on differing methodologies and the geographic markets, product types and size and quality of properties being included. There is a very wide gap when measuring only the largest institutional markets and properties compared to an analysis that also includes markets outside the top 50 metro areas and includes smaller (less than $30 million) properties and alternative product types.

We have studied results from over 40 reputable industry, academic and governmental sources who have conducted analyses of the size and scope of commercial real estate. We’ve found amazing variability in total value estimates, generally ranging from $11 trillion to $21 trillion, with outliers as far apart as $5.9 trillion and $26.8 trillion. What we’ve learned in the process is that the data necessary to answer these questions is complex, disaggregated, incomplete or overlapping, resulting in some prior studies that are noticeably flawed. Given these factors, our review may have some holes in it as well. Nevertheless, this paper constitutes something akin to a meta-study of the available research, summarizing and comparing the data for the benefit of commercial real estate property owners, lenders, intermediaries and industry researchers.

This meta-study helps us develop Northmarq and Northmarq Fund Management’s proprietary estimates of the investable universe of commercial real estate, along with market capitalization available at each access point. We applied both primary industry approaches, using a top-down, four-quadrant formulation that tends to highlight institutional assets in the main property types and in major markets, as well as a broader bottom-up valuation designed to identify all properties and markets, to arrive at a comprehensive measurement of the commercial real estate asset class.

We find that the more limited four-quadrant approach should total approximately $11.42 trillion of CRE value, and is heavily biased toward larger assets, investors and markets. More broadly, we define the entire U.S. commercial real estate asset class as $21.46 trillion. In other words, the most common measurements of U.S. commercial real estate tend to cover only 53.2% of the total addressable market.

To measure the institutional portion of the market, we focus on five key features:

1. Market size
2. Product type
3. Property quality
4. Property size/value
5. Characteristics of ownership

As shown later in the analysis, using these filters we conclude the existing market of institutional commercial real estate represents $8.82 trillion or 77.3% of the condensed four-quadrant valuation, and $13.47 trillion or 62.7% of the expansive $21.46 trillion total universe of U.S. commercial real estate. Of course, not all institutional quality real estate is institutionally owned. We estimate that a minimum of $7.99 trillion of the CRE sector is not currently owned by institutional investors, and the uncovered total could be as much as $10 trillion.

Download the full report for more information.

© Northmarq Fund Management Research, February 2025. All Rights Reserved. Copying, selling or otherwise distributing copies and/or creating derivative works for commercial purposes is strictly prohibited. Although significant efforts have been used in preparing this guide, Northmarq and Northmarq Fund Management make no representation or warranties with respect to the accuracy and completeness of the contents. Northmarq and Northmarq Fund Management Research do not provide tax, legal, investment or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied upon for, tax, legal, investment or accounting advice. You should consult your own tax, legal, investment and accounting advisors before engaging in any transaction.