Madison International’s Liquidity Index Shows Conditions Normalizing

Commercial real estate markets continued to experience normalizing liquidity conditions across several key indicators in the third quarter of 2025, according to the latest reading of the Madison Real Estate Liquidity Index (MRELI) from real estate private equity firm Madison International Realty.

Measuring the ease with which asset owners and investors can enter and exit real estate limited partnerships, the latest index reports a liquidity score of 35.6 for Q3, the sixth consecutive quarter of improvement and the MRELI’s highest point since Q1 2022, as the Federal Reserve began raising interest rates.

Conditions do not yet reflect a fully normalized real estate capital market, typically marked by index readings in the 40s and 50s. However, Madison has observed a consistent improvement in real estate liquidity conditions since the beginning of 2024, with index readings jumping by nearly 80 points in under two years.

“After the worst period of illiquidity since the Global Financial Crisis, commercial real estate markets appear to have turned a corner,” said Christopher Muoio, managing director and head of data and research at Madison International Realty. “Following the very challenging commercial liquidity conditions brought on by the COVID-19 pandemic and ensuing rate hikes of 2022-23, the latest reading of Madison’s Liquidity Index should give market participants cause for cautious optimism in 2026, especially as debt markets remain liquid and private equity activity heats up following the Fed’s December rate reduction.”

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