CRE News

March 31 2025

According to CBRE's 2025 U.S. Life Sciences Outlook, the U.S. life sciences real estate sector experienced a significant 28% annual increase in demand for lab space in late 2024, with leasing activity reaching 3.4 million square feet in the fourth quarter, despite a rise in vacancy rates to 19.7% due to new construction completions. The report highlights a positive net absorption trend across the 13 largest markets, with momentum expected to carry into 2025, driven by gradual improvements and a projected 8 million square feet of new lab space completions. Major hubs like Boston, the San Francisco Bay Area, and San Diego led the charge, with 10 of these top markets showing positive absorption, though construction activity has slowed from its 2024 peak of 12.1 million square feet. Matt Gardner, CBRE's Americas Life Sciences Leader, noted that while the sector's long development cycles temper short-term fluctuations, near-term economic indicators suggest a favorable outlook for 2025, bolstered by stabilizing fundamentals despite challenges from increased supply.

March 24 2025

According to the StorageCafe 2025 report highlighted by World Property Journal, the U.S. self-storage market is poised for significant growth, with an anticipated addition of 54 million square feet of new storage space in 2025, driven by high demand in key metro areas like Phoenix, Austin, and Dallas-Fort Worth, which rank among the top markets due to population growth, housing dynamics, and economic factors. The report identifies Phoenix as the leading market with over 2.5 million square feet under construction, followed by Austin and Dallas-Fort Worth, while emerging markets like Raleigh and Las Vegas also show strong potential with substantial planned developments. Nationally, self-storage supply has grown by 23% over the past decade, reaching 2.2 billion square feet, yet demand continues to outpace supply in many regions, fueled by factors such as urban density, smaller living spaces, and business needs, with an average of 8.2 square feet per capita currently available. Despite challenges like rising construction costs and potential oversupply risks, the sector remains robust, with the top 25 markets expected to account for nearly half of the new inventory, underscoring the self-storage industry's critical role in supporting America's evolving spatial needs.

March 17 2025

Bill Pulte, Director of the Federal Housing Finance Agency (FHFA), has outlined his initial priorities for Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) that have been under conservatorship since the 2008 financial crisis. Rather than pushing for their immediate privatization, Pulte intends to focus on tackling fraud and improving operational efficiencies within the GSEs, which reported a robust combined net worth of $147 billion in the third quarter of 2024, underscoring their significant value to taxpayers. While he recognizes that the conservatorship is not a permanent solution and aligns with broader discussions about eventually ending it, Pulte stresses a cautious approach to privatization, citing potential risks such as increased mortgage rates that could affect homeowners and the housing market. This measured stance contrasts with President Trump’s long-standing objective of privatizing the GSEs, but Pulte prioritizes short-term stability and maximizing taxpayer benefits before pursuing such a major shift, suggesting that any move toward privatization would require thorough evaluation and planning.

March 10 2025

The Federal Reserve's Beige Book, a key economic indicator, reveals modest economic growth spanning mid-January to mid-February, accompanied by notably mixed trends within the CRE sector. While construction activity experienced a slight downturn, leasing activity in specific sectors, such as multifamily housing, demonstrated positive growth. Conversely, the office sector continued to grapple with challenges, and the life sciences sector faced considerable uncertainty regarding future prospects. Notably, there was a modest uptick in economic activity observed in prominent regions like New York City and Chicago. However, despite these localized improvements, persistently weak demand remained a significant factor in other critical sectors, including retail and construction. This overall picture suggests a complex and varied landscape, characterized by mixed results, ultimately pointing to a generally modest growth trajectory within the CRE market.

March 3 2025

The U.S. industrial real estate market exhibited a degree of stability in the final quarter of 2024, with Phoenix notably leading as the top-performing market, closely followed by Orange County and the Inland Empire. Although development experienced a slowdown and vacancies registered a slight increase, the primary focus centered around the successful absorption of recently completed developments. Orange County maintained the lowest vacancy rate and commanded the highest average rental rates, while the Bay Area stood out as the most expensive region for industrial space sales transactions. The sector is anticipated to reach a state of stabilization throughout 2025, with vacancy rates expected to level off and potentially demonstrate a decline later in the year, Inland.

February 24 2025

In the final quarter of 2024, publicly traded retail REITs like Simon Property Group, Kimco Realty, and Federal Realty Investment Trust reported unprecedented leasing activity, driving high occupancy rates, rent growth, and increased funds from operations, signaling robust optimism for the retail sector heading into 2025. Simon Property Group leased over 6.1 million square feet in Q4 alone, boosting mall and outlet occupancy to 96.5%, while Federal Realty completed 100 deals totaling 649,000 square feet, pushing its occupancy to 94.1% with expectations to reach 95% by year-end 2025. Despite challenges like tenant bankruptcies and pharmacy sector contractions, grocery-anchored centers and strong holiday shopping performance fueled a tight national retail market with a vacancy rate of 5.4%, supported by 1.4 million square feet of net absorption, setting a positive tone for continued momentum in the coming year.

February 17 2025

US inflation unexpectedly hit 3% in January, exceeding the 2.9% forecast. Egg and energy prices drove this six-month high, impacting car insurance, airfare, and medicine. Grocery prices rose 0.5%, with egg prices jumping over 15% due to avian flu. Despite some declines, core inflation also accelerated. The Fed, which paused rate hikes, now faces new challenges. Experts like Fitch's Brian Coulton note the Fed's inflation fight continues. This increase impacts commercial real estate. Higher inflation often raises interest rates, increasing borrowing costs and potentially slowing construction. Tighter monetary policy could reduce affordability, impacting prices and rents. However, inflation might also drive up property values as investors seek tangible assets, though increased operational costs pose challenges.

February 10 2025

In the fourth quarter of 2024, delinquency rates for mortgages on commercial properties rose, as reported by the Mortgage Bankers Association. This uptick was particularly noticeable in office, lodging, retail, and multifamily sectors, while industrial properties saw a decrease. Delinquency was highest among Commercial Mortgage-Backed Securities (CMBS) at 5.3%, whereas loans from Fannie Mae and Freddie Mac had a much lower rate of 0.6%. Mike Fratantoni, MBA's chief economist, highlighted that while office properties face significant challenges due to weak fundamentals and high interest rates, other property types are somewhat buoyed by a robust economy. The increase in delinquencies signals potential economic adjustments in the commercial real estate market as it navigates through these varying sector challenges.

February 3 2025

In 2025, the transformation of office buildings into apartment units is projected to reach an unprecedented high with 70,700 new apartments expected from these conversions, a significant increase from the 23,100 in 2022. This surge in adaptive reuse projects is driven by the surplus of office space that's no longer in demand due to remote work trends. New York City leads with 8,310 future apartments from office conversions, followed by Chicago with 3,606. This trend includes not only older buildings but also those constructed from the 1990s to 2010s, with over 1.2 billion square feet of office space considered suitable for conversion across the U.S.

January 27 2025

Underwater loans and distressed assets continue to shape the commercial real estate (CRE) landscape in 2025, with approximately 30% of maturing office loans and 10% of apartment loans in the US now valued below their outstanding balances. MSCI's Mortgage Debt Intelligence data reveals a significant volume of loans set to mature this year, signaling potential market disruptions as property owners grapple with refinancing under current economic conditions. This scenario has led to a cautious approach among investors and lenders, who are closely monitoring debt maturities and asset performance. Furthermore, there's a growing concern over climate-related risks not being fully reflected in property valuations, especially in the Southeast US, where multifamily properties in high-risk flood zones are still trading at yields comparable to those in low-risk areas. This discrepancy suggests a broader market issue where risk assessment and property pricing do not align, potentially leading to future corrections or adjustments in the CRE sector.

January 20 2025

The housing market concluded 2024 on a positive note, experiencing a notable uptick in housing starts during the month of December. This encouraging trend suggests a potential surge in the construction of new single-family homes in the near future. Building permits, a crucial indicator of future construction activity, experienced a modest 1.6% increase. However, the most significant development was a 3.3% rise in single-family housing starts from November to December. This momentum carried over from a strong year overall, with 2024 witnessing just over 1 million single-family housing starts. This figure represents the second-highest level since 2007 and a substantial 6.5% increase compared to the preceding year.

January 13 2025

According to CoStar, a substantial wave of commercial mortgage-backed securities (CMBS) loans are now maturing, placing significant and mounting pressure on the property lending system across the market. With approximately $8.6 billion of CMBS loans scheduled to mature this month alone, commercial lenders may become notably less accommodating with loan extensions and refinancing options, potentially leading to a concerning rise in foreclosures across various property sectors. This marked shift in lending dynamics comes after an extended period of more lenient treatment for holders of maturing debt, and many experienced industry professionals and market analysts anticipate a potential increase in commercial property foreclosures as a direct result of this systematic tightening of lending standards and stricter qualification requirements.

January 6 2025

South Carolina has surpassed Texas as the top state for migration growth, according to U-Haul's annual rankings. This notable shift is beneficial for commercial real estate in South Carolina as it signals a substantial influx of new residents, which typically increases demand for commercial spaces like retail, office, and industrial properties. With over 51.7% of U-Haul movers arriving in South Carolina, this migration trend suggests significant potential for enhanced economic activity, business startups and relocations, and consequently, a more robust commercial real estate market across the state's growing communities.

December 23 2024

CBRE's 2025 U.S. Real Estate Market Outlook Report anticipates economic growth, though it warns of persistent inflation and the possibility of sustained high interest rates. The report projects a 10% increase in commercial real estate investment, signaling a return of confidence in the market. Office leasing is expected to rise by 5%, suggesting some stabilization in this sector, even as the national vacancy rate might hit a peak. In the retail sector, there's an expectation of growth in both occupancy and rental rates, despite the backdrop of significant new construction projects coming online.

December 9th 2024

According to the US Census Bureau, construction spending in October 2024 was estimated at a seasonally adjusted annual rate of $2,174.0 billion, marking a 0.4 percent increase from September. Private construction specifically experienced a notable surge, with spending reaching a seasonally adjusted annual rate of $1,676.4 billion, up by 0.7 percent from the revised estimate for September. Within the realm of private construction, residential spending saw a significant increase of 1.5 percent to $934.0 billion, indicating strong growth in housing development. Meanwhile, private nonresidential construction also contributed to the overall rise, increasing by 0.01 percent to $742.4 billion, maintaining stability in this sector.

December 2nd 2024

CBRE predicts that the holiday retail season in 2024 will see a significant increase in omnichannel strategies, with a focus on Buy Online, Return In-Store (BORIS) to manage the growing volume of online returns. This approach not only cuts down on shipping costs but also improves customer satisfaction by offering convenient return options. The trend reflects a broader shift in consumer behavior, where seamless integration of online and physical shopping experiences is becoming the norm, prompting retailers to adapt their strategies to maintain competitiveness. Additionally, this shift is expected to drive the development of technological solutions aimed at optimizing the return process for both the retailer and the consumer.

November 25th 2024

In 2024, the U.S. commercial real estate market faced challenges from high interest rates, geopolitical issues, and evolving real estate needs, prompting investors to be selective in their investments, particularly favoring multifamily, industrial, and data centers. The office sector struggled with ongoing high vacancies due to remote work trends, while retail showed resilience. Anticipated Federal Reserve rate cuts into 2025 are expected to increase liquidity and transaction volumes, with sectors like multifamily and industrial poised for growth. Distressed properties have attracted buyer interest, and while the market shows signs of recovery, the office sector's challenges persist, with only niche areas like medical offices showing promise.

November 18th 2024

Advance Auto Parts has revealed intentions to close over 700 locations, encompassing its corporate stores, independently-owned outlets, and four distribution centers, as part of a comprehensive strategy to bolster its financial standing. This move is part of a larger wave of store closures across the U.S. as retailers recalibrate in response to economic shifts, evolving consumer trends, and the aftermath of the COVID-19 pandemic. The initiative seeks not only to cut losses but also to optimize the company's business model for future growth and sustainability.

November 11th 2024

Adaptive reuse in the self-storage industry is booming, especially in the Midwest, where developers are transforming old big-box stores and warehouses into storage facilities. This trend capitalizes on the availability of vacant retail spaces, offering economic and environmental benefits by repurposing existing structures. The demand for self-storage drives this development, aligning with changes in consumer behavior, downsizing trends among Baby Boomers, and the lifestyle choices of Millennials. This practice not only reduces construction costs but also promotes sustainability and economic revitalization in local communities.

November 4th 2024

According to the VTS Office Demand Index (VODI), there has been a significant increase in office space demand in tech-driven cities like Seattle, Boston, and San Francisco due to tech companies reevaluating their office space needs and possibly shifting towards policies that encourage office returns. This trend has reversed earlier preferences for remote work, with the demand growth in these cities notably outpacing that in less tech-focused cities like Chicago, Los Angeles, and New York.

October 28th 2024

The RCA CPPI National All-Property Index declined 1.9% in September 2024. Commercial property prices continued to decline, with most sectors experiencing annual losses. Industrial property was the lone exception, posting a modest year-over-year gain. While the pace of decline has slowed for some sectors like apartments and office, the overall trend remains negative. Retail property prices have stabilized, but still show a slight year-over-year decrease.

October 21th 2024

According to CNBC, the commercial real estate market shows early recovery signs following Federal Reserve rate cuts, though progress varies by sector. Office real estate faces ongoing challenges from hybrid work, while multifamily housing performs better due to favorable rental costs versus mortgages. While lower rates help, experts caution they aren't a complete solution. Market sentiment is improving with increased transactions, but significant refinancing needs in coming years suggest an uneven recovery ahead.

October 14th 2024

In 2024, the U.S. industrial property sector is on course to utilize more than 100 million square feet, demonstrating its enduring demand and slight rise in available space. This absorption rate showcases the sector's resilience and continued demand. The market has seen 96 MSF absorbed by the third quarter, with expectations set on surpassing the 100 MSF mark by year's end. Leasing activities remain robust, with 434 MSF recorded in 2024, indicating strong market activity across various regions, particularly in the Northeast and South where rent growth has been significant. However, there's an anticipation of a more significant recovery in 2025 as economic conditions improve and leasing activities are expected to pick up, according to insights from Cushman & Wakefield.

October 7th 2024

A recent survey by the CRE Finance Council shows increased optimism among commercial real estate (CRE) professionals following a Federal Reserve interest rate cut. The Third-Quarter 2024 Sentiment Index surged 18%, reflecting positive expectations for economic conditions, lending, and asset values. Key findings include improved confidence in the U.S. economy, with 85% of respondents expecting lower mortgage rates to boost CRE finance, and 81% anticipating higher investor demand. Borrower demand for financing and liquidity also saw significant gains. However, concerns remain about the office sector, especially for older buildings. Overall, the outlook is positive, with many expecting a recovery in 2025.

September 30th 2024

The Federal Reserve's recent rate cuts are aimed at alleviating stress in the commercial real estate sector, particularly for office spaces affected by post-pandemic work changes. Despite these cuts, experts believe that while they provide some relief by making refinancing more feasible, they are not a complete solution for the sector's challenges, especially with ongoing office market difficulties. The broader economic impact is expected to be mitigated by the U.S. banking system's resilience and available capital, though the sector still faces potentially billions in losses. This situation underscores the limited but helpful role of rate cuts in managing economic stability while not fully resolving the deeper issues within commercial real estate.

September 23rd 2024

The Federal Reserve cut interest rates by 50 basis points to a range of 4.75 to 5.0 percent, marking the first reduction in over two years, in an effort to support economic activity while continuing to manage inflation, which has fallen to 2.5 percent. This move, announced after the Federal Open Markets Committee meeting, reflects a shift in focus towards sustaining the labor market and hints at possible further cuts, despite being close to an election. Fed Chair Jerome Powell emphasized the balance between not easing policy too quickly or too slowly, suggesting a cautious approach towards achieving a neutral policy stance. The rate cut is seen as a positive signal for the commercial real estate market, potentially easing borrowing costs and encouraging investment, although immediate impacts on cap rates and market sentiment might be modest, with more significant effects expected post-election and into the following year.

September 16th 2024

The first half of this year saw a significant increase in the leasing of mega warehouses, those over 1 million square feet, with 31 such deals signed, marking a 35% rise from the previous year, according to CBRE. This surge in leasing activity, driven by new construction, has led to a 2.2% decrease in lease rates for these large facilities, even as rates for warehouses of all sizes rose by 7.7%. The analysis of the 100 largest industrial and logistics leases showed an average lease size increase and highlighted sectors like traditional retail, third-party logistics, e-commerce, and food & beverage as major players. California's Inland Empire, Memphis, and Dallas/Fort Worth emerged as hotspots for these large-scale leases, reflecting ongoing adjustments in the industrial real estate market to absorb the new supply.

September 9th 2024

Delinquency rates for commercial real estate loans in U.S. banks have climbed to 1.4% in the second quarter of 2024, marking the seventh consecutive quarterly increase, as per S&P Global Market Intelligence. This rise reflects ongoing distress in the office market post-pandemic, leading banks to increase their loss reserves and scale back on new CRE lending, with year-over-year loan growth dropping to 2.2%. Banks are managing maturing loans by extending terms or modifying them, with a significant peak in maturities expected in 2027. Despite regulatory concerns and a slight decrease in banks exceeding CRE exposure guidelines, the sector is buffered by stricter pre-pandemic underwriting standards and the presence of alternative financing from private equity. While anticipated Federal Reserve rate cuts might provide some liquidity relief, they are unlikely to significantly alleviate the sector's challenges due to the substantial gap between current and maturing loan rates.

September 3rd 2024

The retail segment within commercial real estate is demonstrating unexpected resilience and growth. According to CoStar’s data, retail has emerged as the most stable category during the recent global health crisis. It enjoys a near-perfect equilibrium between supply and demand, outperforming sectors like office and industrial properties. Retail property valuations have seen a slight increase since 2019, positioning it as the second most valuable sector after multifamily housing. Additionally, retail vacancy rates have decreased, contrasting with the rising vacancy rates in the office sector. Further insights from JLL's second-quarter analysis indicate a significant uptick in retail net absorption, with a notable decrease in the time properties remain on the market before leasing, empowering landlords with greater leverage in rent negotiations. The report highlights a preference for smaller retail spaces, particularly by quick-service restaurants, with regions in the South and Southwest experiencing robust rental growth due to strong consumer demand and demographic expansion.

August 26th 2024

For the third month in a row, consumers have set new records in core retail sales, reaching a 3.4% year-over-year increase in July, even after adjusting for inflation. This broad growth across nine out of ten retail segments marks the first time since August 2022 that such widespread gains have occurred, demonstrating consumer resilience. Online spending saw a significant 6.7% rise, fed by Amazon’s record-breaking Prime Day, while Fourth of July travel led to a 4.1% increase in restaurant sales. Grocery stores also experienced record sales, with vacancy rates dropping to a 20-year low. While retail vacancies have remained stable, upcoming closures from major retailers could open up new opportunities for new and existing businesses to expand into these spaces, which suggests a dynamic shift in the retail landscape.