Avoid the FOMO: The CRE News You Need to Know—August 18

The Latest Data, News, and Analysis Impacting the Commercial Real Estate Market

Last week’s inflation reports sent conflicting signals, leaving the Fed’s September rate decision uncertain. The consumer price index (CPI) was benign and rose a slight 0.2% in July, with core CPI up 3.1% year over year, still below forecasts. That offered some relief and briefly fueled hopes for a jumbo September interest rate cut, but expectation for a big cut faded fast. Just two days later, the producer price index (PPI) came in hotter than expected jumping 0.9%—the biggest monthly increase in three years—signaling that tariff-driven inflation may be filtering into the supply chain. Since wholesale inflation can foreshadow consumer price hikes in future CPI reports, the hot PPI print was an unwelcome data point, especially following the recent wobbly jobs data, underscoring the Fed’s tricky balancing act.

The LightBox Take: Despite mixed inflation data, investors remain focused on the potential for cheaper capital. The Cboe Volatility Index (VIX), Wall Street’s fear gauge, fell to its lowest level of 2025, suggesting markets are more tuned into rate cut hopes than inflation risks. Futures are still pricing in a 96% chance of a quarter-point cut in September, with Goldman Sachs and J.P. Morgan forecasting further easing later this year, citing labor market softness and political uncertainty.

As the commercial real estate industry contends with the national housing crisis and limited land availability, brownfield redevelopment is gaining renewed urgency. Across the U.S., more than 500,000 brownfields ranging from vacant industrial sites to former gas stations are often located in prime urban areas where demand for housing, mixed-use, and industrial space is high. As LightBox’s recent blog explains, brownfield redevelopment is evolving from isolated cleanup projects into strategic redevelopment efforts that support broader goals around economic growth, infrastructure, and environmental justice.

The U.S. EPA awarded $267 million in brownfield grants in FY2025, the highest amount in recent program history. Proposed legislation would extend the program through 2030 and expand eligibility. However, looming FY2026 budget cuts could significantly reduce federal funding, highlighting the need for public-private partnerships to fill the gap. Beyond funding challenges, brownfield projects are highly complex, requiring environmental consultants to manage vast amounts of property-specific data and collaborate with stakeholders including local governments, community groups, lenders, and developers.

The LightBox Take: Brownfield redevelopment is essential to unlocking contaminated sites and returning them to productive use. With LightBox Live, consultants can manage the full lifecycle of a brownfield project, streamlining data workflows, tracking remediation progress, and meeting evolving reporting requirements with greater efficiency and transparency.

Two notable developments in San Francisco’s CRE landscape suggest the city may be turning a corner. First, two of the city’s largest hotels, the Hilton Union Square and Parc 55, are under contract for a combined sale price of around $550 million, a steep 65% discount from their 2016 valuation of $1.56 billion. These properties, which account for nearly 20% of the city’s hotel room inventory, have struggled post-COVID with occupancy hovering around 40%. Meanwhile, in the office sector, July brought unexpected good news. Office foot traffic in San Francisco rose by a notable 21.6% year-over-year, the highest jump among U.S. metros, according to Placer.ai. This brings San Francisco out of last place in national rankings and at 66% of its 2019 office visit levels. Return-to-office mandates, AI-driven hiring, and rebounding tourism are among the drivers of this surge.

The LightBox Take: These two developments could be a sign that San Francisco’s CRE market is at an inflection point. The discounted hotel deal is a bellwether for the hospitality sector’s recovery and could jumpstart new investor interest. Rising office foot traffic signals real traction in the city’s long-awaited recovery. Together, these data points suggest a pivot point for a city long mired in “doom loop” narratives and could be a sign that the tide is finally turning for this metro market.

As wildfires and urban fire events grow in both frequency and severity, they are becoming a significant environmental risk factor in CRE. Events like the massive fires in Los Angeles earlier this year left behind not only visible destruction but also hidden environmental hazards in the form of contaminated debris and toxic residue. The contamination left in the wake of wildfires can have serious implications for site safety, property valuation, and redevelopment potential. Environmental due diligence is expanding to include fire history data, post-fire contamination assessment, and regulatory compliance related to hazardous material releases. Many fire-damaged sites may contain residual contaminants such as lead, arsenic, and asbestos, especially in older urban areas. Cleanup is further complicated by multi-agency involvement, limited disposal infrastructure, and shifting insurance and lending standards. With more insurers limiting coverage in areas at high risk of wildfires and lenders tightening their underwriting standards, it’s becoming increasingly critical for CRE professionals to factor a property’s fire exposure risk into early-stage assessments and decision making.

The LightBox Take: Properties that have been impacted by fires must be carefully assessed by qualified professionals for potential contamination that could affect valuation, redevelopment decisions, and community safety. Properties lacking mitigation strategies, such as defensible space, fire-resistant construction, or documented cleanup history, could be stigmatized or face devaluation.

Two high-profile office transactions on opposite coasts highlight the bifurcated state of the U.S. office market. In Pasadena, Harbor Associates and The Roxborough Group acquired the Pasadena Towers, a two-building, 477,000-square-foot complex, for $120 million, representing a 50% discount from its 2016 sale price of $256 million. By contrast, RXR closed a $1.08 billion deal for 590 Madison Avenue in Midtown Manhattan, marking the largest non-user office acquisition in NYC since 2018. The 42-story Class A tower is 85% leased with tenants like Apollo and Louis Vuitton, and has recently undergone $100 million in renovations.

The LightBox Take: These two deals highlight a stark divide in today’s office market: location and asset quality are driving value. Investors are either targeting deep discounts in soft suburban markets like Pasadena or doubling down on premier, well-leased trophy assets in tight supply markets like Manhattan. The Pasadena sale reflects the valuation reset underway for traditional suburban office properties facing weak tenant demand and high vacancy. Meanwhile, RXR continues to bet on the “flight to quality” trend, making bold plays on top-tier assets in core markets. LightBox ranked RXR 10^th on its 2025 list of top buyers YTD as of July. This latest deal is likely to move them up in the rankings in August.