The Latest Data, News, and Analysis Impacting the Commercial Real Estate Market
Each week, LightBox carefully selects the most impactful economic news, market metrics, in-house data and analysis, and transactions shaping the CRE industry.
In This Week’s Edition:
- Trump vs. Powell: Round 2—Rate Cuts or Bust?
- The 10-Year Treasury Hit 4.33%—What That Means for CRE
- LightBox Appraisal Index Rebounds in Q1 Despite Intense Volatility
- Housing Starts Plunge, Permits Mislead
- Retail’s Big Month—But Don’t Call It a Comeback
1. Trump vs. Powell: Round 2—Rate Cuts or Bust?
The Fed is under fire again. In a high-stakes speech to the Economic Club of Chicago, Fed Chair Jerome Powell signaled that rate cuts are on hold for now, citing stalled progress on inflation. While markets had hoped for a cut by June, Powell’s remarks suggested that sticky inflation and global trade uncertainty are keeping the Fed in a wait-and-see mode.
Former President Donald Trump quickly escalated the rhetoric, criticizing Powell’s position and declaring that “his termination cannot come fast enough.” Trump called for immediate rate cuts, framing monetary policy as a key battleground in his broader economic platform.
The LightBox Take: The Fed is unlikely to cut rates amid tariff-fueled inflation risk and persistent volatility. Former Fed insider Tyler Wiggers said on the CRE Weekly Digest podcast that markets are overly optimistic about the central bank’s posture. Until more certainty surfaces, the Fed may be willing to sacrifice growth to keep inflation down. Pro-inflationary drivers like tariffs and a sizable retiring workforce are all part of the Fed’s calculus, according to Tyler. He foresees no rate cuts on the table in 2025 – given what we know about the market today.
2. The 10-Year Treasury Hit 4.33%—What That Means for CRE
The 10-year Treasury yield hit 4.33% this week—a level that continues to shape cap rates, borrowing costs, and underwriting assumptions across CRE. While not a recent high, it’s still enough to keep capital cautious. In his latest Market Talk blog, LightBox head of Data Strategy Manus Clancy unpacks three lesser-discussed forces driving the bond market—factors that every CRE lender and investor should be watching closely.
The LightBox Take: The 10-year yield is just low enough to keep deals in play and just high enough to keep borrowers wishing for more. Until we see stronger signals on inflation and Fed policy, this “higher for longer” will likely hold—leading to a more gradual improvement in CRE velocity than sharp rebound.
3. LightBox Appraisal Index Rebounds in Q1 Despite Intense Volatility
Fresh analysis from LightBox’s forthcoming Q1 2025 CRE Snapshot—Appraisal Trends shows a rebound in CRE appraisal activity, despite intense economic and policy-driven volatility. The Index rose to 59.8 in Q1, up from 56.9 in Q4 and 56.4 a year ago, driven by a surge in January and February appraisal awards. Big banks re-entered the lending space, borrowers sought refinancing amid loan maturities, and deal volume gained traction—especially for assets with strong fundamentals.
The LightBox Take: A 5% quarterly jump in appraisal activity signals renewed momentum as capital re-enters the system. Refinancing tied to maturing loans is a key driver, but March’s late-quarter dip is a reminder that this rebound is still delicate. The coming weeks—especially in the face of shifting policy and rate uncertainty—will test whether lenders’ appetite for new originations has real traction or if Q1 was just a temporary lift. Keep an eye out for the full Q1 2025 CRE Snapshot report on lender-driven appraisal trends, publishing later this week for deeper insights.
4. Housing Starts Plunge, Permits Mislead
U.S. housing starts dropped 11.4% in March, led by a steep 14.2% decline in single-family construction. The South—previously a hotbed of building—saw starts fall nearly 18%. Permits rose slightly, but analysts warn it’s likely a temporary spike driven by multifamily filings rather than a true market shift. Rising mortgage rates, tariffs, and consumer debt are all weighing heavily on builder sentiment.
The LightBox Take: Developers are walking a tightrope between still-elevated costs and a policy landscape that keeps shifting underfoot. Even with a slight rise in permits, there’s little appetite to start new projects in regions where supply is high and rent growth is softening. Further weakening is likely in 2025, according to Oxford Economics, with analysts calling March’s jump in multifamily permits “more noise than signal.” And with new tariffs adding uncertainty to materials pricing, the margin for error is shrinking. Capital is being deployed more selectively, and unless interest rates ease or fundamentals firm up, many projects may stay sidelined through midyear.
5. Retail’s Big Month—But Don’t Call It a Comeback
Retail spending came in stronger than expected in March, rising 0.7% versus the 0.3% forecast—the largest monthly increase in more than two years. Core retail sales—excluding autos, gasoline, building materials, and food services—rose an even stronger 1.1%, suggesting momentum in key discretionary categories like restaurants and clothing. But the surprise strength was largely attributed to a spike in auto sales, widely seen as panic buying ahead of expected tariffs. Despite the surge, economists’ GDP growth estimates for Q1 remain stuck below a 0.5% annualized rate, keeping fears of stagflation—slowing growth combined with high inflation—firmly in play.
“It’s hard to feel good about Americans panic buying cars as consumer confidence craters,” said Bill Adams, chief economist at Comerica Bank. “The economic outlook is in flux with large changes to trade policy nearly every day. Businesses selling cars, appliances and electronics are likely to see less demand in the next month or two as panic buying ends.”
The LightBox Take: The March bump in retail sales offers a short-term lift for CRE’s retail sector, but it’s not a signal to get comfortable. Tariff-driven volatility, weak consumer confidence, and stagnant GDP expectations point to fragile footing beneath the headline strength. CRE players should view this as a narrow window of strength, not a longer-term trend. Of all the segments likely to be hit by the impact of tariffs, retail is at the top of the list, followed by luxury hotels, and developers of industrial space on spec.
Important dates and industry events this week
- Monday, April 21
- U.S. leading economic indicators
- Wednesday, April 23
- March New home sales
- Thursday, April 24:
- Initial jobless claims
- March Existing Home Sales
- March Durable Goods Orders
- Friday, April 25
- Consumer sentiment
Did You Know of the Week
Did You Know In Q1, appraisal awards put out to bid by CRE lenders on the LightBox Collateral360® and RIMS® platforms showed uneven month-to-month growth. January saw a 33% rebound from a slower-than-usual December, driven by typical seasonal slowness and lingering market volatility. February followed with a more modest—but still strong—13% increase over January.
For more insights on commercial real estate data and trends, subscribe to Insights and the CRE Weekly Digest Podcast for commentary and real-time data.
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