Avoid the CRE FOMO: The 5 Leading News Stories of the Week of April 28th-May 2nd

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:

1. From Soft Survey Data to Hard Truths: GDP Dips and Confidence Cracks
2. LightBox CRE Activity Index Increases Modestly to 109 in a Volatile April
3. Capital Leaves Malls for Grocery-Anchored Retail: Where Stability Meets Foot Traffic
4. Jobs Hold Steady, Hiring Hits the Brakes-but Doesn’t Swerve (Yet)
5. Cracks in the Foundation: Data Reveals Mounting Pressure in U.S. Housing Market

In a rare alignment of “hard” and “soft” data, last week’s GDP report confirmed a clear cooling in the U.S. economy, with a 0.3% contraction in Q1—the first decline in three years—underscoring the growing pessimism echoed in recent sentiment surveys. Behind last Wednesday’s sobering GDP report was a historic surge in imports as companies rushed to get ahead of President Trump’s sweeping “Liberation Day” tariffs. On the same day, the Fed’s preferred inflation gauge—the PCE Index—showed inflation cooling to 2.3% year-over-year in March, while core PCE (excluding food and energy) held steady at 2.6% year over year, its slowest pace since March 2021. Consumer spending rose 0.7% in March—a solid gain, but one likely front-loaded ahead of anticipated price hikes from tariffs taking effect in Q2.

On the “soft” data side, sentiment is starting to reflect the economic reality. The Conference Board’s Consumer Confidence Index fell for a fifth consecutive month in April, plunging to 86.0—its lowest level since the depths of the pandemic. The CRE Finance Council (CREFC) also released its Q1 2025 Sentiment Index, which painted a similarly downbeat picture. The Index dropped 30.5%, marking the second-largest decline on record. CRE market participants cited rising trade uncertainty, policy volatility, and declining confidence in fundamentals.

The LightBox Take: The GDP contraction reflects mounting anxiety over the tariff regime, which has rattled consumers, complicated business planning, and shaken investor confidence—triggering steep stock market losses. While inflation cooled in March, economists caution that newly implemented tariffs could reverse that trend, placing further strain on the Fed’s efforts to balance price stability and employment. Yet, at least for now, last week’s slowing GDP and softening inflation data give the Fed room to pause, making a rate cut at next week’s meeting unlikely.

In the first round of monthly CRE market data since the April 2^nd “Liberation Day” tariff announcement, the LightBox CRE Activity Index rose to 109 in April, up from 107.9 in March—marking its highest reading since June 2022 and a continued strong upward trajectory. Although this represents the third triple-digit reading in nearly three years, the month-over-month growth slowed in April compared to the prior three months in what may be the early signs of a market pause. Behind the latest month’s activity is a 7% increase in the average daily volume of appraisals by CRE lenders and a 2% rise in the average number of properties listed for sale on LightBox platforms while environmental due diligence activity was flat month-over-month.

The LightBox Take: While broader financial markets remained unsettled—characterized by sharp equity fluctuations and volatile 10-year Treasury yields—the CRE Activity Index continues to show increased movement of commercial property assets into the market. However, sentiment among lenders and investors is becoming more cautious as uncertainty around tariffs grows. May’s Index will be telling in terms of whether the current momentum holds or begins to soften—potentially signaling a slowdown after a strong first quarter.

Investor interest in grocery-anchored retail is surging while aging malls continue to struggle with high vacancies and low foot traffic. Grocery stores act as dependable traffic generators, supporting adjacent retail tenants and boosting rent growth. Brands like Whole Foods and Publix serve as high-credit anchors with 20-year lease terms, making them attractive to REITs and private investors alike. In 2024, transaction volume in the grocery-anchored retail sector soared to $7 billion, driven by strong consumer demand and a sharp supply-demand imbalance, according to JLL. With only 8.3 million square feet of new retail space delivered last year—and limited development on the horizon—investors are vying for a shrinking pool of high-performing properties. Lenders are increasingly stepping in to fund these deals, perceived as a more stable alternative to distressed asset classes like office. Value-add opportunities such as subdividing oversized stores or upgrading physical infrastructure make the sector even more compelling.

The LightBox Take: Strong demographics, particularly in fast-growing Sun Belt markets, make grocery-anchored appeal attractive to lenders and investors alike as a lower-risk, income-generating solution that balances portfolios amid ongoing volatility in other real estate sectors. As investor confidence in the office sector declines, capital is shifting toward more stable asset classes. Retail assets, particularly necessity-based centers, offer the benefits of consistent foot traffic, reliable tenants, and long lease terms.

The April 2025 jobs report offered a mixed but still generally reassuring picture of the labor market, with employers adding 177,000 jobs—slightly below March’s 185,000 but above expectations of 133,000. The unemployment rate held steady at 4.2%, and job gains were concentrated in sectors like healthcare, financial activities, and transportation. However, federal government employment declined by 9,000, reflecting the early impacts of DOGE cuts. Not surprisingly, hiring cooled in tandem with heightened uncertainty from sweeping—but now partially paused—tariffs imposed by the Trump administration. It’s worth noting that the data in this latest jobs report was collected in mid-April, after the April 2^nd tariff announcement, but likely too early to capture their full economic impact.

The LightBox Take: The report is definitely more “cautious optimism” than “full steam ahead.” While it shows that the labor market remains in decent shape, momentum is clearly slowing. Following last week’s negative Q1 GDP report, the jobs data reinforces the view of an economy that is resilient but slowing. It’s not a red flag yet, but more like a flashing yellow. Slower hiring, tepid wage growth, and tariff-driven unpredictability suggest employers are bracing for tougher conditions ahead. The April jobs report gives the Federal Reserve room to stay patient at next week’s meeting but increases the likelihood of a rate cut by summer or early fall, especially if weakness persists and trade policy continues to weigh on confidence.

The U.S. housing market is exhibiting signs of mounting pressure, with key indicators pointing to a broader slowdown, according to a recent LightBox analysis. The U.S. housing market is exhibiting signs of strain, with April 2025 data highlighting several concerning trends. Single-family housing starts declined by 14.2% in March, reaching an annual rate of 940,000 units—the lowest since July 2024. Overall housing starts dropped 11.4%, indicating a broader slowdown in construction activity.

A significant factor contributing to this downturn is the imposition of steep tariffs on Chinese goods, some as high as 245%, affecting a wide range of construction materials like steel and aluminum. According to a survey by Associated Builders and Contractors, 80% of contractors are facing rising material costs, with 20% reporting project delays directly linked to these hikes. Over 40% anticipate tighter profit margins moving forward. Rising mortgage rates, which surged to 6.83% by early April, are also taking the winds out of the sails of buyers, pushing existing home sales down 5.9% year-over-year to their slowest March pace since 2009.

The LightBox Take: Developers and investors in the single-family sector are undoubtedly reevaluating their strategies as construction timelines and profit margins come under increasing pressure. Uncertainty clouding materials pricing and buyer demand is likely to delay or pause many planned residential developments, particularly in secondary markets, as projects are more difficult to pencil out in an environment of struggling home sales and still-high interest rates.

Important dates and industry events this week

• Tuesday, May 6
  • U.S. trade deficit
• Wednesday, May 7
  • FOMC meeting—third of 2025
• Thursday, May 8
  • U.S. productivity and initial jobless claims

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