Avoid the CRE FOMO: The CRE News You Need to Know – October 13

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

The Fed’s September minutes show a committee balancing stubborn inflation against a cooling labor market and concluding a 25 bp cut was warranted. “Almost all” members backed the September rate cut, with only one dissent favoring a 50 bp cut. Most participants judged that additional easing this year is likely appropriate if data evolves as expected. Equity prices were noted at near record highs, while overall financial conditions were described as supportive of activity. Staff estimates put the August PCE inflation at 2.7% headline and 2.9% core, and the committee acknowledged risks around inflation, especially from tariffs, remain skewed to the upside even as longer-run expectations stay anchored. Participants agreed the labor market has softened: job gains slowed, unemployment edged up, and downside risks to employment increased following weaker July/August reports and revisions. The statement language was adjusted to drop “solid” for labor conditions and emphasize rising downside risks to jobs; members stressed they will calibrate further moves to the incoming data and risk balance.

 The LightBox Take: On balance, the latest Fed minutes tilt dovish on growth risks but note the focus on inflationary pressures. For CRE, that argues for gradual rate relief, supportive for deal math, while spreads and underwriting stay disciplined. Into Q4, metrics to watch include labor prints and revisions for confirmation of cooling, inflation’s path for any signs of tariff pass-through, and long-end yields/credit spreads, which will drive cap rate and financing sensitivity. If data cooperates, the Fed’s “ease-more-if-needed” bias should help liquidity and listings. A re-acceleration in inflation or a surprise re-tightening in the labor market would slow that tailwind.

Momentum in CRE snapped back in September. The LightBox CRE Activity Index rose to 116.8, the highest reading of 2025 and the eighth straight month above the 100 “healthy” threshold. Strength was driven by a 25% month-over-month jump in property listings, a clear sign of renewed seller confidence and deeper price discovery as bid-ask gaps narrow further. Early-stage pipelines were steady with monthly activity in environmental due diligence and lender-driven appraisals up by a modest 1% month over month, extending their stable summer trend. Within appraisals, lenders showed the first clear acceleration of demand for industrial loans, consistent with easing new construction and durable tailwinds from onshoring, e-commerce, and supply-chain optimization. September’s 25-bps Fed cut improved sentiment and the calculus behind risk-sensitive lending, with markets now assuming additional easing later this year. Risks remain, however. Labor data continues to soften, inflation is sticky, and a nascent federal shutdown is introducing uncertainty.

The LightBox Take: Absent a major shock, we expect continued modest improvement into Q4 as investors lean into durable-demand segments like industrial, necessity retail, and selective multifamily while keeping underwriting tight. Another rate cut at the Fed meeting later this month, and possibly another in December, would only add momentum. The expectation is for a stronger, steady finish to 2025, with odds improving for a broader uptick into 2026 if federal policy, rates, and credit cooperate.

At last week’s CREW Network Convention, Cushman & Wakefield senior economist James Bohnaker laid out how tariffs could ripple through CRE. Roughly 40% of building materials used in commercial projects are imported, so trade frictions feed directly into budgets and pro formas. Product-specific tariffs on aluminum, steel, copper, and lumber are the swing factors, with metals most exposed. Under the current structure, steel and aluminum costs could rise by more than 50%, a sharp jump from Q4 2024’s 3.5% and 6.3% increases. Layer on volatile spot pricing, and it means that U.S. importers face real challenges locking in contracts and contingencies. U.S. capacity cannot meet demand for many key inputs; while manufacturers may invest in new plants and refineries, those facilities often take years (up to a decade) and significant capital to come online.

The backdrop tightened further Friday, when President Trump announced a 100% additional tariff on Chinese imports alongside new U.S. export controls on critical software, following Beijing’s sweeping rare-earth export curbs (vital to chips, EVs, and defense). The U.S. measures, slated to start Nov. 1, sparked a risk-off move as the S&P 500 fell 2.7% in its largest one-day decline since April 10 and the Dow lost nearly 900 points.

The LightBox Take: Higher metals tariffs, pricing volatility, and already-thin margins are major headwinds, especially with materials at 35–45% of total project costs. Underwriting should widen contingencies and stress-test schedules, particularly for steel- and aluminum-heavy scopes. With tariff pass-throughs estimated at about 75%, elevated input costs could push rents higher at the margin. With higher-for-longer rates and cautious (but improving) bank lending, construction remains soft; however, when activity turns, expected demand in industrial and multifamily argues for longer lead-time planning and flexible budgets.

Fifth Third is acquiring Comerica in an all-stock deal valued around $10.9 billion, creating a roughly $288B-asset regional bank with national ambitions. The tie-up marries Fifth Third’s Midwest/Southeast strength and retail/payments platform with Comerica’s middle-market franchise anchored in Texas and California. Management’s thesis centers on scale, cheaper funding, and bigger tech spend, with targeted pre-tax cost synergies of about $850 million and no tangible book value dilution. Strategically, the combined bank says it will operate in 17 of the 20 fastest-growing U.S. markets and plans a major Texas build-out, including new financial centers supported by a $600-Million investment. Contextually, this represents the largest U.S. bank deal since BMO’s purchase of Bank of the West in 2021 but far smaller than the BB&T/SunTrust (Truist) deal. With Comerica’s roughly $77.7 billion in assets combined with Fifth Third’s $209.3 billion, Fifth Third will move to No. 11 on the list of the largest U.S. banks, up from No. 20, based on the latest Federal Reserve quarterly rankings, putting it ahead of BMO’s $253.7 billion in assets and behind the $356.4 billion held by TD Bank.

The LightBox Take: The Mortgage Bankers Association projects a 29% rebound in CRE lending in 2025 and another 27% in 2026 (before a modest 2027 pullback). In that backdrop, a larger, better-funded Fifth Third–Comerica is positioned to play offense, leaning into durable segments like industrial, multifamily, and select construction lending in high-growth markets, especially Texas. If rate cuts continue and capital markets stay receptive, the combined platform should be well placed to capture share as CRE activity grinds higher into 2026.

In the latest shakeup from the retail sector, Rite Aid has closed all remaining U.S. locations after six decades in business, replacing its website with the notice: “All Rite Aid stores have now closed.” The move caps a rapid wind-down following two Chapter 11 filings, the first in October 2023 and then in May 2025, struggling under heavy debt levels, declining sales, and lawsuit costs. The company previously said it would operate through bankruptcy while selling assets and secured nearly $2 billion in debtor-in-possession financing but ultimately pivoted to a full shutdown. At its peak, Rite Aid operated roughly 5,000 stores and more recently, operated about 1,200 stores across 15 states. Operationally, millions in prescription-based revenue are expected to migrate to rivals like CVS and Walgreens, potentially boosting volumes and store-level performance at these chains. At the same time, closures heighten concerns about “pharmacy deserts,” especially in lower-density and lower-income areas that relied on Rite Aid for access.

The LightBox Take: This is the latest wave in a multi-year pharmacy retrenchment and opens another door to opportunities in retail. Many Rite Aid boxes sit on high-visibility, signalized corners with strong ingress/egress, drive-throughs, and parking, all prime ingredients for reuse. Expect a mix of back-fill (other pharmacies, urgent care, dental/vision, dialysis), service retail, community uses, and in select corridors, small-format logistics or clinic-anchored medical retail. It is likely that opportunistic investors and debt capital will target the best-located sites vacated by RiteAid.