Avoid the CRE FOMO: The CRE News You Need to Know – October 20

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

Last week’s Fed Beige Book characterizes commercial real estate credit as mixed but incrementally better than the prior report. A handful of districts cited improving business lending as rates eased. Cleveland noted upticks in commercial construction and financial services demand tied to lower borrowing costs; Chicago saw slight gains in construction/real estate alongside loosening financial conditions; Dallas reported growing loan demand. Elsewhere, CRE was steady to flat, with San Francisco flagging some increases in loan delinquencies, and several districts stressing that office remains the pressure point. On balance, the tone of the Fed report cooled to “little changed” overall versus earlier “slight growth,” but the credit temperature for CRE was slightly more positive as the September rate relief filtered through. The latest round of Q3 big bank earnings syncs with that narrative. JPMorgan posted modest CRE loan growth and talked up stabilizing office valuations. Wells Fargo continued to shrink office exposure but reported lower office nonaccruals than a year ago and charge-offs within expectations. The sentiment in the financial commentary suggests that CRE lending is turning a corner. Capital is available for well-underwritten industrial, multifamily, grocery-anchored retail, and select construction-to-perm, while office credit remains selective and sponsor-driven.

 The LightBox Take: Lenders are methodically working through the office reset, paring legacy exposure, reserving conservatively, and favoring extensions, mods, and note sales over blunt exits. At the same time, they’re still extending capital to CRE where cash flows are durable: logistics, necessity retail, medical, and higher-quality multifamily. Expect structure over spread, lower leverage, stronger covenants, ample reserves, and tighter underwriting of rollover and cap-ex. For office, credit is available only to top-quartile assets with tenancy, location, and sponsor strength (think amenity-rich, pre-leased, or lab-capable).

LightBox logged approximately $27 billion in U.S. CRE trades in September, making it the busiest month of 2025. Large deals above $100M rose 23% month over month and ran 34% above this year’s monthly average. In the next tranche, deals between $50M and $100 million rebounded 18% from August and set a new monthly high. We recorded 970 closings, spanning a $200,000 Ohio retail sale to a $1.6 billion multi-state portfolio. Among the 20% of sales with prior price history, 70% traded above their previous mark, while 29% cleared at discounts. The average uplift across all asset classes and geographies was an appreciation of $13.6 million and the average discount was $33.6 million.

The sharpest markdown came in Manhattan office, where Norges/Beacon agreed to buy 1177 Sixth Ave for $571 million, 42% below its 2007 valuation. The deal was the latest sign of pensions trimming legacy office. Offsetting that, retail delivered notable wins: Nuveen bought Algonquin Commons for $100 million after a $30 million repositioning (vs. the sellers’ $33M 2021 basis), and IKEA acquired a Midtown flagship site for $213 million (45% above its 2012 sale).

By property type, multifamily (23%), retail (21%), and office (20%) led volume. Industrial (17%) remained healthy on normalized vacancy, lower starts, and still-positive rent growth in prime nodes. Land was at 8% of the September total as developers and homebuilders bank sites for new construction. Buyer mix ranged from family offices to global institutions, signaling broad, diversified demand.

The LightBox Take: The September LightBox CRE Activity Index (116.8), powered by a 25% jump in listings and steady ESA/appraisal pipelines, sets the table for elevated Q4 closings as those workflows typically convert over 30–90 days. If the Fed adds another interest rate cut in late October (and possibly another in December), wider financing windows and a tighter bid-ask spread should reinforce volumes. That outlook aligns with external forecasts from CBRE, Goldman Sachs Asset Management, and the MBA calling for firmer transactions and improving financing conditions as the CRE cycle turns. Caveats include the impact of tariff pass-through on inflation, the softening labor market, and the potential adverse impact of a prolonged federal shutdown.

In a potential win for brownfields redevelopment in Los Angeles, a proposal took a major step forward, with the City Planning Commission unanimously recommending approval for Continuum Partners’ $2-billion transformation of the 7.6-acre Los Angeles Cold Storage site at 4th & Central. The plan recasts a 130-year-old industrial property on the Arts District/Little Tokyo edge into a 10-building, mixed-use district with 1,589 homes (at least 249 affordable), 401K square feet of creative office, 146K square feet of retail/restaurant, and two acres of public open space. In response to community feedback and market conditions, the team removed a hotel component and reduced the tallest tower from 44 to 30 stories, while keeping the pedestrian network and open-space spine that link Central Ave. to Alameda St. intact. The project now heads to the Council’s PLUM Committee, then the full Council. Beyond adding badly needed housing, Fourth & Central is a textbook brownfield conversion, reusing legacy warehouse land, knitting jobs and homes to transit, and seeding a potential halo of follow-on investment in DTLA. Recent coverage frames it as one of the largest apartment proposals in L.A., emblematic of cities reimagining older industrial zones to meet housing and employment needs without displacing established neighborhoods.

The LightBox Take: Fourth & Central is the kind of large-scale brownfield reuse cities need: it turns dormant industrial acreage into mixed-income housing, employment space, and public realm, precisely the “housing first” posture many markets are adopting. On a CREW NY panel last week, panelist MaryAnne Gilmartin of MAG Partners observed that for the first time in many years, city and state forces are aligning around housing projects in NYC, a mood that’s surfacing in other big cities like LA as well. If this brownfields project moves forward, it could trigger ancillary development in the area with new projects that pull in neighborhood retail, small-format logistics, and additional infill housing. Execution risks remain (financing, construction costs), but if approvals hold, this could be a high-impact template for converting legacy assets into resilient urban neighborhoods.

As the federal shutdown enters its third week, LightBox took a dive into early impacts specifically for environmental due diligence consultants. Ultimately, the shutdown’s duration will be the swing factor. A brief standoff is noisy but manageable, but a multi-week shutdown will compound the impact on the economy and specific CRE markets. The most immediate impact is on federal agencies that support CRE lending, like HUD/FHA and SBA. Lending and environmental due diligence pipelines are stalling, which pushes environmental consultants into rescheduling, potential revenue gaps, and workload pivots. A parallel headwind is the data blackout which could impact access to federal data records used in environmental due diligence.  

The LightBox Take: The impact on any individual consulting firm is a function of exposure to federal work. Large shops can redeploy teams to other contract work while smaller firms, particularly those concentrated in HUD/SBA/GSA client sectors will feel a greater cash-flow strain. LightBox will be closely watching shutdown developments and tracking any impact on CRE markets.

A new consortium, Artificial Intelligence Infrastructure Partnership (AIP), led by BlackRock, Nvidia and Microsoft, agreed to acquire Aligned Data Centers in an approximately $40-billion transaction, aiming to accelerate global AI and cloud capacity. Aligned brings 50 data-center campuses and more than five gigawatts of operational and planned capacity across the U.S. and Latin America (Chicago, Dallas, Phoenix, Salt Lake City, Northern Virginia, Ohio, São Paulo, Querétaro, Santiago). The deal, AIP’s first, launches with a target of $30 billion in equity (up to $100 billion with debt) and is expected to close in the first half of next year. The move lands amid a flurry of AI infrastructure tie-ups (e.g., OpenAI–Nvidia’s $100-billion plan for at least 10 GW of compute; AMD’s chip pact with OpenAI). It also intersects with a mounting power bottleneck. As the Wall Street Journal reported last week, AI data-center developers are increasingly in “bring your own power” mode, adding on-site gas turbines, fuel cells and other solutions to their projects because grid interconnections and transmission additions lag surging demand. The U.S. may need at least 80 GW per year of new generation to keep pace but is building less than 65 GW, pushing operators to bridge with on-site generation until utilities catch up.

The LightBox Take: The engines powering hot data-center markets, like hyperscaler demand, abundant private capital, land/substation access, and creative power procurement, continue to turn unabated. The Aligned buyout underscores a cycle defined by scale and speed, even as grid constraints force “power first” site selection and interim on-site generation. For CRE, that means sustained demand for large industrial parcels, power-adjacent land, and conversion/redevelopment near transmission, with outsized activity in Northern Virginia, Phoenix, Dallas, Salt Lake City and Ohio. Expect longer diligence around power, water and permitting hurdles, but this latest deal is a sign that capital continues to rally around data center development.