Avoid the CRE FOMO: The CRE News You Need to Know – September 15

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

Inflation data last week offered mixed but telling signals. The Producer Price Index (PPI) unexpectedly fell 0.1% in August, defying forecasts for a 0.3% rise, after a sharp 0.7% gain in July. Wholesale prices were up 2.6% year-over-year, with the decline driven largely by softer trade services margins and retailers absorbing tariff costs rather than passing them through. Economists note this suggests weakening demand as well as margin compression. Meanwhile, the Consumer Price Index (CPI) showed consumer prices climbing 0.4% month-to-month and 2.9% year-over-year, with core inflation holding steady at 3.1%. Goods like beef and coffee spiked due to tariff effects, while shelter and services costs remained firm. In response, the 10-year Treasury yield briefly fell below 4% last week, around 3.996%, before settling at about 4.01%, its lowest close since early April.

This data came on the heels of the prior week’s dismal jobs report: just 22,000 jobs added in August, and revisions revealed nearly one million fewer jobs over the past year than previously reported. Jobless claims also hit a four-year high. The combination of weak hiring and sticky consumer inflation highlights stagflation risks, leaving the Fed with little choice but to cut rates at this week’s meeting. Markets are betting on a quarter-point cut, though the debate now centers on the pace of easing as tariffs and a fragile labor market weigh on growth.

The LightBox Take: With producer prices easing, consumer inflation steady, and job growth collapsing, the Fed faces a precarious balancing act. The PPI drop shows retailers are absorbing tariff costs, but CPI pressures remind us households aren’t fully insulated. Weak labor data has markets pricing in at least a 25-basis-point rate cut, a view reinforced by the 10-year Treasury yield dipping below 4%. Tariffs, labor softness, and sticky service inflation point to selective growth, tighter scrutiny, and a cautious road ahead.

LightBox’s August Major CRE Transaction Tracker report shows that deal activity cooled modestly after July’s record-setting pace but remains comfortably above 2025 averages. The Tracker logged 112 deals above $50 million, with nine-figure trades holding steady and mid-cap activity easing slightly from July’s high-water mark. This year’s CRE dealmaking climate is particularly notable for the wider range of buyers stepping in, with very few repeat names surfacing month after month. August’s biggest transactions were driven by institutional heavyweights: Cortland Partners led with a $1.6 billion apartment portfolio, followed by Harbor Group International ($740 million New England multifamily) and Ventas REIT ($600 million senior housing). Other notable deals included Bain Capital/11North’s $395 million Southeast retail portfolio, Pacific Retail’s $332 million mall acquisition, and Amazon’s $270 million Georgia land purchase for data center development.

LightBox’s pricing data underscores a market in reset. Of deals with prior purchase history, 74% traded at a gain with average appreciation of $13.6 million, while 26% sold at a loss averaging $33.6 million. The extremes illustrate the divergence: a $267 million loss on New York’s Times Square retail condo versus a $320+ million gain on Beverly Hills’ Rodeo Drive trophy asset.

The LightBox Take: August reflected a market catching its breath rather than losing steam. Nine-figure deals held firm, and mid-cap sales remain well above average, signaling capital is still in play. Institutional buyers are driving activity across multifamily, retail, industrial, and specialty sectors, while pricing patterns reveal a split personality: strength in trophy assets but steep losses where fundamentals are weaker. Looking ahead, September’s near-certain Fed rate cut could be the catalyst for renewed lending and deal momentum into Q4.

Last week’s CRE Weekly Digest podcast featured guest Craig Benton, Senior Director of Valuation & Environmental Services at Synovus Bank, on what’s changed in CRE and how appraisers are navigating the “great pricing reset.” Benton is seeing more property listings and far better comp visibility than in years past, as well as a sharp uptick in refinancing activity this year. “The great challenges facing appraisers right now,” Benton observed, “are low fees, shorter turn times, and a lack of training for the next generation. Training is much harder to solve in today’s remote working world.” On the topic of differences by asset class, Benton noted divergency by asset class with multifamily and grocery-anchored retail strong and office cloudy but finally transacting. Benton also highlighted the growing focus on data centers with billion-dollar valuations, syndicated lending, and underwriting questions that straddle real estate vs. business valuation. Power availability and obsolescence risk have become first-order issues on data center lending decisions. On the hot topic of AI, Benton is bullish, viewing AI as a force-multiplier for research and comp analysis, but stressed the need for expert verification to avoid hallucinations and keeping valuation judgment human-led.

The LightBox Take: In this pricing reset, appraisers are playing a critical role in helping the market find its footing. With more transactions closing this year, appraisers finally have better comps than in recent years, giving their work sharper clarity and context. AI tools are opening up new ways to process information faster and spot trends more accurately, but there’s no substitute for the judgment of seasoned professionals who know how to separate signal from noise.

A new study led by Purdue University, with contributions from LightBox CTO Eric Bollens, is shedding light on the hidden health risks of wildfire smoke contamination in homes after the devastating Los Angeles fires. While most recovery efforts traditionally focus on debris removal in burned areas, Purdue researchers surveyed more than 1,200 households and found that toxic compounds, including heavy metals, asbestos, and volatile organic compounds, can infiltrate standing homes, posing long-term risks that remain poorly understood. Bollens and the Purdue team have developed new post-wildfire testing recommendations to guide remediation, underscoring the urgent need for clear standards and protocols as urban-interface wildfires become more common. As insurers, homeowners, and public health officials wrestle with inconsistent cleanup guidance, the Purdue study provides critical data for shaping science-based responses and highlights the need for proactive testing and remediation to safeguard communities.

The LightBox Take: The Los Angeles fires show why environmental due diligence can’t stop at the property line. Purdue research confirms that smoke can leave hazardous residues long after flames are out, with real impacts on health and habitability at both residential and commercial properties. Without federal standards, property owners and investors must lean on testing and expert guidance. For CRE stakeholders, incorporating fire risk into environmental due diligence is now essential to protect both public health and liability exposure.

The CMBS distress rate hit a record 11.8% in August, according to a new analysis from CredIQ, surpassing the previous high of 11.5% set in January. The increase of 70 basis points marks the second consecutive monthly rise and continues a trend of elevated stress across the commercial mortgage-backed securities market. Underlying measures worsened as well: The delinquency rate climbed 78 basis points to 9.44%, while the special servicing rate rose to 10.95%.

CredIQ’s review of $61.1 billion in CMBS loans showed a steady deterioration across performance categories. Current loans fell for the third month in a row to $8.4 billion (13.7% of the pool), while late loans held at $3.8 billion (6.2%). The largest category remains matured loans, which totaled $38.8 billion (63.5%), up from $35.8 billion in July. Of these, just 22.8% are performing, while 40.7% are non-performing. The mounting distress reflects the challenge of refinancing in today’s higher-rate environment, with many borrowers unable to replace maturing debt on favorable terms. Notable new delinquencies include the $61 million loan on Estates at Palm Bay, a 300-unit multifamily property in Florida’s panhandle that fell 30 days delinquent in August.

The LightBox Take: CMBS distress reaching a historic 11.8% underscores how fragile the market remains. While still below the 2010 post-GFC delinquency peak, today’s environment is defined by a looming wave of maturities through the end of 2025 that will test both lenders and borrowers. More than $38 billion in CMBS loans are already past due, with nearly 41% non-performing. For commercial real estate, this means valuations and refinancing decisions hinge on disciplined appraisal and underwriting, particularly as capital selectively flows to stronger sectors. The pricing reset isn’t over, and the ability to manage maturities will be a defining challenge in the months ahead.