Avoid the FOMO: The CRE News You Need to Know—August 4

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

Last week the Fed held interest rates steady for the fifth straight meeting, keeping the benchmark rate in the 4.25%–4.50% range. That came as no surprise, but the real story was the dissent. For the first time since 1993, two Fed governors broke ranks, voting for a rate cut, signaling growing concern about the pace of economic slowing. Fed Chair Jerome Powell struck a cautious tone, reiterating that inflation needs to show more sustained moderation before any policy easing and that we’re in the “early days” of tariffs showing up in consumer prices. The Fed’s preferred inflation gauge, the PCE index, rose 0.3% in June, with core PCE up 2.8% year-over-year, driven partly by tariff-related increases in goods prices. Complicating the Fed’s decision making, signs point to a labor market that’s cooling. Weekly jobless claims ticked up, along with layoff announcements from major employers like Microsoft, Merck, and Moderna. Then there’s the GDP surprise: Q2 growth came in at 3.0%, but it was largely a statistical distortion given that a sharp drop in imports inflated the number, masking soft domestic demand. Final sales to private domestic purchasers, a more accurate measure of true economic momentum, slid to just 1.2%, the weakest since 2022.

The LightBox Take: Interest rates remain the top concern for CRE professionals. While a September cut is still on the table, it’s far from guaranteed, with odds now hovering around 40–50%. Inflation that is still running above the 2% target, combined with the expectation that tariffs will push pricing levels higher in the coming month along with a cooling labor market, puts the Fed squarely in the middle of its dual mandates. While Powell is unlikely to cut rates as inflation threatens to move higher, the dissenters’ concerns are that the Fed would be better to cut rates now, before weakness in the job market becomes more apparent. The September decision will hinge heavily on how data shakes out in the coming months.

In advance of the August 1 tariff deadline, the U.S. struck a flurry of trade deals, most recently with South Korea, which agreed to invest $350 billion in the U.S. and purchase $100 billion in energy in exchange for lower-than-expected tariffs. This marks a strategic shift as the administration pairs tariff relief with investment pledges, softening trade war rhetoric without eliminating disruption. In addition to concerns that tariffs will accelerate inflation, other warning signs are surfacing. June container volumes at U.S. ports dropped 27% year-over-year, the steepest decline since COVID. After front-loading imports in April, shippers pulled back, and July–August forecasts remain down 25%, signaling a decline in supply chain confidence. At the same time, consumer-facing companies are flashing alarms: UPS, Whirlpool, Stanley Black & Decker, and P&G all reported tariff-related earnings pressure and shifting demand patterns. Whirlpool cited a surge of pre-tariff imports from Asian competitors; Stanley projected an $800 million tariff impact; and P&G noted behavioral changes among budget-conscious shoppers.

The LightBox Take: Together, these signals point to growing uncertainty and slowing momentum. For CRE, the double-digit drop in container volume is hitting industrial leasing and port-adjacent logistics hubs, where tenants are delaying commitments and taking a more conservative underwriting stance amid an increasingly uncertain trade environment.

After a shaky start to 2025, sentiment across the commercial real estate industry is rebounding. According to LightBox’s Mid-Year CRE Market Sentiment Survey, completed in mid-July, 76% of respondents expect deal activity to either increase (42%) or hold steady (34%) in the second half of the year. The survey, which gathered insights from 237 professionals across investment, brokerage, lending, appraisal, and environmental due diligence, shows an industry adjusting to ongoing volatility with a renewed sense of cautious optimism. This outlook aligns closely with the CRE Finance Council’s (CREFC) Q2 Sentiment Index, which jumped nearly 28% to 112.3, recovering from a Q1 low and marking its largest quarterly gain in years. Notably, only 27% of CREFC respondents now expect conditions to worsen, a major turnaround from 80% in Q1. Interest rates remain the top concern, followed by economic volatility and tariff risks.

The LightBox Take: While few CRE professionals are calling for a full-blown recovery, the consensus is clear: the market is stabilizing, adjusting to higher rates, and poised for selective momentum. Respondents’ tone, while not euphoric, is measured and adjusted to the likelihood of continued uncertainty, paired with cautious optimism for a busier second half. Interest rate stagnation remains a key sticking point, with many citing the Fed’s pause as the main reason pricing clarity and deal flow have yet to rebound meaningfully. On pricing, while sentiment suggests the market is approaching a floor, a significant 60% still see room to fall although narrowing bid-ask gaps offer a hopeful sign.

After a prolonged downturn, the U.S. office market is showing early signs of stabilization, led by select deals in major metros like San Francisco and Dallas. In the first half of 2025, U.S. office sales surged 40% year-over-year, totaling $18.2 billion, according to Green Street. While still trailing the 10-year average, this marks a notable rebound from 2024’s 14-year low. In San Francisco, Redco’s acquisition of Wells Fargo’s headquarters at 420 Montgomery St. signals renewed confidence in the city’s long-term workplace fundamentals. This comes as many planned office-to-residential conversions stall, showing that investors still see upside in high-quality, urban office assets. Similarly, Dallas’ Uptown submarket remains a bright spot, with Bradford’s acquisition of a 254,000 -square-foot asset reinforcing investor confidence in Sun Belt urban cores. On pricing, national office values are still falling, but the breadth of depreciation is narrowing, with 23 markets showing appreciation in Q2, up from just six a year ago.

The LightBox Take: Pricing clarity is improving in the office sector, and capital is moving again. Office attendance has steadily climbed to 72.6% of pre-pandemic levels, according to Placer.ai, up from just 29% in mid-2021. That rebound is helping ease vacancy pressures and revive investor interest in well-located office assets. While the office market’s recovery is slow and uneven, the thaw has begun as evidenced by recent deals in major CBDs. Importantly, rising office usage also correlates with demand for downtown housing, retail, and self-storage, reinforcing the office sector’s critical role in urban ecosystems.

Two high-profile portfolio acquisitions underscore growing investor confidence in U.S. retail real estate, particularly in stabilized and mid-tier formats. In one of the largest retail real estate transactions in recent years, Onyx Partners is acquiring 119 JCPenney properties for $947 million, or roughly $8 million per store. Spread across more than 30 states, the deal secures long-term operations for the retailer and reflects Onyx’s strategic bet on legacy retail repositioning and stable cash flow. Meanwhile, CBL Properties is doubling down on its core strength with the $178.9 million acquisition of four mid-tier malls from Washington Prime Group. These assets, located in markets like Florida, Colorado, and Montana, are dominant in their respective regions and part of a broader trend. Investors are starting to revisit non-trophy mall assets that have loyal foot traffic and local relevance.

The LightBox Take: The $947-million JCPenney portfolio sale and CBL’s $179-million mall acquisition both reflect renewed confidence in stabilized, experience-driven assets that have survived multiple market shocks. While luxury retail has dominated the post-COVID rebound, investors are now leaning into mid-tier and legacy formats with proven foot traffic and local loyalty.