Avoid the FOMO: The CRE News You Need to Know—September 2

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

In July 2025, the Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, rose 0.2% month-over-month, keeping the annual rate at 2.6%. Core PCE, which excludes food and energy, increased 0.3% and reached 2.9% year-over-year, its highest in five months. These figures align with expectations and reinforce the narrative that inflation remains subdued enough to keep rate-cut momentum alive. Last week at Jackson Hole, Fed Chair Jerome Powell signaled that a shift toward easing may be warranted, citing an increasingly fragile labor market and considering the transitory nature of tariff-driven inflation. In that light, July’s PCE data serves as a bridge between Powell’s cautious openness to rate cuts and actual policy change. Also last week, the U.S. economy surprised a bit on the upside in Q2 2025, with GDP growth revised to 3.3% annualized, up from the previously reported 3%. This gain was fueled by strong consumer spending and business investment, particularly in AI and digital infrastructure, event as the boost largely stems from a sharp turnaround in imports due to trade-driven fluctuations.

The LightBox Take: July’s PCE print and the slightly stronger GDP growth data strengthens Powell’s case for easing, with markets pricing a 75–85% chance of a 25 bp September cut. Lower borrowing costs could boost CRE lending and investment, especially in multifamily and value-add assets. If rates begin to fall, expect deal flow to accelerate in Q4 as financing improves and underwriting confidence returns. 

Commercial real estate deal activity marched on in July, with volumes hitting their highest level of the year, up 10% over June’s strong pace, according to the latest LightBox CRE Monthly Transaction Tracker. Year-to-date, closed CRE deals now exceed $160 billion, underscoring robust investor interest and access to capital despite headwinds from weak jobs data, inflationary concerns, and still-high interest rates. The volume of nine-figure transactions eased slightly from June’s peak, but mid-cap transactions ($50–$100 million) surged 24%. Encouragingly, activity is spreading across a wider pool of buyers, not just repeat players, reflecting broadening participation in a market seeing strong increases in buying opportunities compared to last year. By sector, multifamily dominated, with mid-cap trades more than doubling June’s volume. Industrial held steady, while hotels showed fresh signs of life.

The LightBox Take: July’s CRE deal flow points to strong market momentum, but August data will be especially telling as a sign of how the fall transaction season is taking shape. With economic signals flashing mixed on jobs, consumer spending, and inflation, the next LightBox CRE Activity Index will provide critical insight into market momentum. If September brings the first interest rate cut of the year or trade clarity, it could set the stage for a stronger fourth quarter for CRE transactions.

Hyundai Motor Group has increased its U.S. investment commitment to $26 billion over 2025–2028, up from the originally announced $21 billion. The expanded investment includes a groundbreaking steel mill in Louisiana, a robotics hub with 30,000 units of annual production capacity and expanded automotive manufacturing—including its massive Metaplant America campus in Georgia. This surge comes amid a broader wave of automaker investment in U.S. production. General Motors recently unveiled $4 billion in U.S. factory upgrades, signaling a return of some vehicle production from Mexico and bolstered EV and gas-powered capacity. Meanwhile, Stellantis announced over $5 billion in domestic investments, including a revamped assembly plant in Illinois and broader facility expansions. Hyundai’s investment points to a shift in global manufacturing—driven by trade policy, incentives, and reshoring strategies—and signals opportunity for industrial CRE. On the ground, this translates to demand for automotive-aligned warehouses, robotics-ready production space, logistics hubs, and supplier-oriented land. 

The LightBox Take: The Hyundai’s $26 billion U.S. bet, alongside major commitments from GM and Stellantis, highlights a renewed wave of automotive-driven CRE demand—especially in industrial, manufacturing, and logistics sectors. These automaker investments are reshaping regional real estate markets, creating opportunities for developers and landlords near plant sites, supplier zones, and infrastructure corridors. As policymakers drive reshoring and industrial investment, markets aligned with auto clusters and EV ecosystems stand to benefit most. For CRE professionals, targeting auto-aligned industrial nodes and upskilling for robotics-capable space could yield stronger leasing and development pipelines in the years ahead. 

Section 1031 exchanges remain one of CRE investors’ most powerful tax strategies, but zoning missteps can quickly turn them into costly traps. While the IRS requires strict adherence to identification and closing deadlines, local zoning rules dictate what can actually be built or operated on a property, often independent of federal tax rules. The result: a property may qualify for like-kind status under §1031 but still be economically useless if zoning blocks intended operations. Two case studies in a recent LightBox blog illustrate the risk. In one, an investor swapped into a “commercial” property only to find it zoned exclusively for office and retail, making warehouse use impossible. In another, a multifamily developer lost tax deferral when rezoning delays pushed approvals past the 180-day deadline.

Both scenarios highlight how zoning blind spots can wipe out millions in deferred gains, saddle investors with non-performing assets, and disrupt financing relationships. To avoid such pitfalls, the blog recommends integrating zoning due diligence from day one, identifying backup properties, considering reverse or improvement exchanges, negotiating contracts with zoning contingencies, and collaborating with Qualified Intermediaries, tax advisors, and land use experts.

The LightBox Take: Zoning can make or break a §1031 exchange. July’s blog highlights how overlooked land use rules can derail even tax-compliant deals, leaving investors with stranded assets and heavy tax bills. For CRE professionals, zoning diligence should sit alongside tax planning in every exchange strategy. With municipalities tightening land use rules and timelines clashing with rigid IRS deadlines, investors who build zoning into their early due diligence, supported by expert reports and flexible exchange structures, will safeguard tax benefits and unlock long-term asset value.

Two of the country’s most recognizable office complexes are hitting the market, highlighting ongoing stress in regional office markets even as New York City offices see renewed momentum. In Atlanta, the landmarked Peachtree Center, a six-tower, 2.5 million-square-foot complex connected by sky bridges, has been listed for sale after years of dwindling tenancy. Once heralded in the 1960s and ’70s as “a city within a city” and placed on the National Register of Historic Places in 2018, the complex now faces vacancy rates ranging from 8% to 74%. Anchored in the city’s hotel-convention district, Peachtree Center has seen its fortunes fall alongside the foreclosure sale of the nearby Hilton Atlanta. JLL is marketing the asset, which carries a public appraisal of $121 million, as “likely to trade at a discounted basis.” 

Meanwhile in Philadelphia, Centre Square, the city’s largest office property, is also on the selling block. The 1.76 million-square-foot, two-tower complex sits across from City Hall but is just 36% occupied, down from 63% earlier this year. Backed by a $375 million CMBS loan now in distress, the property is expected to sell for little more than $100 million. CBRE is marketing it as a candidate for conversion to mixed-use residential, retail, or hospitality. 

The LightBox Take: The listings of Peachtree Center and Centre Square Philadelphia highlight how even landmark properties are not immune to the post-pandemic office reset. Both assets, massive in scale but struggling with high vacancies and debt pressure, are poised to trade at steep discounts, in line with the widening gap between book value and market reality for many CBD office transactions this year. For CRE investors and developers, these listings represent a new phase in the distressed office cycle: prime opportunities for adaptive reuse. With demand shifting toward housing, retail, and hospitality, conversions of iconic towers could become defining plays in reshaping downtown cores.