Avoid the FOMO: The CRE News You Need to Know—August 11

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

The affordable housing sector got a million-dollar boost this week as the Federal Housing Finance Agency (FHFA) doubled the annual cap on Low-Income Housing Tax Credit (LIHTC) investments for Fannie Mae and Freddie Mac to $2 billion each annually. The move could deliver $4 billion per year to support affordable housing, with 50% targeting underserved markets and 20% reserved for rural communities. At the same time, conversations around privatizing the two mortgage giants are picking up again. President Trump met with CEOs from Citigroup and Bank of America to explore taking the GSEs public, potentially ending their post-2008 conservatorship. Since the Great Financial Crisis, Fannie and Freddie have accounted for 35% to 60% of all multifamily lending, up from roughly 20% before the crisis. Privatization could spark innovation and reduce taxpayer risk but may also drive up borrowing costs and reduce access to capital for affordable housing. “The two giants own roughly 50% of the multifamily finance marketplace, so movement here shows up everywhere,” noted Mike Flood, president of MF Policy Advisors, in his article What in the DC is Going On: Trump’s Next Move on GSE Privatization. “The Administration wants the GSEs to exit, but they also do not want to cause disruption to an already costly housing market.”

The LightBox Take: Fannie Mae and Freddie Mac are essential to multifamily housing finance, providing liquidity for workforce and affordable housing projects, often on terms that private lenders can’t match. Privatization would mark a seismic shift in U.S. housing finance, potentially boosting competition but also raising borrowing costs and limiting access to capital. That, in turn, could stall new developments and constrain the supply of affordable rental housing. Given the market’s sensitivity to interest rate shifts, any exit from conservatorship is likely to be gradual and carefully managed, particularly as demand for affordable housing is at historic highs and the inflationary impact of tariffs on building materials and construction costs is just beginning to take hold.

The LightBox CRE Activity Index posted a strong July reading of 112.4, just 3% lower than June’s high-water mark of 115.6, marking the sixth consecutive month above the 100-point baseline. Year over year, the Index is up 13%, reflecting continued momentum despite new economic crosscurrents. The Index aggregates daily activity across environmental due diligence (Phase I ESAs), commercial property listings, and lender-driven appraisals, drawing from more than 30,000 data points. In July, commercial property listings dipped slightly (down 7% from June but still +47% year over year), Phase I ESA volume held steady at near-peak levels, and lender appraisal volume surged 13% to its highest point of 2025. Capital remains accessible for stabilized assets, and transaction activity is climbing according to the LightBox CRE Transaction Tracker, which hit a 2025 high in July after an already-active June.

The LightBox Take: The strong July CRE Activity Index underscores a market still moving forward, bolstered by strong deal flow, improving access to capital, and greater pricing clarity. With the second half of 2025 underway, continued triple-digit readings signal solid fundamentals. Yet caution is warranted. Signs of labor market softening and uncertainty tied to new tariffs, especially on construction materials, could exert pressure on pricing. Yet if the Fed lowers interest rates at its September meeting, it could unlock new momentum. For now, the CRE outlook is bullish but measured.

After a quiet 2024, the latest data from the Mortgage Bankers Association confirms a notable rebound in commercial real estate lending. Commercial and multifamily mortgage originations jumped 66% year-over-year and 48% quarter-over-quarter in Q2 2025, with gains across most property types and capital sources. Investor-driven lenders led the surge with a 93% year-over-year increase, followed by life insurers (+72%) and GSEs (+59%). Depository lending more than doubled, signaling renewed confidence among traditional institutions. By asset class, industrial lending soared 102% quarter over quarter, while hotel activity was flat and office originations dropped 18%, reflecting ongoing concerns over risk and distress in the office sector. Supporting this trend, LightBox’s Q2 Appraisal Snapshot reported a 12% year-over-year increase in lender-driven appraisal volume, a key precursor to lenders’ loan originations and refinancing.

Despite Q2’s stronger volumes, the MBA cautions that any year-over-year comparisons are made against unusually low 2024 activity. Looking ahead, the lending sector is not without headwinds, including rising delinquencies, tighter credit, and a wave of maturing debt. Still, the Q2 bounce indicates meaningful re-engagement from both traditional and alternative capital sources. Meanwhile, the Q2 Senior Loan Officer Opinion Survey showed that while overall standards tightened slightly, large banks eased lending criteria and borrower demand improved, pointing to broader access to debt capital heading into the second half of 2025.

The LightBox Take: The 66% year-over-year spike in Q2 CRE lending marks a clear turning point, as investor-driven lenders, banks, and GSEs re-engage across sectors. It’s a sign that capital is returning to CRE, selectively but meaningfully. Reinforcing this trend, the uptick in the CREFC Sentiment Index suggests growing confidence that strong lending activity will continue into Q3.

According to the LightBox Midyear 2025 CRE Market Sentiment Survey, 40%  of CRE professionals believe CRE pricing has hit bottom, while 60% see further room to fall. In Los Angeles, the bottom could be nearing as Q2 office sales reached nearly $1.2B, more than double the same period in 2024. The rise in transactions, which included five deals over $100 million, was fueled by greater pricing transparency, a surge in distressed listings, and a broader pool of institutional investors in search of ROI. Nearly half of LA’s office inventory is considered economically unviable, according to Newmark, so opportunities are expanding for investors targeting overleveraged assets at deep discounts. While private buyers dominate, REITs and institutional players are gradually returning. Hybrid work, high vacancies, and refinancing hurdles continue to pressure owners, keeping the pipeline of distressed assets flowing

The LightBox Take: LA stands out as a cautionary case in a highly nuanced national office market. The recent $210-million sale of Brookfield’s 601 S. Figueroa tower at a 42% discount underscores the ongoing reset in LA’s CBD. In metros like LA, distress is being met with long-term upside and attracting opportunistic capital from REITs and other investors. Yet with a 24% office vacancy, LA’s recovery will likely lag stronger Sun Belt and suburban markets where fundamentals have already started to stabilize.

Meta is accelerating efforts to fund its $72 billion AI infrastructure buildout by putting $2 billion worth of data center land and development sites up for sale, aiming to monetize the real estate through third-party partnerships. As Meta pivots to raise capital, developers and investors are scrambling to secure land and power for AI-fueled data center campuses. Meta’s holdings, reclassified as “held for sale,” are worth $3.2 billion and expected to be offloaded within the year. CEO Mark Zuckerberg signaled Meta’s 2025 capex could top $100 billion, with spending overwhelmingly focused on data center infrastructure. Meta is also exploring external financing, including a proposed $30 billion data center fund, with discussions reportedly underway with Apollo, KKR, Brookfield, Carlyle, and Pimco. Meta operates 28 data center campuses and is developing new megaprojects in Wisconsin, Ohio, and a controversial 4-million-square-foot site in Louisiana. Combined with spending from Amazon, Google, and OpenAI, total Big Tech capex is projected to reach $400 billion this year. Soaring demand is straining resources: construction materials are up nearly 20%, and power access is a growing bottleneck.

The LightBox Take: As AI demand fuels a data center land rush, developers face more than a capital challenge. With $400 billion in Big Tech capex expected this year, data center development depends not just on where you build, but also on how well you understand parcel-level intel, access to critical power inputs, permitting data, and the importance of building community support.