By: Head of Data Strategy at LightBox, Manus Clancy
Last month, we noted that March ended with investors on tenterhooks. U.S. stocks were off sharply in March leading to a great deal of investor angst.
Little did we know at the time that the unease would get considerably worse before it got better.
Liberation Day Triggers Short-Lived Market Flurry
The April 2nd “Liberation Day” announcement of the actual tariff levels turned investor sentiment from nervous to panicked. The sharp decline in the stock market in the wake of the tariff announcement was the first sign of panic. What began as a selloff quickly escalated into a rout, with volatility spiking and major U.S. stock indexes plunging over the following days.
For a brief moment, investors rushed into the perceived safety of U.S. Treasuries, driving long-term yields sharply lower. But that flight to safety was short-lived. Rumors of foreign retaliation—potentially in the form of boycotting U.S. debt—began to circulate. At the same time, hedge funds rapidly unwound basis trades, triggering a swift reversal. Yields surged. In hindsight, “safe” U.S. bonds were anything but in early April 2025.
The markets quickly reversed course over the second half of April. A 90-day timeout, carve-outs for select industries, and White House assurances that trade deals were on the horizon proved to be just the tonic for rattled investors. Stocks rebounded over the final two weeks of the month, volatility retreated, and yields on long-dated Treasuries edged lower.
So Where Does That Leave Us?
A trader I spoke with had this astute observation: “Don’t forget, we are only a tweet away from heaven or hell.”
The comment was a pointed reminder of just how reactive the market has become. While momentum is on the side of stocks and bonds following two brutal weeks, flow can change in a heartbeat. A hawkish tweet from the President or hostile remarks from China could certainly put investors back on their heels. On the other hand, signals that a deal is close could help the markets continue to heal.
We’re heartened by how the CRE markets have held up in recent periods of stress. In 2020, financial markets froze at the outset of COVID—yet were functioning again just a few months later. For those expecting assets at a 30% discount, the big “For Sale” signs never materialized. When hostilities began between Russia and Ukraine, lenders grew jittery and CRE activity slowed. But that deceleration had more to do with rising inflation than geopolitical fears. After the failure of Silicon Valley Bank, spreads surged and lending activity at large U.S. regional banks pulled back sharply. Still, the CRE markets never shut down completely—as they did in 1990 or 2008. For that, we can be grateful.
That takes us to today, where we can hope the current Tariff Tantrum ultimately slows the CRE spigot—but doesn’t shut it off. The past few years have shown that even in moments of severe disruption, the market has proven more resilient than many expected. Let’s hope that holds true again.
Early indications are positive. Both sales transaction activity and property sales listings tracked by LightBox ticked up in late April after a modest mid-month slowdown. That is an encouraging sign.
Skeptics may argue that many of the deals closing in April were already too far along to unwind after the April 2 tariff announcement—and that’s a fair point. But we’re now four weeks into the new tariff era, and the longer the CRE wheels stay on, the more likely that confidence will return to the market. That renewed confidence could translate into tighter spreads, more active lending, and a gradual return to normalcy. Fingers crossed.
Signs of Life in the Hotel Market
One of the laggards in the CRE recovery since activity began rebounding in mid-2024 has been the hotel sector—particularly high-end, high-priced assets, where sales have been few and far between. But April brought early signs that this may be changing. Global hotel investment volume is projected to accelerate in 2025, with JLL forecasting a 15% to 25% increase over 2024, driven in part by upcoming loan maturities and long-delayed capital expenditures.
Notable April deals include the Hilton Atlanta Airport and the Dallas Fairmont, both of which sold for over $110 million. The Atlanta transaction marked a 10% gain over its 2019 sale price, while the Dallas Fairmont—last sold in 2011 for $69 million—represents a roughly 60% appreciation.
Trophy Offices Still Turning Heads
Surprisingly, six office properties traded for more than $100 million in April. While several of those deals came at sizable discounts to previous sale prices, the fact that investors are still writing big checks—for assets in markets like Boston, Los Angeles, Washington, D.C., and San Francisco—are encouraging signals that capital is available for the right opportunities. It’s a clear reminder: even in a challenged sector, trophy assets in prime locations can still command serious investor interest.
Momentum or Mirage? May Will Tell
May will be a pivotal month for the CRE market. While many of April’s closings were likely too far along to be disrupted by the April 2 tariff announcement, the LightBox CRE Activity Index tells a more encouraging story. The Index rose to 109 in April, its highest reading since June 2022 and the third triple-digit reading in nearly three years—driven by a 7% increase in appraisal volume and a 2% rise in listings. While the pace of growth slowed compared to earlier in the year, my colleague Dianne Crocker noted that “even amid volatility, we’re still seeing momentum in the movement of assets into the market.”
May will test whether April’s momentum was real or just residual. If the deals keep coming, lending holds steady, and the Index doesn’t flinch, we’ll know the market can take a punch—and keep moving.
And don’t forget: Memorial Day is more than just a long weekend—it’s the unofficial start of summer, when deal velocity often fades as vacations kick in. If activity holds through month’s end, that’ll say even more about this market’s staying power.
For more insights from Manus Clancy, subscribe to LightBox Insights and tune in to the CRE Weekly Digest Podcast, where he, along with Martha Coacher and Dianne Crocker, shares real-time data, market commentary, and key signals to watch across the CRE landscape.
Subscribe To Insights
Be the first to get the latest news, updates and insights from LightBox.
