The LightBox Signal: Our Weekly Analysis of the Top Headlines

In a move that surprised no one, the Federal Reserve issued another 25-bps cut, though dissent within the Committee reached its highest level since 2019. Powell’s remarks leaned dovish, emphasizing labor market softness and signaling that further cuts may be needed to avoid an employment-driven downturn. Markets welcomed the tone, but policymakers signaled little appetite for further cuts, projecting at most one in 2026 and another in 2027. With Powell’s term ending soon, the path ahead could hinge more on his successor, likely to take a more rate-friendly stance, than on last week’s decision.

LightBox Take: The cut offers modest relief but doesn’t shift CRE out of its higher-for-longer reality. Floating rate borrowers may benefit, but lender caution and volatile long-term yields continue to limit deal activity. So, while the rate cut was a positive for equities markets, the effect on CRE isn’t so clear and might not be for many months. This means that borrowing costs will remain elevated longer than many CRE owners hoped.

San Diego’s downtown office market was dealt a major blow as Irvine Company completed a two-year exit, selling its remaining towers, some at more than 50% discounts. Downtown vacancy has surged to 35.6% in San Diego, far exceeding surrounding submarkets like La Jolla and UTC. While markets like New York and San Francisco are seeing record office trades, San Diego remains sluggish. LightBox ScoreKeeper, which tracks pre-transaction environmental due diligence activity across all geographies and property types, shows San Diego down 9% YoY versus 14% growth nationally through November.

LightBox Take: The ScoreKeeper trend points to a metro struggling to attract capital from investors. In the office sector as pricing resets and vacancy peaks, 2026 could bring renewed interest from opportunistic investors seeking value plays and repositioning opportunities, particularly for strategies focused on modernizing office space to attract tenants seeking flexible, amenitized environments.

As 2026 approaches, major industry forecasts from the likes of Deloitte, Colliers, Avison Young, and Cushman & Wakefield are converging around a cautiously optimistic outlook. After several years of elevated rates, pricing uncertainty, and limited deal flow, analysts expect the coming year to bring continued stabilization rather than dramatic swings. Many of the crosscurrents that defined 2024–25 like tight capital markets, scarce listings, and shifting valuations appear to be settling into a more predictable pattern where fundamentals matter again. Lending markets remain active across the risk spectrum, though equity availability lags as institutions wait for capital to recycle. The consensus: 2026 is shaping up as a transition year with more clarity, but not without risk and uncertainty.  

LightBox Take: Forecasts for 2026 lean positive, but the common thread across all of them is uncertainty. CRE teams that build flexible model multiple scenarios, and revisit them often as conditions shift will be best positioned to chase new opportunities while managing risk.

The retail landscape is undergoing a reshuffling as expanding value-focused chains move into spaces vacated by struggling retailers. Brands such as Dollar General, Dollar Tree, Aldi, Burlington, and Tractor Supply are driving the largest share of new openings, capitalizing on consumer demand for affordability and their own strong balance sheets. They are backfilling vacancies left by bankrupt or downsizing chains including Big Lots, Rite Aid, Party City, and Joann. Meanwhile, many smaller retailers and restaurants continue to close, pressured by higher operating costs and limited pricing power, putting closures on track to outpace openings for a second consecutive year. This uneven performance underscores the fact that retail is far from a one-size-fits-all sector.

LightBox Take: At last week’s ICSC conference, owners and retailers alike described current conditions as the most exciting environment for retail in years, driven by favorable supply dynamics, demolished obsolete space, and aggressive expansion plans from grocers, value chains, and even upscale brands testing smaller formats. Still, success is highly location- and tenant-dependent. Centers anchored by strong discount grocers, value chains, and service-oriented tenants are thriving, while properties in slower-growth locations or tied to weaker anchors face ongoing challenges.

Banks are accelerating the modernization of appraisal workflows as credit pressures intensify, and regulators demand faster, more defensible data. In a recent blog, LightBox explained its new extraction platform, first launched with a curated 150-field dataset, has now expanded to include full sales and land comps, adding roughly 40 data points per comp and pushing total fields past 300 per appraisal. This shift gives reviewers instant visibility into which comps were selected, how they compare to recent appraisals, and where inconsistencies may warrant deeper scrutiny. More importantly, structured appraisal data now flows directly into credit, risk, and regulatory functions, improving trend analysis, model inputs, and portfolio oversight. With rent comps and operating expenses arriving in early 2026, banks are on the cusp of true appraisal intelligence.

LightBox Take: This type of structured data is a powerful example of how technology can unlock appraisal data that was historically trapped in PDFs, unstructured, unsearchable, and unusable. By converting these reports into consistent, machine-readable datasets, banks can track trends, compare assumptions, benchmark comp selection, and feed cleaner inputs into models across credit and risk. This is the future of appraisal intelligence: freeing data that already exists but has never been available for true analytics.