The latest Consumer Price Index report from the Bureau of Labor Statistics wasn't the most glowing. As Nationwide Chief Economist Kathy Bostjancic wrote in a note, "Despite the core CPI reading coming in at consensus expectations, up 0.3% in September, the breakdown of the core reading shows that the decline was led by the ongoing pullback in core goods prices, while core services still look buoyant."

"Total core services were up 0.6% and the super core services reading is also up 0.6 – the highest since December- and the year-on-year rate slowed only slightly to 3.8% from 3.9% core super core," she added. "The 3-month annualized rate for super core accelerated to 4.8% from 2.3% in August and the 6-month annualized rate ticked up to 3.1% from 2.7%."

But while that might keep the Fed hawkish, it's still wary. " We believe it's a coin flip as to whether or not the Fed raises rates on 11/1 because the Jobs number on Friday (10/6) and the inflation data this week were both higher than expected, but also because the Fed is also worried about tightening too much, and you could see in the Fed minutes yesterday that they see risks balanced from both raising rates or leaving rates unchanged (e.g. threatening the economic expansion or allowing inflation to run too hot)," Chris Zaccarelli, chief investment officer for Independent Advisor Alliance wrote in a note.

"Typically, an economic environment characterized by positive economic growth, an incredibly tight labor market, slowing inflation, and the prospect for lower interest rates would represent a clear positive for the commercial real estate (CRE) market," Severino writes. "The upshot is that inflation should continue to slow over the balance of the year as the lagged decline in shelter costs filter through to the major inflation indexes. Inflation will likely still sit above the Fed's target rate by the end of the year, but we expect it to draw closer."

However, even not raising rates, the "Fed's short-term agenda is superseding" the tight labor market, positive economic growth, slowing inflation rates, Severino notes. "Until the market receives clearer direction from the Fed, it will remain in a holding pattern, with market participants keen to avoid making a mistake. Already, several key transaction-oriented firms are pushing off forecasts for a meaningful recovery in their businesses (both capital markets and leasing) to late 2023 if not 2024."

And that means CRE will have to wait for bluer skies for now.