Investors in commercial real estate are actively seeking opportunities now that pricing has stabilized, even as they remain vigilant for ongoing risks in an uncertain economy.
That’s the conclusion LightBox has drawn from the June reading of its CRE Activity Index, which climbed to 113.9 – the highest reading this year and its best performance since May 2022. The finding also brings a sigh of relief after the index slipped from 109 in April this year to 105.5 in May. That, LightBox said at the time, was “a clear sign that early-year momentum is beginning to taper amid rising economic and geopolitical uncertainty.”
This month’s index reading instead paints “an encouraging picture,” suggesting that May’s reading was just a hiccup. The June index is 21% higher than year-ago levels and 8% above May, indicating that the market is not simply holding on but recalibrating and setting the stage for a stronger second half of 2025.
Recommended For You
The Index measures the aggregate daily activity across three core CRE functions: environmental due diligence, commercial property listings and lender-driven appraisals.
For the sixth consecutive month, brokers brought more commercial property listings to market. Phase one environmental site assessments rose 10%. Lender appraisals increased 19% month-over-month.
“While uncertainty remains elevated, from tariff fallout to the unknown timing of interest rate cuts by the Federal Reserve, deal-making and the critical functions that support it remain strong,” the report stated. “CRE market activity continues to strengthen even amid wild fluctuations in the 10-year Treasury yield and weakening market sentiment by businesses and consumers.”
The broadening of debt capital sources is another cause for optimism, providing liquidity for new loan originations as well as the growing volume of maturing loans. Not only banks but also debt funds and CMBS lenders are increasing their activities. However, loans are taking longer to close due to increased due diligence and tighter underwriting standards. Non-disclosure agreements by interested investors and bidding activity continue to rise, “indicating growing confidence and a broader buyer pool.”
Money is flowing most actively to multifamily and industrial assets. Still, retail, which faces the most pressure from tariffs, is also of interest. Select office properties are too, as leasing volumes increase in major metropolitan areas.
Still, difficulties remain. The future direction of interest rates is a big concern; a rate cut could trigger a spurt in CRE activity and a further rise in the Index. Other concerns are a softening in consumer spending and a housing market that shows signs of stress. The risk of inflation remains, and the impact of tariffs on the labor force is yet to be determined.
Nevertheless, the index suggests a healthy stream of deal closings in the months ahead. “CRE investors are still active, albeit with eyes wide open,” the report said.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more inforrmation visit Asset & Logo Licensing.
