Caution is the key theme emerging from a July survey of CRE professionals by LightBox, even as they hold on to some optimism that the second half of 2025 will be better than the first.
“Participants are staying disciplined. This is a market driven by math, not mood,” commented Manus Clancy, head of data strategy. The key, he added, is whether assets can be underwritten with confidence.
Respondents included 237 professionals across investment, brokerage, appraisal and environmental due diligence. Of these, 76% expected deal activity to either increase (42%) or hold steady (34%) for the rest of the year.
“Most respondents avoided the extremes, neither strongly optimistic nor deeply pessimistic. Instead, responses clustered in the middle, anticipating modest gains, slight declines, or stability, reflecting the high level of uncertainty,” the report found. On a scale of 1 to 100, respondents rated current CRE sentiment at 48, with a third more optimistic and 35% less optimistic about market conditions.
There was disagreement about whether prices had hit bottom. Some 40% believe prices have stabilized, but 60% still think a further fall is possible. Narrowing bid-ask spreads and higher multifamily and industrial transaction volumes could improve clarity.
Distress remains a challenge, especially for urban office properties. “Distress is not yet widespread, but signs are emerging. 40% of respondents are starting to see localized increases,” the survey noted, adding that there have been fewer distressed opportunities than expected so far. Loan extensions have delayed widespread workouts, but more distressed properties could be up for grabs by the end of the year as a backlog of maturing loans hits the market.
Investors were most drawn to the industrial, multifamily and retail sectors. However, 56% of brokers and investors also saw strong potential in niche asset classes like data centers and life sciences.
“While CRE capital is still constrained, expectations for modest rate cuts and improving pricing clarity could support increased lending and investment activity heading into Q4,” LightBox said. It noted that the lack of movement on interest rates is holding up deal flow more than tariffs, even though duties are emerging as a growing risk. “High rates are slowing down improvement in CRE pricing clarity. Any hope hinges on rates coming down.”
Nevertheless, more than 70% of brokers and investors said they were likely or very likely to pursue new transactions in the second half of 2025, provided current market conditions hold.
“This is a strong sign from an industry bracing for ongoing uncertainty but still hopeful about pricing clarity, modest rate relief, and renewed lending momentum,” the report stated.
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