Commercial real estate got off to a running start in January this year with more activity, more lending and $24.1 billion in deals, including 49 exceeding $100 million. Together, they helped propel the LightBox CRE Activity Index to 110.7, up 28% from 86.7 in December.
The Index is an aggregate measure of momentum across property listings, appraisals, and environmental due diligence. The January report "reflects strengthening capital deployment, improving lender participation, and rising transaction velocity," it stated – despite concerns about low job growth and uncertainty about the Fed's inflation and interest rate policy.
Three factors helped boost the Index. Average daily listings rose 81% from December levels as more assets were put on the market and more investors came forward. Even though Phase 1 environmental site activity (ESA) slipped 4% from December levels, it was still 17% higher than in January 2025. Similarly, though there were 5% fewer appraisals than in December, there were still 40% more than in the previous January.
These developments "point to a market stabilizing beneath the surface, even as broader economic signals remain uneven," the report said. The prospect for CRE lending was especially hopeful, it noted.
LightBox cited factors like Q4 bank earnings signaling resilient credit quality, active refinancing and selective loan growth. CMBS issuance remained near the highs of prior years. A 20.5% increase in CRE originations and refinancings this year – possibly close to pre-Covid levels – was predicted by the Mortgage Bankers Association. Refinancing – including payoffs at maturity -exceeded expectations. "Multifamily lending caps at Fannie Mae and Freddie Mac have expanded capacity, and rising property listings point to renewed capital deployment, supporting a constructive lending outlook for 2026," the report stated.
At the same time, it said higher rates, labor shortages and rising material costs were causing construction to pull back, except in the case of data centers, where a 23% increase in spending is projected. Furthermore, industries are at different stages of the recovery process, with office and retail stabilizing, industrial and multifamily working through supply imbalances, and healthcare and data centers benefiting from powerful demographic and AI tailwinds.
"Across asset classes, constrained new supply is creating selective value-add opportunities, while capital flows toward modern, high-quality assets in growth markets," LightBox stated.
Another sign of recovery was the robust deal flow that began in December and continued into January.
"After 199 transactions above $50 million closed in December, January recorded 145 such deals totaling $24.1 billion. Overall, 1,163 properties traded for $24.1 billion, compared to 1,334 deals totaling $32.9 billion in December. Importantly, 49 nine-digit transactions and 96 deals between $50 million and $100 million underscore continued institutional engagement across asset classes," according to LightBox's tally.
But it warned that some investors and lenders remain cautious because of broader economic volatility. The possibility that private equity firms could face losses in corporate lending portfolios was another concern. It cautioned that rigorous data analysis and local market insight would be needed to fit each metro area and property type. In addition, deepening bidding pools across product types and more diversified buyers were increasing pressure on pricing, requiring underwriting discipline coming out of the down cycle.
"While a sharp surge in transaction volume or aggressive repricing appears unlikely, the market is positioned for measured, incremental improvement building on the foundation laid in 2025," LightBox concluded.
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