CRE This Week - What's impacting the United States market?
July 21, 2025 - US commercial real estate news, macroeconomic indicators and market analysis.
Week of July 21, 2025
Welcome to the latest edition of CRE This Week, curated by Altus Group’s US research team.
Our team has handpicked pertinent and noteworthy market indicators, articles, original research, and significant industry dates that are critical to the US commercial real estate sector. We understand that your time is valuable, so we're excited to deliver research that helps you stay informed and saves you some time each Monday morning.
For more key economic indicators that matter to commercial real estate, see Top Indicators by Major Asset Type.
Economic print
Macro economic factors impacting CRE
Consumer Price Index and Producer Price Index
The U.S. Bureau of Labor Statistics released the Consumer Price Index (CPI) and Producer Price Index (PPI) for June 2025 on July 15 and July 16, respectively. Headline CPI rose 0.3 percent on the month and 2.7 percent on the year. Core CPI, which excludes food and energy, increased 0.2 percent in June and was up 2.9 percent annually. PPI for final demand was flat, unchanged on a monthly basis in June, and was 2.3 percent on an annual basis. On a month-on-month basis, the PPI for final demand goods increased by 0.3 percent, and the index for final demand services declined by 0.1 percent.
Neither June's CPI nor PPI data releases set off alarm bells, but rather revealed initial signs of tariff-related price pressures flowing through the system. June's CPI data showed that categories more exposed to tariffs, like apparel (+0.4%) and household goods (+0.55%), saw higher increases, while the overall index marked the largest monthly increase since January and the highest annual increase since February. The theme of goods inflation was also seen in the PPI data, which also showed signs of producer margin compression. The mixed inflation signals in June suggest continued Fed caution on near-term interest rate cuts, which in turn keep pressure on CRE financing costs and lower transaction volumes. However, recent CRE price stability, supported by steady operating performance, continues to support moderate optimism for the asset class and capital outlook.
The U.S. Census Bureau released its Advance Monthly Sales Report for Retail and Food Services on July 17, showing that U.S. retail and food services sales rose 0.6% month-over-month in June to a seasonally adjusted $720.1 billion, rebounding from May’s 0.9% decline. Year-over-year, total receipts were up 3.9%. Retail trade sales rose 0.6% on the month and 3.5% annually, while sales excluding motor vehicles and gasoline climbed 0.6% and 4.1%, respectively.
The S&P 500 and Nasdaq reached record highs following the release, as investors welcomed signs of resilient consumer spending. June’s rebound also offers reassurance to property owners that the consumer continues to support retail demand and occupancy. While the data is not adjusted for inflation, several categories likely posted real gains: food services and drinking places led with a 6.6% year-over-year increase, reinforcing demand for experience-driven retail, while nonstore retailers – primarily e-commerce – rose 4.5%, highlighting ongoing strength in logistics and warehouse demand.
The U.S. Census Bureau released its Monthly New Residential Construction Report for June on July 18. U.S. housing starts rebounded to a 1.32 million units at a seasonally adjusted annual rate in June, up 4.6% from May but still 0.5% below last year’s pace. Single-family starts slid 4.6% to 883,000 while permits for that segment dropped 3.7% to 866,000. Overall permits inched up just 0.2% month-over-month to 1.4 million, though still 4.4% below June 2024. Completions plummeted 14.7% month-over-month and 24.1% year-over-year to 1.31 million, sharply curbing near-term supply.
June data cements the story of multifamily supply contraction: multifamily permits eked out a fourth straight annual gain (+2.1% year-over-year) but off a severely reduced 2023-24 base, and multifamily starts – though up 25.8% year-over-year – remain volatile after last year’s slump. Units under construction fell 19.8% annually and completions cratered 39.8%, the steepest annual drop since September 2021. For multifamily investors, a thinner delivery schedule should ease near-term competitive pressure on existing apartments and bolster rent growth.
University of Michigan Consumer Sentiment
The University of Michigan released the preliminary results of the Consumer Sentiment Index for July on July 18. The Index ticked up to 61.8 from 60.7 in June, extending its winning streak to five straight months and marking the strongest reading since February. Under the hood, the Current Conditions sub-index rose to 66.8 while Consumer Expectations edged up to 58.6, though still leaving overall confidence well below its long-run average.
Consumers think inflation will cool – one-year expectations just slipped to 4.4% and five-year to 3.6% – and that optimistic outlook is lifting sentiment and, for now, keeping wallets open. Expectations aren’t the same as actual price moves, but they still matter for commercial real estate: lower perceived inflation and resilient spending sustains cash-flows at retail, logistics, and hospitality properties. If realized inflation fails to follow expectations lower, however, financing costs could stay elevated and temper the rebound in investment activity.
News
News to know
Builders’ mortgage aid lifts home prices, Morgan Stanley says | Bloomberg, July,14, 2025
Homebuilders are increasingly offering below-market mortgage rates (via interest rate buydowns) to attract buyers, a move that has helped stabilize and even boost new home prices, according to Morgan Stanley. Builders are better positioned than individual sellers to offer rate incentives because of scale and financing flexibility. While the broader resale housing market faces affordability challenges due to high mortgage rates, new home prices have remained resilient. Morgan Stanley notes that builder incentives are effectively masking affordability concerns and that these “artificial” price supports could persist as long as builders continue the strategy.
New York City’s hotel market is envy of the country | Wall Street Journal, July 15, 2025
New York City’s hotel market is outperforming the rest of the U.S., with high occupancy rates (82%) and strong revenue per available room ($239), driven by resilient tourism, robust business travel, and limited new hotel supply due to stricter construction laws and Airbnb enforcement. Despite a national pullback in travel amid rising costs and tighter visa policies, NYC continues to attract both domestic and international visitors, with marquee attractions seeing record attendance. However, recent declines in occupancy and RevPAR, coupled with rising labor costs and fewer migrant shelter contracts, pose risks to sustained growth. Still, upscale and boutique properties remain confident, reporting consistent year-over-year gains.
Manhattan class A buildings are dominating office sales in 2025 | Commercial Observer, July 15, 2025
Manhattan’s Class A and trophy offices dominated in early 2025, accounting for 74% of the $3.2B in sales and 82.5% of leasing activity, per Ariel Property Group. Demand is driven by top-tier amenities and strong tenant interest from finance, law, and tech firms. In contrast, Class B and C assets made up most transactions but only 26% of dollar volume. With high vacancy and falling rents, owners are eyeing conversions, boosted by zoning reforms and incentives. Ariel’s Shimon Shkury called it a “turning point” as capital flows into both premium offices and adaptive reuse projects.
Construction costs to ‘go up radically,’ Prologis CEO says | Bloomberg, July 16, 2025
Prologis CEO Hamid Moghadam says looming mass-deportation policies are deepening warehouse-labor shortages and will push construction costs “up radically,” forcing many tenants into uneconomic automation. The squeeze, he adds, makes existing Prologis facilities more valuable because replacement costs keep climbing. Even with the pressure, Prologis beat Q2 FFO estimates and held occupancy near 95%, lifting the shares 1.4% on the day.
Multifamily rent growth falls short of pre-pandemic levels in H1 | GlobeSt, July 17, 2025
Multifamily rent growth remains subdued, with average U.S. rents rising just 0.9% year-over-year to $1,749 in June, according to Yardi Matrix’s June 2025 report. Growth was strongest in Midwest cities like Chicago and Columbus, while Sun Belt and Mountain West metros such as Austin and Denver posted declines. First-half rent gains (1.2%) fell short of pre-pandemic norms, though Yardi notes this still reflects resilient demand amid record supply, with over 250,000 units absorbed through May. Occupancy held steady at 94.6%, and build-to-rent single-family homes saw modest 0.7% annual rent growth.
Delinquencies rise in June for Fitch-rated CMBS | ConnectCRE, July 17, 2025
Fitch Ratings reported that the U.S. CMBS delinquency rate rose to 3.10% in June 2025, up from 3.08% in May, driven primarily by new office delinquencies, which made up 53% of the $2.01 billion in newly delinquent loans. Despite this, resolution volume increased to $1.5 billion, and $8.9 billion in new issuance across 11 deals helped offset the impact.
Starwood to buy $2.2B net lease firm from Brookfield | Bisnow, July 17, 2025
Starwood Property Trust is buying Brookfield’s Fundamental Income for $2.2B, picking up a fully occupied 12 M SF, 467-property net-lease portfolio that spans 44 states and serves 92 tenants across 56 industries. The assets deliver average 2.2% annual rent escalations and carry a 17-year weighted average lease term. Starwood will assume $1.3B of existing facilities (including $900M of ABS debt) and fund the remainder with cash, debt, and equity; Fundamental’s 28-person team will move over when the deal closes next week.
Research Spotlight
Catch the latest insights from the Altus team
Podcast | Beyond gut feel: The power of data analytics in modern CRE investing
Ryan Severino, Chief Economist and Head of Research at BGO, sat down with Omar Eltorai and Cole Perry to discuss how data science is transforming commercial real estate investing. From outperforming rent growth projections in Las Vegas to forecasting macroeconomic shifts with machine learning, Severino takes us through the power and challenges of blending traditional insights with modern analytics. This is a must-listen for CRE professionals navigating today’s increasingly data-driven landscape.
Important dates
Upcoming data releases and events
Data releases (Times in EST)
Wednesday, July 23
10:00AM: Existing Home Sales, Data Release
Thursday, July 24
9:45AM: S&P Flash PMI, Data Release
10:00AM: New Home Sales, Data Release
Friday, July 25
8:30AM: Durable Goods Orders, Data Release
About our research team
Omar Eltorai
Research Director
Altus Group
Omar Eltorai is a Research Director at Altus Group. With more than a decade of experience in the industry in investment management and financing roles,
Omar's focus is on macro, capital and market trends affecting the US CRE market. Beyond regularly authoring articles and reports, his commentary and analysis has been featured in various media publications, including: Wall Street Journal, Globe Street, and Yahoo! Finance.
Cole Perry
Associate Director of Research
Altus Group
Cole Perry is a Associate Director of Research with Altus Group's Research team. In this role, Cole delivers key insights into macroeconomics, capital markets, and the broader commercial real estate sector.
Cole boasts a rich background in Commercial Real Estate analytics with previous roles at CompStak and Brixmor Property Group. He holds dual M.S. degrees from Columbia University in Urban Planning and Real Estate Development.
Disclaimer: The opinions expressed in this newsletter are solely those of the authors and are not endorsed by Altus Group Limited, its affiliates and its related entities (collectively “Altus Group”). This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice or services of Altus Group. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy, completeness or reliability of the information contained in this publication, or the suitability of the information for a particular purpose. To the extent permitted by law, Altus Group does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. The distribution of this publication to you does not create, extend or revive a client relationship between Altus Group and you or any other person or entity. This publication, or any part thereof, may not be reproduced or distributed in any form for any purpose without the express written consent of Altus Group.
Resources
Latest insights
