CRE This Week - What's impacting the United States market?
May 19, 2025 - US commercial real estate news, macroeconomic indicators and market analysis.
Week of May 19, 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
Senior Loan Officer Opinion Survey
The Federal Reserve released its quarterly Senior Loan Officer Opinion Survey on Banking Lending Practices on May 12. The report provides significant details on lending related to construction, multifamily, and nonfarm nonresidential (commercial). The net percentage of banks tightening standards for lending was +11.1% for construction, +1.6% for multifamily, and +10.9% for commercial real estate. The net percentage of banks reporting stronger demand for lending was -6.3% for construction, -1.6% for multifamily, and -1.6% for commercial real estate.
The report also included responses to a supplementary set of questions on commercial real estate, a recurring feature each April. In Q1 2025, CRE lending standards remained tight overall. Large banks eased slightly on multifamily and construction loans, while smaller and foreign banks pulled back more broadly. Demand varied by institution size. Larger banks reported stronger appetite, but many smaller banks continued to see weakness, particularly in construction lending. Over the past year, most banks either held firm or tightened terms, with the most common changes being lower loan-to-value ratios and higher debt service coverage requirements. The drivers were familiar: concerns around pricing, vacancies, delinquency risk, and a more cautious regulatory environment. Office loans saw the most pronounced shift, as many banks tightened across all major categories in response to lingering uncertainty in the sector.
NFIB Small Business Optimism Index
The National Federation for Independent Business released its April Small Business Economic Trends Report on May 13, with the headline Small Business Optimism Index falling 1.6 points to 95.8. This marks the second consecutive month the index has remained below its long-term average of 98. Among the index components, 34% of owners reported current job openings, down 6 percentage points from the previous month. Only 18% plan capital outlays over the next six months, the lowest level since April 2020. A net negative 1% of owners expect higher sales in the next six months, a 4-point decline from March. Meanwhile, the net percentage of owners anticipating better business conditions fell 6 points to 15%, the lowest reading since October 2024.
Small businesses, a major source of demand for industrial, retail, and office space, are showing signs of hesitation amid rising uncertainty. While few export goods, many rely on imports, making them sensitive to shifting trade policy. The Uncertainty Index climbed to 92, well above the historical average, and that anxiety is likely to show up in real estate decisions. Many small firms appear to be pausing or delaying plans to expand their physical footprint. However, labor quality remains their top concern, but rising insurance costs and regulatory pressures are also contributing to a more cautious stance.
The U.S. Census Bureau released data on Advance Monthly Retail and Food Services for April on May 15. Sales rose 0.1% month-over-month and 5.2% year-over-year. Retail trade alone, however, fell 0.1% month-over-month but was up 4.7% from one year ago.
Retail sales showed a notable deceleration in April, signaling a pullback from consumers likely due to the April 2 tariff announcement. While China and the U.S. have since reached an agreement to de-escalate the trade war, the slowdown is still visible in several categories. Notably, grocery spending was flat, which, in real terms, represents a decline since the data is not inflation-adjusted. On a positive note, home improvement and restaurant spending saw increases. However, discretionary categories like apparel and sporting goods continue to show weakness. This shift in spending patterns suggests that investors in retail centers, particularly those lacking essential goods, may need to exercise caution moving forward.
News
News to know
NYC’s tallest tower leases its highest floors for the first time | Bloomberg | May 12, 2025
For the first time since its opening, One World Trade Center is leasing its highest floors, marking a milestone in Lower Manhattan’s ongoing office market recovery. The Durst Organization is marketing the penthouse space at up to $160 per square foot, aiming to attract finance or venture capital firms with sweeping 360-degree views and premium amenities. The 3.1 million square foot tower is now 95% occupied, with existing tenants like Conde Nast and Energy Capital Partners. While citywide office availability remains elevated, surging demand for trophy assets has tightened Midtown and boosted Downtown leasing, with Q1 activity in Lower Manhattan reaching its highest level since 2019, according to CBRE.
Rest of year isn’t looking good for retail-property market | Wall Street Journal | May 12, 2025
The retail property market’s recovery is losing momentum due to a wave of retailer bankruptcies, inflation fatigue, and uncertainty surrounding tariffs. Store closures outpaced openings in 2024, and early 2025 data shows net negative absorption of space, the weakest leasing quarter since 2020. While national retailers like Burlington and Five Below are still expanding, many tenants are pausing lease decisions, seeking concessions, or walking away. Shopping center owners report rising costs to backfill space and less leverage in negotiations. Although vacancy remains low and new development is limited, the rest of the year looks challenging for retail real estate.
Live Nation has signed on to lease a 5,300-seat entertainment venue at Atlanta's Centennial Yards, a $5 billion mixed-use development aimed at revitalizing downtown. The venue, expected to open in 2027, will be one of Live Nation’s largest indoor theaters and part of a broader strategy to anchor real estate with live entertainment. The development includes plans for housing, hotels, retail, and dining, with key elements scheduled for completion by the 2026 World Cup. Backed by a $1.9 billion public incentive package, the project has already delivered apartments, a brewery, and public space, although progress has been slow. Stakeholders hope Live Nation’s involvement will help attract foot traffic and accelerate investment in the area.
AFIRE’s Q1 2025 survey of institutional investors revealed a steep drop in confidence toward U.S. commercial real estate due to growing uncertainty over trade policy and geopolitical risks. Sixty-three percent of respondents had a negative outlook for cross-border investment in the U.S., up from 42 percent in late 2024. Concerns over tariffs and global tensions ranked highest among factors influencing investment decisions, followed by interest rates and inflation. Expectations for increased distressed asset opportunities also fell sharply. Despite this, investors still view the U.S. as relatively safe, with multifamily and industrial sectors most favored. Dallas, New York, Miami, Boston, and Atlanta topped the list of preferred metros. However, AFIRE cautioned that these rankings may shift following April’s market disruptions.
CRE lending climbs despite market jitters | Commercial Property Executive | May 15, 2025
Commercial real estate lending activity surged in the first quarter despite economic uncertainty, with CBRE's Lending Momentum Index showing a 13 percent quarter-over-quarter and 90 percent year-over-year increase in loan closings. Banks led with a 34 percent share of non-agency loan activity, followed by CMBS conduits at 26 percent, reflecting renewed momentum in office financing and steady demand for data center loans. Debt yields rose sharply to 10.3 percent, while underwritten cap rates averaged 6.1 percent. Investment volumes climbed to $88 billion, led by the industrial sector and bolstered by major cross-border deals, including Norway’s $1.1 billion logistics investment.
Blue Owl Capital announced the final close of its third digital infrastructure fund, securing $7 billion in capital commitments for Blue Owl Digital Infrastructure Fund III. The fund surpassed its $4 billion target and reached its hard cap, making it one of the largest data center-focused vehicles in the market. ODI III will target large-scale, build-to-suit data centers and related assets to meet rising demand from AI and cloud-driven technologies. Backers include a diverse range of global institutional investors. As of April 2025, Blue Owl’s digital infrastructure strategy has raised $34 billion and invested in over 90 facilities across 25 global markets.
Recent cuts at Fannie Mae and Freddie Mac may restrict access to mortgage credit and slow the housing recovery, according to Bloomberg Intelligence. Credit availability for loans backed by the two government-sponsored enterprises hit a record low this year, and new policies from the Trump administration are tightening underwriting standards. Programs aimed at helping first-time and disadvantaged homebuyers, including those offering down payment and closing cost assistance, have been halted. While the Federal Housing Finance Agency argues these changes will lower housing costs, the report warns that reducing affordable loan products could further squeeze borrowers already strained by high home prices and limited inventory.
Research Spotlight
Catch the latest insights from the Altus team
Podcast | What we can learn about multifamily investing from the Northeast and Mid-Atlantic
The Northeast and Mid-Atlantic aren’t the easiest regions for multifamily investment, but they might be the most instructive. We sit down with Matt Frazier, Founder and CEO at Jones Street Investment Partners, to explore how the region’s regulatory complexity, persistent housing undersupply, and stable demand create an environment that rewards long-term thinking and local expertise.
Matt shares how his team leverages vertical integration to manage risk, capitalize on operational efficiencies, and respond quickly to changing market conditions. He also discusses rising insurance costs, evolving capital structures, and secondary urban markets.
Tune in for valuable lessons on resilience, discipline, and execution in multifamily real estate
Important dates
Upcoming data releases and events
Data releases (Times in EST)
Thursday, May 22
9:45AM: S&P Flash PMI, Data Release
10:00AM: Existing Home Sales, Data Release
Friday, May 23
10:00AM: New Home Sales, Data Release
Upcoming Industry Events
May 18 – May 20: ICSC Las Vegas
May 18 – May 21: MBA Secondary and Capital Markets Conference
May 18 – May 21: MBA CRE Finance and Technology Conference
May 30 – May 31: AREUEA National Conference
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
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EP61 - What we can learn about multifamily investing from the Northeast and Mid-Atlantic
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EP60 - Gen Z, AI, and the Mall: What’s driving retail real estate’s next golden age
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EP58 - From volatility to opportunity - AEW's Justin Pinckney on the CRE debt landscape
