CRE This Week - What's impacting the United States market?
September 1, 2025 - US commercial real estate news, macroeconomic indicators and market analysis.
Week of September 1, 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
The U.S. Census Bureau and HUD released their latest New Residential Sales data on August 25, 2025, reporting that new single‑family home sales in July 2025 occurred at a seasonally adjusted annual rate (SAAR) of 652,000, a 0.6 percent decrease from June’s revised rate of 656,000, and an 8.2 percent drop compared to July 2024’s 710,000 level. Despite this decline, existing inventories remain elevated: there were 499,000 new homes for sale at month‑end, down slightly from June’s 502,000 but 7.3 percent higher year‑over‑year, equating to a 9.2‑month supply.
While new home sales are only a fraction of the single-family market, the pullback underscores how affordability challenges are shaping housing demand. Despite median new home prices falling nearly 6% year-over-year (a sign that many builders are cutting prices to move elevated inventories) ownership remains out of reach for a large share of households given still-high mortgage rates. This affordability squeeze is reinforcing demand for multifamily rentals, where steady absorption and stable vacancies are leading to modest rent growth.
The Conference Board’s August 26 release showed the Consumer Confidence Index slipped by 1.3 points to 97.4, down from a revised 98.7 in July. The Present Situation Index, reflecting views on current business and labor market conditions, fell 1.6 points to 131.2. The Expectations Index, which gauges outlook for income, business, and employment, declined 1.2 points to 74.8 – still below the 80-point threshold that often signals a looming recession. Consumers expressed growing concerns about job availability, while 12-month inflation expectations rose to 6.2%, up from 5.7% in July.
Softer sentiment around jobs and incomes could weigh on discretionary spending and spill into commercial real estate. Retail, hospitality, and office sectors are most exposed, with potential for slower leasing, rising vacancies, and added rent pressure. Elevated inflation expectations compound the challenge by eroding purchasing power. By contrast, logistics and multifamily remain more resilient, benefiting from structural demand drivers less tied to consumer confidence.
Real gross domestic product (GDP) increased at an annual rate of 3.3 percent in the second quarter of 2025, according to the second estimate released by the U.S. Bureau of Economic Analysis on August 28. Compared to the prior estimate, real GDP was revised up from the 3.0 percent annual pace, and represents a significant rebound from Q1 2025's 0.5 percent contraction. The increase in real GDP in the second quarter primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP, and an increase in consumer spending, while investment declined. Corporate profits surged $65.5 billion versus a $90.6 billion decline in Q1. However, core PCE inflation remained elevated at 2.5 percent, above the Fed's 2.0 percent target.
The GDP rebound supports commercial real estate fundamentals broadly. Economic growth and firming real estate fundamentals should drive a moderate recovery in real estate investment activity in 2025 if the positive growth trend persists. Strong consumer spending growth directly benefits retail and industrial (distribution) properties, while the corporate profit recovery should eventually translate into improved office demand. However, the decline in private investment within the most recent GDP data is concerning for CRE capital allocators, as it suggests businesses remain cautious about capital deployment. This could soften demand for CRE space in coming quarters despite the positive headline growth.
Personal Income & Outlays, PCE Price Index
On August 29, the Bureau of Economic Analysis released the Personal Income & Outlays report for July 2025. Personal income increased 0.4% in July 2025, while personal consumption expenditures (PCE) rose 0.5%. The PCE price index increased 0.2% monthly and 2.6% annually, while core PCE (excluding food and energy) rose 0.3% monthly and 2.9% annually. The personal saving rate held steady at 4.4%.
The July PCE data reinforces a "higher-for-longer" inflation and rate environment, however the data seem to stand in contrast to the current market expectations for a Fed rate cut at the next September FOMC meeting. PCE growth of 0.5% monthly demonstrates resilient consumer demand, with services spending leading at $60.2 billion versus $48.7 billion for goods. This robust spending pattern, supported by solid income growth, bodes well for consumer-facing CRE sectors. Stable employment and wage growth support both consumer spending (retail CRE) and residential rental demand (multifamily properties).
News
News to know
Churches are a rare construction bright spot | Wall Street Journal, August 24, 2025
Church attendance has been declining for decades. But in a new kind of religious mystery, construction on churches and other houses of worship is booming. Federal data show that religious construction spending rose nearly 17% in the 12 months running through June. Overall construction spending fell nearly 3% in the same period, weighed down by high interest rates and soaring costs for materials and labor. Spending has been particularly strong over the past year on auxiliary religious buildings such as fellowship halls, camps and Sunday schools, data show, as churches broaden their appeal to newcomers.
Cap rates may have reached their peak, according to a CBRE survey of 200-plus brokers released Monday. The survey also reported a slight compression in the first half of 2025, with the all-property average cap rate narrowing nine basis points to 6.84% at midyear amid volatility in Treasury yields and the announcement of a broader regime of tariffs than was expected. CBRE said that multifamily assets are now projected to have the best long-term performance, surpassing industrial properties. Retail remains stable, while the office sector, particularly Class B and C assets, continues to face pricing uncertainty along with wider valuation spreads.
Zohran Mamdani, Democratic candidate for mayor, put big building owners on notice when he pledged a rent freeze on rent-stabilized apartments in New York City. But he is also rattling a number of mom-and-pop landlords who own small apartment buildings and say that Mamdani’s housing policy could damage their business. Small landlords face challenges such as inflation, high rates, and slow city permits; some owners are barely breaking even. Sales of rent-stabilized buildings are down (nearly 70% from 2018 levels, before large-scale rent regulation took effect), many listings stay on the market longer, and see price cuts of +10% before selling.
To boost housing, Chicago kills parking minimums | Bloomberg, August, 26, 2025
The Chicago City Council unanimously approved an ordinance eliminating parking minimums for new housing developments near transit, allowing developers to build without dedicating space to parking within a half mile of CTA and Metra lines or a quarter mile of bus routes. The measure, part of Mayor Brandon Johnson’s Cut the Tape Initiative to reduce barriers to housing supply, positions Chicago within a national movement to strike down parking mandates as a way to cut construction costs, encourage density, and expand affordability. Supporters argue the change will make adaptive reuse projects easier, prevent unnecessary demolitions, and give developers flexibility to match neighborhood demand rather than rigid zoning codes.
The A.I. spending frenzy is propping up the real economy, too | New York Times, August 27, 2025
A surge of artificial intelligence investment is reshaping the U.S. economy, with tech companies and private equity firms pouring hundreds of billions into data centers, semiconductor plants, and energy infrastructure. UBS estimates $375 billion will be spent globally on A.I. infrastructure this year, rising to $500 billion in 2026, while Commerce Department data shows software and equipment investment made up a quarter of recent GDP growth. The boom has overtaken traditional office construction, creating demand for construction firms, materials suppliers, and power providers, and keeping construction employment stable even as housing and warehouse projects stall. While some warn of dot-com-era parallels if A.I. profits fail to materialize, data center leasing remains strong and growth is projected at about 20 percent annually through 2030, though rising costs and community pushback could pose constraints.
HUD is preparing to require more than 3,000 public housing authorities to disclose immigration status information for tenants receiving federal housing assistance, threatening funding cuts for those that fail to comply. The move follows President Trump’s February executive order to bar benefits for undocumented immigrants and builds on earlier letters from HUD Secretary Scott Turner reinforcing that housing aid is reserved for citizens and “qualified aliens.” While some housing authorities already request Social Security numbers, many do not collect or share full citizenship data, creating tension over compliance. The D.C. Housing Authority is expected to receive the first letter, part of a broader federal crackdown linking housing policy with immigration enforcement and local crime control.
Economic uncertainty takes toll on industrial space demand | Connect CRE, August 28, 2025
Industrial space demand has cooled sharply amid tariff uncertainty and high interest rates, according to the NAIOP Research Foundation. Net absorption totaled just 27 million square feet in the first half of 2025, with demand contracting by 11.3 million square feet in Q2—the first quarterly decline since 2010. NAIOP forecasts flat absorption through year-end, but expects a rebound beginning in Q2 2026, with 119.3 million square feet projected next year and 109.7 million in 2027. Even so, the group cautions that higher tariffs and slower job growth will temper the pace compared to the boom years of 2020–2022.
Bad Mortgage Loans in Baltimore Send Wall Street a Warning | Bloomberg, August 29, 2025
Private mortgage lending, once a niche market, has grown into a major source of capital for home flippers and small-scale investors, but cracks are emerging. Reports of inflated appraisals in Baltimore have prompted some lenders to pause or scale back originations, exposing how vulnerable these loans are given their reliance on projected income potential rather than borrower credit. With lawsuits and fraud concerns surfacing elsewhere, the industry is moving toward tighter oversight, developing watchlists and red flag reports to identify risky appraisers, title firms, and borrowers. This signals that the rapid growth of the sector may now be colliding with mounting risks.
INSIGHTS Spotlight
Catch the latest research and insights from Altus
Podcast | US commercial real estate transaction trends – Q2 2025
Fewer deals. Bigger deals. And a sector landscape that looks very different than it did just a year ago.
On the newest episode of CRE Exchange, Cole Perry explores Altus Group’s Q2 2025 US CRE Investment and Transactions Quarterly report, uncovering key findings on transaction volumes, pricing, and property sector trends.
Tune in for data-driven insights
Report | Q2 2025 US CRE Investment and Transactions Quarterly
US commercial real estate pricing gained ground in Q2 2025 despite mixed transaction activity.
While the number of traded properties declined year over year, the median price per square foot rose 13.9%, with multifamily leading annual price growth.
Important dates
Upcoming data releases and events
Data releases (Times in EST)
Tuesday, September 2
9:45 AM: S&P final U.S. Manufacturing PMI
10:00 AM: ISM Manufacturing
10:00 AM: Construction Spending
Wednesday, September 3
10:00 AM: Job Openings and Labor Turnover
10:00 AM: Factory Orders
Thursday, September 4
8:15 AM: ADP Employment
8:30 AM: US Productivity
Friday, September 5
8:30 AM: Employment Report
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.
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