For the week of Nov. 4th-8th
Leading the news highlights for the week of November 4th was Election Day, and what a Trump win means for policies that affect the U.S. economy and commercial real estate (CRE). On the heels of the election, the Fed held its November FOMC meeting and voted in a widely expected 25 bps cut in interest rates. The October CRE Activity Index points to early signs of underwriting getting underway to fuel a round of CRE deals likely to close by year-end after a swirl of big-ticket October deals made headlines.
Here’s our latest top 5 list of the biggest weekly CRE news stories and why they matter.
- Trump’s Election Fuels Speculation on Policies Impacting Economy and CRE
With Trump’s decisive win and a Senate that flipped to Republican control, control of the House hangs in the balance with a number of races left to be called. In the immediate wake of the election, stocks soared across the board as investors anticipate a pro-growth agenda of lower taxes and deregulation. The months of uncertainty leading up to the election now transitions to speculation about what Trump’s campaign positions mean for the future of federal monetary policy, bank regulations, tariffs, climate change, and other issues that impact CRE.
Why It Matters: Policies like tariffs on imports that could impact prices raise concerns about inflationary pressures that could impact future Fed decisions about interest rates. In the coming weeks, more specifics about what Trump’s next term will bring in the way of policy decisions will take shape.
- LightBox CRE Activity Index Falls Slightly in October on Heels of Strong September
After a strong September surge to 98.2 in anticipation of the first rate cut, the LightBox CRE Activity Index fell slightly to a still strong 95.9, well above last October’s 79.7. Behind the October reading was the strong 18% increase in property listings in September over August, which was the first sign of Q4 dealmaking activity gaining steam. In October, environmental due diligence activity increased 5% and appraisals by 2%, leading indicators of underwriting on deals that could close by year-end.
Why It Matters: The modest October dip was neither surprising nor concerning, particularly given the seasonal contraction in October after an August-to-September uptick from a summer lull in CRE activity. In addition, the weeks leading up to the election, coupled with the elevated 10-year Treasury gave some investors cause to assume a “wait-and-see” posture. The Q3 Snapshot report series in Capital Markets, Appraisals, and Phase I ESAs (environmental site assessments) sheds light on recent key developments in each of these sectors in CRE. November’s CRE Activity Index will be an indicator of how the CRE market is starting to respond to election results, as well as having two interest rate cuts on the books.
- Fed Lowers Interest Rates by Another 25 Basis Points
In a unanimous vote, the Fed lowered interest rates by another 25 bps, news that came as no surprise to many. The real focus now shifts to: What’s next? Prior to the election, the expectation was for continued modest cuts in rates through the end of 2024 and into 2025. Now, it seems likely that the Fed will shift decisions about future rates cuts based on how Trump’s campaign promises play out. There is also speculation that Fed Chairman Powell could be sidelined. If jobs numbers and consumer spending remain strong leading up to the December Fed meeting, it’s likely another 25-bps cut will close out the year but after that, the outlook is hazy.
Why It Matters: Trump’s campaign promises on issues like tariffs on imports could raise inflation and alter the Fed’s path for future rate cuts. And if rates stay high too long, recessionary conditions like higher unemployment could take hold. Currently, the Fed Futures markets see a nearly 70% probability of another quarter-point cut at the December meeting, which would bring the actions taken since the September meeting to a full 1% cut to round out 2024.
- Steep Uptick in Major Property Deals Closed in October
In the month leading up to the November election, despite the steady climb in Treasury yields and continued uncertainty, 53 property sales valued at over $100 million closed. This was a sharp uptick compared to only 29 deals in September and 24 in August. Two of the most notable October deals were in Florida: the sale of the W’s South Beach hotel to Reuben brothers for $425 million, and the $322 million purchase of Orlando’s Waterford Lakes Town Center by Kimco.
Why It Matters: The healthy climb in the number of large transactions is particularly encouraging considering the caution triggered by rising Treasury yields and buyer hesitation during the final month of political campaign season. In addition to the 53 major deals, there were another 52 deals in the $50 to $100 million range, setting the stage for what could be a late year rush to close deals before year-end.
- ULI/PwC Ranks Dallas No. 1 on List of CRE Markets in 2025
A new report, Emerging Trends in Commercial Real Estate, released each year by PwC and the Urban Land Institute, ranked Dallas as #1 market to watch in CRE in 2025. Dallas has consistently been ranked in ULI/PwC’s top 10 metros for six years, but this marks its return to the top spot for the first time since 2019. Dallas is the largest MSA in Texas and the fourth largest in the U.S. with strong 11.2% employment growth built on a solid economic base of diverse industries. Rounding out the top three were Miami and Houston in second and third place.
Why It Matters: The results in the report are consistent with the output from LightBox EDR’s ScoreKeeper model which ranked Dallas as the second fastest-growing MSA in the U.S. for pre-transactional Phase I ESA activity behind Atlanta and ahead of Miami in Q3 2024. These rankings highlight broader trends that are well underway in the CRE transactions market; namely, that investors with capital are focusing attention on metros with strong ROI potential based on factors like a strong economy, rising rents, and a growing population.
For commentary on these CRE developments and more, tune in to the LightBox CRE Weekly Digest podcast.
Did You Know of the Week
Did you know that the share of property listings in the LightBox RCM platform accounted for by multifamily properties rose from 23% of the total in 2019 to 34% YTD in 2024, and fell from 20% to 10% for office listings?
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