The Latest Data, News, and Analysis Impacting the Commercial Real Estate Market
Every week, LightBox carefully selects the week’s most impactful economic news, market metrics, in-house data and analysis, and transactions shaping the CRE industry.
In This Week’s Edition:
- Trade Wars Get Hotter as Uncertainty Rattles Investors
- LightBox CRE Index Surges in February Despite Dramatic Federal Policy Shifts
- Recession Fears Intensify Despite Some Welcome Economic Data Prints
- LightBox Tracks 31 February Deals Over $100 Million as Buyers Re-engage
- Green Shoots Continue to Emerge in Office Sector
1. Trade Wars Get Hotter as Uncertainty Rattles Investors
As the trade wars ramped up last week, uncertainty took a toll on investors. President Trump’s imposition of 25% tariffs on steel and aluminum imports from Canada, Mexico, and China prompted swift retaliatory measures. Canada responded with equivalent tariffs on $21 billion worth of U.S. goods, while China targeted U.S. agricultural products and suspended certain imports. The European Union announced plans for counter-tariffs on U.S. exports, including industrial and agricultural goods. These developments have led to significant market volatility, with the S&P 500 suffering its biggest decline since September with a major stock selloff as investors fled riskier assets.
The LightBox Take: Investors are grappling with concerns over disrupted supply chains, increased production costs, and potential slowdowns in global economic growth, in response to aggressive tariff policies. A potential softening of the trade-war dialogue could bring calm to the markets, but until then, volatility is likely to continue.
2. LightBox CRE Index Surges in February Despite Dramatic Federal Policy Shifts
The February LightBox CRE Activity Index released early last week reported a strong acceleration to 96.1, up from 80.7 in January and 75.8 a year ago. February’s increase reflected double-digit jumps in the three component activity measures: environmental due diligence, commercial property appraisals, and property listings. The new 12-month monthly average (12MMA) CRE Activity Index is an alternative way of viewing market trends through the lens of an average calculated over the most current 12-month period. This approach smooths out the often-wide fluctuations of monthly seasonal trends to focus on the broader, long-term trajectory. On a 12MMA basis, February’s Index was 86.4, a 10% increase over 78.5 last February and just above 84.7 in January.
The LightBox Take: While February’s CRE Activity Index signaled strong momentum in lending and investment activity, market uncertainty is growing. Of the three components in the Index, property listings are the tip of the sword in that a listing starts a property on the path to a transaction with environmental due diligence, appraisals, and other supportive functions triggered weeks or even months later. Although LightBox’s property listings in early March are trending downward relative to the strong growth of the previous four to six weeks, it’s too early to conclude whether the strong leasing and investment momentum of the past two months is beginning to decelerate.
3. Recession Fears Intensify Despite Some Welcome Economic Data Prints
The latest round of inflation data last week was welcome news for the Federal Reserve (and investors) but did little to ease fears of an uncertain economic outlook. The Consumer Price Index was up 2.8 percent year over year, rising another 0.2% monthly compared to 0.5% in January—and notably, the first slowdown in five months. The Producer Price Index, a wholesale inflation gauge that is being closely watched for tariff-related impacts, showed that price hikes slowed substantially in February. Despite the encouraging inflation reports last week, policy uncertainty is surging to its highest level since the COVID-19 pandemic and recession fears are mounting. Consumer spending is softening along with business travel demand, and the job market, though still strong, is showing cracks. Goldman Sachs and JPMorgan Chase joined forecasters in ringing alarm bells about the increased probability of an economic downturn.
The LightBox Take: The bond market in recent weeks has increasingly priced in fears of slowing growth, with the 10-year U.S. Treasury yield falling to a low of 4.1% after the stock sell off early in the week, then snapping back to 4.3% by week’s end compared to 4.8% in January. The February reports of inflation easing more than expected should calm fears about stagflation, but the concern is that tariffs could trigger fresh inflationary pressures by raising consumer prices. The Federal Reserve’s second meeting of 2025 is just days away, but forecasters don’t expect another rate cut until June— unless escalating trade war tensions heighten recession fears.
4. LightBox Tracks 31 Deals Over $100 Million in February as Buyers Re-engage
The momentum of the February LightBox CRE Index was also reflected in the volume of nine-digit deals that closed last month. At the high-end of the transactions market, a total of 31 deals valued at $100 million or more, and another 49 deals in the $50 million–$100 million range, closed in February. These big-ticket transactions are a strong sign of the early-year investor confidence, even as macroeconomic uncertainty looms over financial markets. More encouraging is that the buyers represent a broad swath of major REITs and private investors that are showing interest that spans asset classes and geographies. In retail, the Del Monte Shopping Center in Monterey, CA, traded hands for $123 million, a 7% increase over its prior purchase price 20 years ago. Multifamily assets also remained a key driver of this year’s nine-figure transactions, including Avalon Bay Communities acquiring an eight-property Texas apartment portfolio for $618.5 million.
The LightBox Take: Early last week, Citigroup market experts cited tailwinds in CRE, including low supply across all property sectors, economic constraints on new construction starts, steady demand, and improved rent growth. Savills is projecting that more than $500 billion in pent-up sales that were delayed over the last two years would begin to come to market this year and next. Based on the deals LightBox is tracking, there are willing buyers ready to step in to take advantage of new buying opportunities. The buyers of February’s nine-digit deals represented a very diverse group of investors with few repeats from deals tracked in prior months, suggesting that a new round of investors are re-engaging after a slow 2024.
5. Green Shoots Emerging in Office Sector
While office properties continue to face a “particularly complex operating climate, some green shoots have begun to emerge,” according to the 2025 Office Investment Forecast from Marcus & Millichap. The company’s National Office Market Index (NOMI)—based on forward-looking economic indicators and supply-and-demand variables—sees the strongest office market strength concentrated in the South and West. The top 10 metros are Tampa-St. Petersburg, Raleigh, Fort Lauderdale, Charleston, West Palm Beach, Miami-Dade, Las Vegas, Charlotte, Salt Lake City, and Orlando. In promising news from San Francisco last week, the area around the metro’s most recognizable skyscraper is shaping up to be the epicenter of a downtown recovery. On the block across from the Transamerica Pyramid near the edge of Jackson Square, Related California is moving forward with plans to build a 41-story tower with 360,000 square feet of office space and a 200-room five-star hotel. This came as welcome news to the market after a long delay in part caused by the pandemic.
The LightBox Take: The office deals that LightBox tracked in February averaged a closing price of $110 million. One property, an office tower in Fort Lauderdale, appreciated 2% over its price ten years ago, the others sold at discounts that ranged from 11% to 40% below sales that closed in 2018. The office investment market will continue to reflect a bifurcated landscape, with heightened distress driving opportunistic acquisitions alongside stabilized assets that will attract core and core-plus capital.
Important dates and industry events this week
- Monday, March 17
- U.S. retail sales and home builder confidence index
- Tuesday, March 18
- Housing starts and building permits
- Wednesday, March 19
- Federal Reserve’s interest rate decision
- Thursday, March 20
- Initial jobless claims, existing home sales, and US leading economic indicators
Did You Know of the Week
Did You Know that LightBox’s PZR zoning report volume was up 20% in 2024 and another 12% in the first two months of 2025? The industrial sector is showing a particularly dramatic turnaround in 2025, with the share of total zoning report volume accounted for by industrial properties increasing from 4% in the first two months of 2024 to 23% this year. Zoning assessments play a key role in identifying underutilized properties that may be strong candidates for rezoning or redevelopment, and for determining if a property’s permitted uses align with an investor’s or developer’s intended use.
For more insights on commercial real estate data and trends, subscribe to Insights and the CRE Weekly Digest Podcast for commentary and real-time data.
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