Avoid the FOMO: The CRE News You Need to Know—July 14

The Latest Data, News, and Analysis Impacting the Commercial Real Estate Market

Tariffs returned to the center of global economic discussions last week as President Trump announced new duties ranging from 25% to 50% on five additional countries, set to take effect August 1. The move marks a continuation of the administration’s broader effort to reshape U.S. trade policy, now six months into Trump’s second term. While the White House has framed the measures as part of a strategic push for fairer trade, the scope and timing of the announcements have introduced challenges for global partners. Countries including India, Indonesia, Thailand, and Brazil reported receiving little advance notice, with several officials saying they learned of the tariffs through public channels. Economists have noted the ripple effects on global planning and investment, with ING’s Carsten Brzeski calling the uncertainty “poison for the global economy.” In addition to the country-focused tariff actions, the CRE industry is responding to the newly announced 50% tariff on copper, which is poised to significantly increase construction costs at a time when budgets are already under pressure. As a vital material for electrical wiring, HVAC systems, and power infrastructure, particularly in energy-intensive sectors like data centers, the tariff could delay projects, squeeze margins, and force developers to reassess timelines and capital plans.

The LightBox Take: The escalating trade wars are fueling persistent market uncertainty, with shifting tariffs and unpredictable negotiations making it challenging for investors and lenders to forecast with confidence. Yet equity markets appear unfazed, for now. The S&P 500 hit a record high last week, even as bond yields edged higher. This divergence matters for CRE, where capital flows are highly sensitive to movements in the 10-year Treasury. The LightBox CRE Activity Index in July will be a telling leading indicator of how the market reacts to the latest developments given that the Index pulled back modestly in the wake of the April 2 tariff announcement.  

In last week’s CRE Weekly Digest episode, David Putro, SVP and sector lead at Morningstar Credit Analytics, joined the LightBox team to break down the slow-moving wave of distress in the CMBS market. While distress is now at its highest level since 2012, especially in office and multifamily, resolution continues to lag. “One of the things that’s different in this cycle,” Putro noted, “is that it’s taking an awful lot of time to resolve a high volume of very large loans.” Many assets are stuck in “CMBS purgatory,” meaning they’re performing just well enough to avoid default, but not well enough to refinance. Multifamily faces a rate mismatch, with solid properties unable to clear today’s higher debt service hurdles. Office distress remains concentrated in urban cores like Philadelphia and Chicago, where transactions are scarce and valuation floors remain elusive. Yet, deals like the $550M Natick Mall workout show that creative, equity-backed resolutions are possible, just slow to materialize. His broader takeaway? Distress is real, but resolution is a grind.

The LightBox Take: Distress is progressing through CRE as a slow wave, and as Putro highlights in the podcast, resolution isn’t happening quickly because not all distressed assets are equal. A well-located multifamily property with stable occupancy may just need a rate reset to refi. A regional mall with weak cash flow and multiple lease expirations faces more challenges. Meanwhile, the CMBS market is flashing conflicting signals with distress levels rising even as new issuance has surged to a 15-year high, with spreads tightening since the Silicon Valley Bank crisis. Capital is flowing when the numbers pencil out, but in such a differentiated market, outcomes will hinge on sponsorship strength, asset quality, and rate resilience.

Optimism is building for a significant increase in capital deployment across U.S. commercial real estate in the second half of 2025. While more than $350 billion in dry powder remains on the sidelines, much of it raised by firms like Blackstone, Brookfield, and Ares, market participants expect momentum to return if tariff volatility stabilizes. Pressure is growing to deploy capital, particularly from funds raised several years ago that are now nearing expiration windows, according to mid-year reports from PwC and Bain & Co. First-quarter activity, including Blackstone’s $4B acquisition of Retail Opportunity Investments, pointed to a rebound, but Q2 turbulence from on-again, off-again trade policy slowed that momentum. Despite this, investor sentiment remains strong, especially in sectors like industrial, healthcare, student housing, and data centers. These alternatives are seen as more resilient, with long-term demand drivers and lower volatility.

The LightBox Take: CRE capital is poised for a strong second half of 2025 but only if tariff volatility cools and more certainty takes shape. With billions of dollars of dry powder nearing expiration, pressure to deploy is rising, especially in high-demand sectors like data centers and healthcare. As construction costs rise and new supply shrinks, the cost of capital has started to ease, boosting the case for strategic acquisitions. Still, deal competition and redemption pressures are mounting, which may lower returns and tighten timelines.

With NOAA forecasting up to 19 named Atlantic storms and five major hurricanes this season, CRE stakeholders are preparing not just for wind and flood damage, but also for less-visible environmental hazards that can emerge in a storm’s aftermath. A new LightBox article highlights how hurricanes can trigger contamination from hazards that often go untracked but that can lead to serious cleanup costs, human health risks, and long-term liability. Following Hurricane Katrina, over 350 underground storage tanks (UST) were submerged or displaced in Orleans Parish alone, delaying recovery in sensitive areas like schools and hospitals. While today’s risk mapping has improved, federal data gaps persist, leaving many properties vulnerable to overlooked threats. “There’s a tendency to focus on Superfund sites,” said Richard W. White, research director, environmental due diligence, at LightBox, “but we’re looking at flood-triggered risks that don’t show up in the headlines like underground storage tanks, chemical storage facilities, and co-located infrastructure that can introduce serious contamination hazards in the wake of a hurricane.” The escalating intensity and frequency of major hurricanes is changing how environmental risk is managed in commercial real estate. No longer a long-term strategy, resilience is a near-term consideration that is factoring into where capital flows, how properties are insured, and how owners protect their investments from climate risk exposure.

The LightBox Take: With another active hurricane season underway, CRE stakeholders face growing pressure to identify environmental risks in storm-prone areas. Amid uncertainty around FEMA’s future, private data providers will play a critical role in storm response efforts. LightBox is building a reporting framework that combines GIS-enabled overlays, parcel data, and historical environmental records to map risk at the property level. Commercial property-level data is essential for guiding capital, accelerating response efforts, and protecting long-term value in storm-prone markets.

BlackRock, the world’s largest asset manager, announced it will acquire ElmTree Funds, a real estate investment firm focused on single-tenant, build-to-suit properties, in a move that adds $7.3 billion in assets under management to its growing private markets portfolio. The deal, expected to close in Q3 2025, will fold ElmTree into BlackRock’s Private Financing Solutions (PFS) platform, launched after its $12B acquisition of HPS Investment Partners. ElmTree operates across 122 properties in 31 states and specializes in long-term leases within the industrial sector. The acquisition aligns with BlackRock’s strategy to deepen its exposure to private real estate, infrastructure, and credit. PFS Chairman Scott Kapnick noted that the deal brings together “a premier triple-net investor” and a capital platform designed to deliver risk-adjusted, income-generating solutions to investors in a shifting real estate environment.

The LightBox Take: BlackRock’s acquisition of ElmTree marks a significant push into industrial real estate, with a clear emphasis on the net lease sector, where long-term, stable income is a key draw for investors. The deal folds a seasoned operator of build-to-suit, single-tenant assets into BlackRock’s expanding Private Financing Solutions platform just months after its $12B acquisition of HPS. BlackRock remains bullish on real estate within private markets, citing strong fundamentals in sectors like U.S. industrials and apartments, even amid ongoing office sector weakness. The acquisition of ElmTree reinforces the company’s focus on long-duration, yield-driven alternatives.