Avoid the FOMO: The CRE News You Need to Know—June 16

Every week, LightBox analysts carefully select the most impactful economic news, market metrics, in-house data and analysis, and transactions shaping the CRE industry.  

June 9^th edition:

1. Inflation Contained, Tariffs Tamed—But for How Long?
2. Tracking Transaction Activity—Bifurcation of the Market
3. Potential FEMA Phase-Out Could Trigger CRE Pricing Reset
4. LA Deal Highlights Office Opportunity in CBDs as Distress Surfaces
5. Zara Founder Makes $165M Bet on Fort Lauderdale Luxury Multifamily

May’s consumer inflation report was tamer than feared: prices rose just 0.1% over the month, with year-over-year inflation holding steady at 2.4% matching April’s four-year low and marking the softest pace since mid-2021. Despite tariff concerns, broad price hikes haven’t materialized. While prices for items like appliances and automotive parts rose, prices for key categories like autos and apparel fell, likely due to businesses drawing down pre-tariff inventories, giving them a cushion before they test the ability of consumers to accept higher prices. This inflation print followed a jobs report that signaled a gradually moderating—but still resilient—labor market, reinforcing the view of a cooling economy that remains fundamentally stable. Last week’s PPI report also showed only a modest increase with producer prices rising 2.6% in May, up slightly from April’s 2.5% gain. This latest round of pricing data supports the Fed’s stance of staying the course, especially as inflation isn’t rising fast—but it’s not dropping fast enough either.

On the global stage, U.S.–China trade talks last week showed promising progress. A tentative deal includes China resuming rare earth exports and easing some restrictions—a comforting sign of de-escalation. Still, six-month contract limits and ongoing legal battles suggest a bumpy road ahead.

The LightBox Take: Before tariffs and the growing swell of economic uncertainty, inflation was well on its way to falling back to the 2% target. Future progress could be impeded by any tariff-triggered price increases but for now, CPI data shows limited impact, putting the likelihood of the Fed lowering interest rates at this week’s FOMC meeting near zero. News of a potential U.S.-China trade deals offers welcome relief to the market although uncertainty remains. As BGO’s chief economist Ryan Severino said on the LightBox CRE Weekly Digest podcast, if tariffs are used more like a scalpel than a broadsword, economic damage may be more contained. It seems likely that trade negotiations will stretch out over the coming months but at least for now, news of a tentative deal delivered a dose of reassurance.

LightBox’s latest analysis of nine-figure CRE transactions provided further evidence—after the May CRE Activity Index—that although the broader market may have tapped the brakes a bit, deals are moving forward. A total of 45 nine-figure deals closed in May, up from 43 in April, showing that big-money buyers still have conviction when the right assets come to market. Institutional capital is leaning into multifamily and office. Multifamily fundamentals remain solid, with demand outpacing new supply. Meanwhile, trophy office buildings are still drawing capital and distressed opportunities are being met with capital willing to invest, renovate, and in some cases, repurpose. The analysis revealed a cooling that showed up further down the stack in the $50–$100M range, where tighter credit conditions are sidelining some smaller players. The divergence is clear: this is a market of haves and have-nots, with capital flowing to quality and certainty. Add in the potential U.S.–China trade truce and a calming inflation report, and the May deals analysis adds up to a market finding its footing after April’s tariff turbulence, powered by sharp underwriting and strategic plays.

The LightBox Take: After a volatile April, the LightBox Transactions Tracker shows that the CRE market is still chugging along driven by institutional confidence and selective conviction. Nine-figure deals remained steady, particularly in multifamily and office, while mid-tier activity cooled slightly for the first time all year. The easing of tariff fears and a benign inflation report gave investors breathing room—and potentially set the stage for tailwinds as the market heads into the summer season. Capital is moving, but the focus is on assets and sectors that can weather today’s challenges and deliver tomorrow’s returns. The stage is set for April’s uncertainty to retreat and for a rebound in activity to pick up in the second half of 2025.

In a headline-grabbing policy announcement, President Trump announced plans to begin phasing out FEMA—the Federal Emergency Management Agency—after the 2025 hurricane season. Trump argues that disaster response and rebuilding should be ‘decentralized and privatized,’ shifting responsibility out of federal hands and into the control of state and local governments. He also proposed rerouting FEMA funding to private insurers and emergency response providers. FEMA currently manages a $33.1 billion budget and employs more than 20,000 people, playing a critical role in disaster preparedness, relief, and recovery. For the CRE sector, a phaseout of FEMA would be a significant policy shift as FEMA-backed aid and modeling have been foundational for rebuilding efforts after major events, particularly for underinsured communities and large-scale rebuilds.

The LightBox Take: LightBox data shows that billions in CRE asset value sit in zones where FEMA support buffers risk. If federal safety nets shrink, the financial burden shifts to states, insurers, and property stakeholders—raising risk exposure and potentially driving up already-high insurance and capital costs in high-risk regions. The prospect of a FEMA phaseout also heightens the imperative for CRE stakeholders to elevate climate resilience planning. Owners who embed resilience and climate risk mitigation measures into their operations will be better positioned to preserve long-term value especially as underwriting becomes more climate-sensitive.

In the latest high-profile office deal involving a troubled loan, private equity firm Carolwood is in escrow to acquire EY Plaza in Downtown Los Angeles for $130 million. The 41-story, 920,000-square-foot tower, once owned by Brookfield, was placed in receivership in 2023 after the firm defaulted on $305 million in loans tied to the asset. The building’s sale price is expected to come in below its $150 million assessed value, underscoring a broader trend of discounted trades in urban office markets. This move follows the county’s recent purchase of the nearby Gas Company Tower, adding momentum to the wave of post-distress repositioning that is reshaping Downtown L.A.’s office landscape. If successful, Carolwood’s investment could become a bellwether for reinvention—breathing new life into outdated buildings through renovations, amenity upgrades, or potential repurposing for mixed-use.

The LightBox Take: The EY Plaza deal in Los Angeles underscores a growing trend: As distressed office assets surface, investors are stepping in to seize repositioning opportunities. For the first time in decades, more office space is being demolished or converted than newly built, according to CBRE. With remote work reshaping demand, capital is flowing toward properties that offer strong location, quality, and potential for reinvention. Carolwood’s acquisition reflects this shift, targeting Class B assets primed for transformation. Whether through renovation or adaptive reuse, these investments signal a new chapter for office buildings in today’s evolving, hybrid work environment.

In one of the largest multifamily deals of the year, Amancio Ortega, billionaire founder of Zara, acquired the 259-unit Veneto Las Olas apartment tower in Fort Lauderdale for $165 million from developer Related Group. That price—more than $637,000 per unit—is steep even by South Florida standards, signaling continued investor appetite for high-end, well-located assets despite a broader market cooldown. This move is part of a long-term, strategic play by Ortega’s family office, Ponte Gadea, which has been quietly amassing U.S. trophy assets for over a decade. From premier office towers in New York to luxury residential in Miami and a cold-storage facility in Hialeah acquired for $113 million last year, Ortega has shown a consistent focus on long-hold, prime-located properties.

The LightBox Take: While LightBox data shows that cross-border CRE investment in Florida dropped by double digits in 2024 after pandemic years when Florida’s market was viewed as a “safe haven” for international capital, this deal bucks the trend. The investment in the Veneto Las Olas multifamily tower is a bet not just on Fort Lauderdale, but on the enduring appeal of luxury urban living. In a more selective capital environment, this multifamily deal highlights that world-class properties are still attracting capital at a premium from investors focused on the long game.

Important dates and industry events this week

• Tuesday, June 17
  • U.S. retail sales, home builder confidence index
• Wednesday, June 18
  • Housing starts, building permits and FOMC interest rate decision
• Thursday, June 19
  • Juneteenth holiday

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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