Our take on the news that matters in commercial real estate and property data intelligence.
The Weekly LightBox Perspective
Last week’s headlines pointed to steady activity in CRE, even as crosscurrents build underneath. The Fed’s expected decision to hold rates, followed by a hotter-than-expected PPI print and renewed focus on a new Fed chair, was largely absorbed without disruption. Lender sentiment continues to improve, with capital markets increasingly eager to meet refinancing and acquisition demand. Wall Street is celebrating new highs and CRE transaction volume, especially in multifamily, remains strong. And yet, the market still feels uneasy with plenty to watch on the horizon, including this week’s release of new data on the labor front.
TOP STORY: Deep Demand, Disciplined Capital Behind December’s Transaction Tracker
December closed the year with a healthy surge in CRE deal activity, setting a new high-water mark for the year. LightBox’s Transaction Tracker logged 1,226 deals totaling $28.1 billion, surpassing October as the busiest month and rebounding sharply from November’s holiday slowdown. Large transactions drove momentum, with $100 million-plus deals up 44% month over month. Multifamily led activity at 26% of deals, followed by retail (21%), office (18%), and industrial (18%). Pricing remained bifurcated, with office dominating discounted trades while multifamily posted standout appreciation.
LightBox Take: Behind the year-end surge was a deep buyer pool and the return of workable capital markets. “While risks remain, active lenders, improved liquidity, and narrowing buyer–seller gaps suggest 2026 is shaping up for steady deal flow in the months ahead,” said Dianne Crocker, research director at LightBox.
CREFC’s Lender Sentiment Index Points to Debt Market “Open for Business”
CREFC’s fourth-quarter 2025 Board of Governors Sentiment Index points to a materially improving capital markets environment. The index rose 2.1% to 125.4, marking its third consecutive quarterly increase and sitting just below its all-time high. Nearly all respondents expect borrower demand to rise over the next year, driven largely by refinancing needs as roughly $663 billion in CRE and multifamily loans mature. Sentiment is broadly positive, with no negative responses on interest rates or the overall industry outlook. While executives acknowledge a bifurcated market and lingering credit stress, expectations for financing demand, CMBS issuance, and selective refinancing have strengthened heading into 2026.
LightBox Take: CREFC’s latest survey reinforces what we’re seeing on the ground: lenders are “open for business” in a way they haven’t been for some time. Lisa Pendergast, President and CEO of CREFC, noted that this is the first period in years where financing demand, liquidity, and sentiment are aligning. Commercial real estate financing executives are increasingly optimistic for the year ahead, anticipating increased borrowing demand for financing new acquisitions and for refinancing loans as the maturity wall looms.
Rates Stay Put, Prices Heat Up, New Fed Pick Unveiled
The Federal Reserve surprised no one this week, holding interest rates steady for the first time since July as policymakers signaled no urgency to move while inflation and labor data remain mixed. That calm was tested Friday when December PPI came in hotter than expected, rising 0.5% and reinforcing concerns that inflation pressures, partly tied to tariffs, remain sticky. Treasury yields initially moved higher on the data, with the 10-year briefly rising before easing back. The week ended with added uncertainty as President Trump named Kevin Warsh as his choice to succeed Fed Chair Jerome Powell, whose term expires in May. Warsh’s nomination, combined with firmer inflation data, complicates the path to future rate cuts and keeps markets on edge.
LightBox Take: “Markets absorbed this week’s headlines with little visible stress as major indexes held near record highs, reinforcing a cautiously optimistic backdrop for CRE,” said Manus Clancy, head of Data Strategy at LightBox. Rate volatility has settled, spreads remain tight, and risk is priced near historic lows. Consensus expectations still point to two Fed cuts this year, with a Trump-appointed Fed chair widely expected to lean toward easing as policy transitions take shape.
Chicago Office Vacancies Soar as Cities Struggle with the Strain of Reset
Chicago’s suburban office market closed 2025 at a new low, with vacancy approaching 33%, highlighting the widening gap between how space was built and how it’s used today. Years of overbuilding, aging corporate campuses, and functionally obsolete properties continue to weigh on fundamentals, leaving much of the inventory unlikely to return as traditional office space. As vacancies climb, more distressed assets are coming to market, pushing price discovery forward. The downstream impact of the office value reset is hitting city budgets. San Francisco, for example, is reportedly facing a nearly $1B budget deficit over declining property tax revenue, and similar value resets are also creating budgetary strain in cities like Chicago, Boston, and DC, as lower office valuations translate into shrinking tax bases for local governments.
LightBox Take: Many office deals are closing at steep resets, often 50% or more below prior valuations, but institutional buyers are increasingly comfortable stepping in. While elevated vacancies remain a headwind, the ongoing repricing process is laying the groundwork for potential stabilization in 2026 although the fiscal challenge for local governments could take years to unwind.
Land Deals Heat Up in Build-to-Rent Segment
Invitation Homes’ $89 million acquisition of ResiBuilt brings build-to-rent construction in-house, signaling a strategic shift from buying homes to producing new supply. The deal adds a 70-person development and vertical construction platform that has delivered more than 4,200 homes since 2018, while remaining capital-light by excluding land from the balance sheet. Invitation Homes also secured options on roughly 1,500 lots, gaining future flexibility without assuming land risk.
LightBox Take: As policymakers target institutional purchases of existing homes, build-to-rent remains firmly in favor. Large single-family renter (SFR) players are increasingly shifting toward creating new housing rather than competing in resale markets, a pivot likely to drive rising demand for well-located land.
Did You Know?
Nearly one-quarter of all multifamily deals closed in December were concentrated in just five cities. LightBox’s Transaction Tracker shows Chicago, New York City, San Francisco/Oakland, Denver, and Seattle attracting the strongest investor interest in an otherwise highly differentiated multifamily market.
THE WEEK AHEAD
TUESDAY Job openings
WEDNESDAY ADP employment
THURSDAY Initial jobless claims
FRIDAY U.S. employment report
