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:
- Higher Inflation Data Dims Hopes for Fed Interest Rate Cuts
- LightBox Report Uncovers Hidden Environmental Risks After LA Wildfires
- MBA Dials Back 2025 Lending Forecast to 16% in 2025
- Blackstone Mortgage Trust Eyes 2025 Growth After Clearing Billions in Debt
- $208M Las Olas Office Deal Signals Life in Sluggish Market
- Higher Inflation Data Dims Hopes for Fed Interest Rate Cuts
January’s inflation report showed stronger-than-expected price pressures, rather than signs of further progress toward the Fed’s 2% target. The Consumer Price Index rose 0.5% for the month and 3% year-over-year, while core inflation climbed 3.3%. Surging fuel and egg prices—up 44% due to avian flu—drove much of the increase. Wholesale inflation also remained high, with the Producer Price Index rising 0.4% monthly and 3.5% annually, marking its fastest growth in nearly two years. While some costs, like healthcare and airfares, declined, inflation’s persistence adds uncertainty ahead of the key PCE report on Feb. 28. In comments made last week, Fed Chair Powell signaled patience, noting that the economy is “strong overall” and that the central bank does “not need to be in a hurry to adjust our policy stance.”
The LightBox Take: Last week’s inflation reports offer more evidence that inflation pressures continue to be a threat and strengthen financial market views that the Federal Reserve would not be cutting interest rates before the second half of the year. Although green shoots like job creation and strong retail spending are driving momentum in CRE, potential federal policy changes run the risk of reigniting inflation and keeping the 10-year Treasury yield at the current elevated levels.
- LightBox Report Uncovers Hidden Environmental Hazards After LA Fires
A groundbreaking LightBox study reveals widespread environmental hazards in areas affected by the recent Los Angeles wildfires, identifying more than 1,300 properties in the affected region likely to present environmental risk. The report highlights potential hazards related to the presence of petroleum, solvents, asbestos, and lead—all of which are associated with human health risks and whose presence could complicate the urgent cleanup and rebuilding efforts. Among the findings of the study are that there are approximately 19,000 impacted structures, 200 affected businesses, and greater than 225 underground storage tanks (USTs) flagged as concerns. In addition, more than 1,600 properties show potential asbestos exposure. As urgent cleanup efforts get underway, the report underscores the importance of considering a range of environmental risks that may be present on the impacted properties in order to protect public health and ensure safer, smarter rebuilding.
The LightBox Take: The Palisades and Eaton wildfires are the latest in the growing number of extreme disasters, highlighting the pressing need for a more proactive and resilient approach to disaster recovery. The first phase of recovery is focused on removing hazardous materials from the affected areas, but the bigger challenge begins when communities will be challenged to make informed decisions about where and how to rebuild safely. Leveraging property-level environmental data and GIS technology to create maps like the ones LightBox created for the impact zones of the Palisades and Eaton fires are critical tools for assisting planners, insurers, and policymakers make informed rebuilding decisions.
- MBA Dials Back Lending Forecast to 16% Growth in 2025
The Mortgage Bankers Association (MBA) has revised its 2025 CRE lending forecast, now projecting 16% growth to $583 billion—down from its previous 24% estimate. Multifamily lending is expected to hit $361 billion also a 16% increase from last year’s estimate of $312 billion. Longer term, the MBA anticipates a more robust 21% growth in total originations in 2026. The forecast balances the strong pick up in lending at year-end 2024 with lingering economic uncertainty and concerns about the $957 billion in commercial mortgages set to mature in 2025, a 3% increase over the $929 billion that matured last year.
The LightBox Take: The latest lending forecast is consistent with what LightBox attendees at this year’s MBA CREF conference heard from CRE lenders in attendance in San Diego. While lenders are back in the game, caution hangs over the market. After spending much of 2024 addressing loan maturities and shedding non-performing loans, big banks are ready to play “more offense.” However, concerns persist over stubbornly high interest rates, a 10-year Treasury hovering around 4.5%, and the growing wave of loan maturities seeking refinancing debt capital. CBRE estimates that in the office sector alone, nearly 25% of all debt originated between 2017 and 2023—$131 billion—is coming due between 2025 and 2028, likely to result in more distressed assets coming on the market as lenders move away from extending delinquent loans.
- Blackstone Mortgage Trust Eyes 2025 Growth After Clearing Billions in Debt
In its encouraging Q4 earnings report, Blackstone Mortgage Trust (BXMT) pointed to brighter days ahead after resolving 49% of its impaired loans and cutting office risk exposure by 28%. Despite posting a $37.1 million Q4 loss and a $204 million loss for 2024, BXMT closed the year strong with $5.2 billion in loan repayments, including $2 billion in office debt. CEO Katie Keenan says the REIT is “amidst a real estate recovery,” with a $2 billion loan pipeline heavily weighted in industrial, multifamily, and self-storage. With 93% of loans now performing, BXMT enters 2025 positioned for renewed portfolio and earnings growth.
The LightBox Take: As one of the most influential players in real estate finance, Blackstone Mortgage serves as a bellwether for other private lenders. Its strategy of resolving distressed loans, reducing office risk exposure, and ramping up lending in industrial, multifamily, and self-storage signals a market in recovery. The share of the CRE debt market accounted for by private equity has been growing post-COVID and is expected to increase further as private sources compete with traditional banks, CMBS, and insurance lenders.
- $208M Las Olas Office Deal Signals Life in Sluggish Market
A noteworthy sale of a downtown office building in Fort Lauderdale made headlines last week. The city’s Las Olas Center I & II just sold for $208 million—notable for being the first office sale above $200 million in Fort Lauderdale in more than a decade. Unlike many recent office sales, however, this one closed at a slightly appreciated closing price, $4 million higher than the prior 2014 sale price of $204 million. Chicago-based Bradford Allen’s purchase of the 470,810-square-foot property could be a sign of a stabilizing office market, even as high interest rates and evolving demand continue to challenge the sector.
The LightBox Take: In the past year, downtown Fort Lauderdale has added about 3,200 jobs, a 5% increase since 2023, while other metros struggle. Its strong economic drivers drove ULI/PwC to move the Fort Lauderdale metro up five places to number 16 in its 2025 ranking of metros presenting the strongest real estate prospects.
Important dates and industry events this week:
- Monday, February 17
- Presidents’ Day- markets closed
- Tuesday, February 18
- Home builder confidence index
- Wednesday, February 19
- Building Permits and Housing Starts (Jan)
United States FOMC Minutes (Jan)
- Building Permits and Housing Starts (Jan)
- Thursday, February 20
- U.S. leading economic indicators
- Friday, February 21
- Existing home sales and consumer sentiment
Did You Know of the Week
Did You Know that the volume of property listings in LightBox’s RCM platform more than doubled in January over December, and was up by 12% year-over-year, an early sign of growing momentum in the CRE investment environment?
Save the Date: February 25th at 2pm EST
Join us as we share a broad-based look at the trends that shaped year-end 2024 and what it means for the 2025 forecast with Manus Clancy, Dianne Crocker, and Tina Lichens.
For commentary on this week’s CRE developments and more, tune in to the LightBox CRE Weekly Digest podcast.
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