CRE This Week - What's impacting the United States market?
March 31, 2025 - US commercial real estate news, macroeconomic indicators and market analysis.
Week of March 31, 2025
Welcome to the latest edition of CRE This Week, curated by Altus Group’s US research team.
Our team has handpicked pertinent and noteworthy market indicators, articles, original research, and significant industry dates that are critical to the US commercial real estate sector. We understand that your time is valuable, so we're excited to deliver research that helps you stay informed and saves you some time each Monday morning.
For more key economic indicators that matter to commercial real estate, see Top Indicators by Major Asset Type.
Economic print
Macro economic factors impacting CRE
S&P Dow Jones Indices released the S&P CoreLogic Case-Shiller Home Price Indices for January on March 25. The S&P CoreLogic Case-Shiller U.S. National Home Price Index recorded a 4.1% annual increase in January 2025, up slightly from 4.0% in December. The 10-City Composite rose 5.3% year-over-year, compared to 5.2% the previous month, while the 20-City Composite increased by 4.7%, up from 4.5%. Among major cities, New York led with a 7.7% annual gain, followed by Chicago (7.5%) and Boston (6.6%), whereas Tampa reported the weakest performance with a decline of 1.5%. On a monthly basis, after seasonal adjustment, the National Index rose 0.6%, while both the 10- and 20-City Composites increased by 0.5%.
Home prices rose on a monthly basis across all major indices, and prices now sit over 50% above pre-pandemic levels. Global entry cities like New York, Chicago, and Boston led annual gains, but growth was also strong in slower-growth metros like Detroit and Cleveland. These markets have seen limited construction of both single and multifamily housing, and as rising home prices push more households toward renting, strong rent growth may be on the horizon in many markets across the Midwest.
The Bureau of Economic Analysis released the personal consumption expenditures (PCE) price index for February on March 28. The index showed that prices rose 0.3% month-over-month, or 0.4% when excluding food and energy. On an annual basis the overall index rose 2.5%, while core PCE, the Federal Reserve’s (Fed’s) preferred inflation gauge that excludes volatile food and energy prices climbed 2.8%.
The latest Personal Income and Outlays report reinforces concerns about persistent inflation and suggests the Fed is unlikely to accelerate rate cuts, particularly with tariff uncertainty back in the mix. Consumer spending is now growing at a weaker-than-expected pace, and in February, spending on services grew at its smallest monthly pace since August 2023. Food service and accommodation spending also dropped 15% month-over-month, a troubling signal for retail and hospitality fundamentals.
University of Michigan Consumer Sentiment Index
The University of Michigan released its final reading on Consumer Sentiment for March 2025 on March 28. The final reading dropped 12% month-over-month to 57.0. Year-over-year, the index is down 28.2%. The index for future expectations is down 17.8% month-over-month and 32.0% year-over-year.
Despite foregoing a cut to interest rates and the overall negative adjustments to the FOMC’s median outlooks for 2025 and 2026 in terms of slower real growth, higher inflation, and slightly higher unemployment, US equity markets reacted positively to the Fed’s releases and Fed Chair Jerome Powell’s press conference, while the yield on US Treasury securities came down slightly. During the press conference, Chair Powell acknowledged that uncertainty and recession odds have increased, though the economy remains on solid footing, downplaying some of the recent soft data and souring sentiment, and reiterating the Fed’s focus on hard data. While there was no change to the Fed’s “wait-and-see” stance on rates, the elevated uncertainty and increased recession risk slightly lifted the market’s rate cut expectations for 2025 to 75bps, with the first starting in June.
News
News to know
Despite booming demand, data center developers are facing increasing challenges in securing early-stage financing. The capital required for initial stages, such as land acquisition and securing necessary power and infrastructure, has significantly increased, creating difficulties for developers in obtaining speculative financing. This has led to a shift in investment strategies towards larger, institutional-backed data center operating companies. Key hurdles include longer and less predictable timelines for power grid connections, rising upfront infrastructure costs, and stringent utility and governmental requirements.
Park Avenue remains one of the most sought-after commercial real estate markets despite nationwide office sector disruptions, with vacancy rates significantly lower than Manhattan's overall figure. Continued demand is driven by the boulevard's prestige, peer proximity, and improved transit access via the Long Island Rail Road extension to Grand Central Terminal. Major investments, including JPMorgan Chase’s new $3 billion headquarters and plans for RXR’s 175 Park Avenue to become the tallest commercial building in the Western Hemisphere by 2032, highlight the area's resilience. Similarly, retail and dining have rebounded sharply along the corridor.
FHFA Chief ends program designed to help first-time homebuyers | Bloomberg | March 25, 2025
The Federal Housing Finance Agency (FHFA) has ended special purpose credit programs at Fannie Mae and Freddie Mac, which provided down payment and closing-cost assistance to first-time homebuyers. FHFA Director Bill Pulte cited the current support level for these programs as "inappropriate" for entities under conservatorship. These programs, created through the Equal Credit Opportunity Act, aimed to assist economically or socially disadvantaged groups by offering credit flexibilities. Additionally, FHFA waived certain equitable housing finance planning and reporting requirements.
Forever 21’s bankruptcy, resulting in the closure of roughly 350 U.S. stores, presents a significant opportunity for mall owners to attract stronger tenants capable of paying higher rents. Despite broader industry challenges, high-end malls are experiencing robust occupancy and rising rents, with leasing activity also improving in second-tier properties. The limited supply of new malls and ongoing closures of lower-performing locations have strengthened the market position for remaining malls, offering optimism for landlords facing vacancies from Forever 21's exit.
Affordable housing developers stalled by blocked federal funds | Bloomberg | March 25, 2025
The Trump administration has halted a $1.4 billion federal program intended to support green building retrofits, impacting numerous affordable housing projects nationwide. The Green and Resilient Retrofit Program (GRRP), established by Congress under the Inflation Reduction Act of 2022, sought to enhance energy efficiency and sustainability in HUD-assisted housing. With the program currently on hold, various planned renovations such as asbestos removal and energy-efficient upgrades face delays, potentially affecting project financing.
RCG Ventures expands portfolio with $1.1B purchase from Global Net Lease | GlobeSt | March 26, 2025
RCG Ventures has acquired a multi-tenant retail portfolio consisting of 59 properties for approximately $1.1 billion from Global Net Lease (GNL). This acquisition involved equity investments from institutional firms including Koch Real Estate Investments, Goldman Sachs Alternatives, and Ares Management Alternative Credit funds, alongside a loan facility provided by Truist and Key Bank. The purchase represents the first phase of a larger deal, with an additional 41 properties expected to close in two stages by the end of the June quarter, pending loan approvals and customary closing conditions. This acquisition significantly expands RCG’s retail portfolio, which now encompasses more than 250 properties across 30 states, primarily in high-growth markets.
Dollar Tree to sell Family Dollar for $1B | Commercial Property Executive | March 27, 2025
Dollar Tree is selling its Family Dollar discount chain, comprising approximately 8,000 stores, to private equity firms Brigade Capital Management and Macellum Capital Management for roughly $1 billion. The sale is expected to close during the second quarter of 2025. The move concludes a challenging decade since Dollar Tree acquired Family Dollar for about $8.5 billion, with limited integration success between the two brands. The new owners have appointed former Family Dollar executive Duncan MacNaughton as chairman and will take over roughly 1,000 combined Family Dollar and Dollar Tree locations, converting them exclusively to Family Dollar stores. Family Dollar’s headquarters will remain in Chesapeake, Va.
Research Spotlight
Catch the latest insights from the Altus team
Podcast | Rate updates, retail resilience, and housing pipelines
We break down the Federal Reserve’s latest rate decision, the release of their minutes, the press conference, and the updated Summary of Economic Projections. We also take a look at key macroeconomic highlights from the past week, including retail sales, housing data, and insights from regional Fed surveys and indices. Finally, we sift for some key takeaways from the Mortgage Bankers Association’s Q4 2024 report on commercial mortgage debt outstanding.
Important dates
Upcoming data releases and events
Data releases (Times in EST)
Tuesday, April 1
9:00AM: Construction Spending, Data Release
9:00AM: Job Openings, Data Release
Wednesday, April 2
8:15AM: ADP Employment, Data Release
10:00AM: Factory Orders, Data Release
Thursday, April 3
8:30AM: US Trade Deficit, Data Release
8:30AM: ISM Services Index, Data Release
Friday, April 4
8:30AM: Employment Report, Data Release
Upcoming Industry Events
April 7 – April 9: NCREIF Spring Conference
April 8 – April 12: ARES Annual Conference
April 9: NYU REIT Symposium
About our research team
Omar Eltorai
Research Director
Altus Group
Omar Eltorai is a Research Director at Altus Group. With more than a decade of experience in the industry in investment management and financing roles,
Omar's focus is on macro, capital and market trends affecting the US CRE market. Beyond regularly authoring articles and reports, his commentary and analysis has been featured in various media publications, including: Wall Street Journal, Globe Street, and Yahoo! Finance.
Cole Perry
Associate Director of Research
Altus Group
Cole Perry is a Associate Director of Research with Altus Group's Research team. In this role, Cole delivers key insights into macroeconomics, capital markets, and the broader commercial real estate sector.
Cole boasts a rich background in Commercial Real Estate analytics with previous roles at CompStak and Brixmor Property Group. He holds dual M.S. degrees from Columbia University in Urban Planning and Real Estate Development.
Disclaimer: The opinions expressed in this newsletter are solely those of the authors and are not endorsed by Altus Group Limited, its affiliates and its related entities (collectively “Altus Group”). This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice or services of Altus Group. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy, completeness or reliability of the information contained in this publication, or the suitability of the information for a particular purpose. To the extent permitted by law, Altus Group does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. The distribution of this publication to you does not create, extend or revive a client relationship between Altus Group and you or any other person or entity. This publication, or any part thereof, may not be reproduced or distributed in any form for any purpose without the express written consent of Altus Group.
Resources
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