CRE This Week - What's impacting the United States market?
May 12, 2025 - US commercial real estate news, macroeconomic indicators and market analysis.
Week of May 12, 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
US Trade Deficit and Wholesale Inventories
On May 6, the U.S. Census Bureau and the Bureau of Economic Analysis reported that the U.S. trade deficit expanded to a record $140.5 billion in March, up $17.3 billion (+14%) from a revised $123.2 billion deficit in February. U.S. imports rose 4.4% month-over-month to $419 billion while exports remained nearly flat.
The U.S. Census Bureau released the Monthly Wholesale Trade Report for March on May 8. U.S. merchant wholesale sales rose 0.6% in March to $697.9 billion, marking a 6.1% gain over the prior year. Inventories increased by a more modest 0.4% to $907.5 billion, resulting in a lower inventory-to-sales ratio of 1.30, down from 1.35 in March 2024.
As companies anticipated tariffs early in the year, businesses rushed to import billions in goods. Imports rose across pharmaceuticals, furniture, and apparel, lifting inventories enough to add 2.25 percentage points to GDP according to last week’s release, yet the larger trade deficit still produced a 0.3 percent contraction. The buildup may support near‑term demand for warehouse and distribution space, but with March sales up only 0.6 percent and the inventory‑to‑sales ratio steady at 1.30, additional stockpiling looks limited, pointing to a potential plateau for logistics‑oriented CRE.
FOMC Statement & Rate Decision
On May 7, the Federal Reserve’s Federal Open Market Committee (FOMC) held interest rates steady at 4.25% to 4.50%, in line with market expectations leading up to the announcement. “Despite heightened uncertainty, the economy is still in a solid position,” Chair Jerome Powell said in prepared remarks at the press conference. “My gut tells me that uncertainty about the path of the economy is extremely elevated, and that the downside risks have increased… the risks of higher unemployment and higher inflation have risen, but they haven't materialized yet.”
Markets are currently expecting 100bps of cuts through the remainder of the year, starting in July, a much slower pace of cuts than expected at the start of the year. So long as the cost of capital remains high, there is less hope that CRE values will benefit from an appreciation boost. That said, the Fed’s slower-than-expected path to easing is not all bad, as they continue to provide a degree of consistency and confidence throughout markets. While capital markets have experienced elevated volatility and sentiment across business and consumers have soured since the FOMC’s late March interest rate decision, driven by trade and fiscal policy uncertainty from Washington, the central bank remains committed to their data-dependent approach. As a result, Chair Powell reiterated the FOMC’s wait-and-see approach to rate adjustments, “…We're in the right place to wait and see how things evolve. We don't feel like we need to be in a hurry. We feel like it's appropriate to be patient.”
News
News to know
CMBS delinquency rate surpasses 7% for the first time since 2021 | GlobeSt | May 5, 2025
Trepp’s April CMBS report revealed a sharp uptick in delinquency, rising 38 basis points month-over-month to 7.03%, the highest level since January 2021. The delinquent loan balance climbed from $39.3 billion in March to $41.9 billion. Year-over-year, the rate is up nearly 200 basis points. If loans past maturity but still current on interest are factored in, the effective delinquency rate would be 8.37%. As of April, 91.6% of loans were current, while foreclosure and REO rates stood at 2.49% and 0.93%, respectively. Performing and non-performing balloon loans made up 3.84% combined, pointing to ongoing stress in refinancing markets.
A $1 billion tax bill is looming over Boston homeowners | Wall Street Journal | May 5, 2025
Boston homeowners are facing sharp tax hikes as falling office values shift the city’s property tax burden onto residential properties. Office buildings in the city have lost over 50 percent of their value since 2019, with a record 14.2 percent vacancy rate and new commercial development nearly stalled, according to CoStar. The Boston Policy Institute estimates more than $1 billion could be transferred to homeowners over the next five years. Mayor Michelle Wu is pushing to reallocate the burden back to commercial owners, but faces political resistance and a reelection battle, while property owners brace for further financial strain.
Brookfield Asset Management raised $5.9 billion in Q1 2025 for its latest opportunistic real estate fund, bringing total capital commitments to $16 billion, making it the firm’s largest fund to date. The vehicle targets distressed or discounted assets, with Brookfield acquiring foreclosed properties and motivated sales, primarily in apartments and warehouses, at prices 20% to 40% below peak levels. About one-quarter of the fund has already been deployed, including deals such as a portfolio of San Francisco apartments and logistics firm Tritax EuroBox. Private equity real estate fundraising overall rebounded sharply, with $57.1 billion raised in Q1, up from $32.5 billion a year earlier, according to PERE. Brookfield CIO Lowell Baron noted that rising construction costs, driven by tariffs, may limit new supply and support values for existing properties.
Why tariffs could ‘break’ the construction industry | Commercial Property Executive | May 7, 2025
The U.S. construction industry is at risk of a major slowdown, according to attorney Barry LePatner, as Trump’s sweeping tariffs compound existing headwinds like high interest rates, labor shortages, and soaring material costs. New tariffs on imports from China, Canada, Mexico, and the EU are already raising costs for steel, lumber, gypsum, and appliances. Combined with tighter lending and investor uncertainty, these pressures could stall infrastructure and private-sector projects, undermine housing affordability, and trigger a long-lasting contraction across the sector.
Southern California’s industrial warehouse market is bracing for a slowdown as tariffs weigh on imports and reshape global trade flows. The Port of Los Angeles expects a 25 percent drop in ship traffic and a one-third decline in cargo volume as 145 percent tariffs on Chinese goods take effect, slashing demand for logistics space tied to trans-Pacific shipping. While regional diversity and a heavy base of local distribution have buffered immediate impacts, tenant decision-making is stalling and rents are declining. Analysts warn that prolonged tariff uncertainty could depress absorption and ripple through the Inland Empire and Los Angeles warehouse sectors, even as major tenants like Amazon and JD.com continue to pre-lease space.
Research Spotlight
Catch the latest insights from the Altus team
Q1 2025 Investments and transactions quarterly report preview
In just two weeks, Altus Group’s Research Team will publish the 2025 Q1 edition of the Investments and Transactions Quarterly Report. The release will offer insights into US commercial real estate investment sales and market activity trends. Readers can expect analysis of transaction volume, pricing, and pacing at the national level. Some quick preview highlights from the forthcoming report:
The average price per square foot of transacted single properties rose by 0.1% quarter-over-quarter in Q1 2025, with increases across all sectors except industrial, which fell by 4.6%
Average price per square foot of transacted single properties increased by 2.6% year-over-year across all property sectors
Across the major property types, average price per square foot rose annually for hospitality (+14.8%), retail (+5.2%), multifamily (+3.9%), and office (+3.5%), but fell for industrial (-0.1%) and commercial general + mixed use (-0.2%)
Transaction price per square foot
Important dates
Upcoming data releases and events
Data releases (Times in EST)
Tuesday, May 13
6:00AM: NFIB Small Business Optimism Index, Data Release
8:30AM: Consumer Price Index, Data Release
Thursday, May 15
8:30AM: Retail Sales, Data Release
8:30AM: Producer Price Index, Data Release
10:00AM: Business Inventories, Data Release
Upcoming Industry Events
May 12 – May 14: ULI Spring Meeting
May 13 – May 14: RERI Annual Conference
May 18 – May 20: ICSC Las Vegas
May 18 – May 21: MBA Secondary and Capital Markets Conference
May 18 – May 21: MBA CRE Finance and Technology Conference
May 30 – May 31: AREUEA National Conference
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.
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