📢Good morning, today’s Signals are brought to you by CRE360 Signal™.
Today’s Signals show how capital visibility and cost inflation are pulling the CRE feasibility equation in opposite directions.
JPMorgan’s earlier rate-cut call gives the market timing clarity —
but rising construction inputs widen pro forma gaps and tighten lender tolerance heading into 2026.
This isn’t optimism or fear — it’s execution math. And execution math now matters more than headlines.
➤ SIGNAL
📌JPMorgan Pulls Fed Cut Forward to December 2025
JPMorgan’s latest call pulls the first Fed rate cut forward to December 2025, tightening market consensus and pushing futures to price an ~85% probability of a year-end move.
This gives operators something they haven’t had all year: a defined timeline for the beginning of rate normalization.
But the impact is not what retail headlines suggest.
Short-term easing provides liquidity, not leverage.
Floating-rate borrowers get relief; uncertainty compresses; capital flow stabilizes.
Yet the 5–10 year Treasury curve — the part that determines permanent loan sizing, refinance math, and development feasibility — barely moved.
Pricing power hasn’t changed, and valuations haven’t shifted.
Rate timing improves.
Rate economics do not.
📌Construction Input Costs Rise 3.5% YoY
Data shows a 3.5% YoY increase in U.S. construction input prices — the first meaningful broad-based rise in months. This is not a single-category spike.
It’s across concrete, electrical components, steel, and specialty materials — exactly the categories that underpin pro forma accuracy.
This is cost drift, not cost shock.
And cost drift is more dangerous because it’s harder to detect and easier to underestimate.
It widens the gap between:
outdated 2024–2025 budgets
current subcontractor pricing
lender contingency and leverage expectations
development feasibility thresholds already under pressure
Lenders are recalibrating.
GCs are repricing.
Developers must revalidate assumptions — or carry the execution risk alone.
A 3.5% drift seems small.
But layered with insurance volatility, labor intensity, and long-lead exposure, it becomes a feasibility problem masquerading as a rounding error.
Why It Matters
Rate clarity is arriving at the same moment cost visibility is deteriorating — creating the most important spread of 2026:
Capital is moving forward.
Costs are moving sideways.
Underwriting sits in the middle, trying to reconcile both.
This cycle will reward operators who understand that:
liquidity returns before pricing does
rate relief does not fix the 10-year
cost drift can kill a deal faster than rate spikes
lenders will demand updated budgets, not promises
feasibility in 2026 is about timing alignment, not optimism
The mistake would be treating a December rate cut as a valuation catalyst.
It isn’t.
It’s simply a scheduling adjustment for capital.
➤ TAKEAWAY
The 2026 story is misalignment — not relief, not pressure.
Capital gets a clearer timeline.
Costs erode quietly in the background.
Developers must rebuild feasibility on updated math, not recycled assumptions.
Operators who re-budget early, lock procurement, tighten scope, and purge 2024-era pricing assumptions will survive this phase.
Those who don’t will discover that rate relief helps…but cost discipline decides outcomes..
▼ EDITORIAL DESK TOP PICKS
Holiday Spending Splits Retail Market Affluent shoppers drive luxury sales while value-focused households fuel off-price chains, creating a two-tier retail performance pattern heading into peak season.
Urban Retail Leasing Picks Up. NYC’s SoHo and Upper East Side show rising retail demand from luxury, food-and-beverage, and experiential tenants, signaling recovering foot traffic and improving landlord leverage.
Raising Cane’s Opens 14 New Stores. Fast-casual dining continues to outperform as Raising Cane’s accelerates expansion, securing high-visibility sites and strengthening demand for outparcel and drive-thru retail.
Largest Industrial Deal of 2025 Closes. EQT sold an 8.7M-SF, 25-property logistics portfolio, confirming ongoing institutional appetite for stabilized warehouse assets across major U.S. distribution hubs.
Industrial Supply Finally Eases. Q3 deliveries fell 32.5% YoY as the pipeline cooled, helping stabilize vacancy at 7.1% and supporting firm rents and values.
Prologis Invests in “Blue Highway” Logistics. Prologis is expanding its NYC waterfront logistics push, aligning with maritime freight initiatives to solve last-mile congestion and modernize dense-market distribution.
Fortress Executes $465M Resort Sale. Fortress is selling two Caribbean resorts through a $465M muni-bond structure, signaling creative financing demand in hospitality as investors target luxury assets supported by strong travel fundamentals.
San Francisco Hotels Trade at Deep Discounts. Hilton Union Square and Parc 55 sold for $408M, far below previous valuations, reflecting urban hotel distress while signaling investor confidence in a long-term recovery cycle.
Investors Flocking to Luxury Hotels. Global RevPAR is rising and luxury hotels show the strongest pricing power, driving renewed private equity interest and higher 2025 transaction forecasts.
Multifamily Bidding War Intensifies Post-Fed Cuts. October multifamily acquisitions saw the sharpest bid-intensity increase of 2025, fueled by improved liquidity, chronic housing undersupply, and investor rotation back into stable cash-flow assets.
Midwest Renter Demand Surges. Cincinnati, Kansas City, and Minneapolis lead the country in renter demand as affordability drives migration, strengthening fundamentals and boosting investor interest across secondary Midwest metros.
Rent Collections Improve for Small Operators. On-time rent payments rose to 83.7% in November, marking the third consecutive month of improvement—an encouraging stabilization signal for multifamily owners facing delinquency pressure.
Office Markets Recover Unevenly. Cities with limited new supply—New York, Miami, Charlotte—are posting falling vacancies, while overbuilt markets like Austin and Seattle continue to face absorption headwinds.
Houston Investor Repositions Aging Office Asset. LandPark Advisors acquired an eight-story Houston building to renovate and reposition for higher-quality tenancy, reflecting selective opportunistic buying in discounted office markets.
Distress Improves—But Maturity Defaults Surge. CRE CLO delinquencies dropped to their lowest level of 2025, yet 43% of loans maturing this year became non-performing due to refinancing gaps.
Office Defaults Drive CMBS Spikes. Manhattan and Hartford office towers missed balloon payments, pushing office CMBS delinquency to 8.1%, underscoring ongoing stress in aging urban office stock.
Weekly “Return-to-Lender” Deals Accelerate. Receiverships and distressed sales—including nursing homes and mixed-use assets—are rising as operators struggle with inflation, labor costs, and refi hurdles.
