The Fed’s late-October 25-bp rate cut ended the “higher-for-longer” era and re-anchored CRE valuations.
A brief dip in the 10-year yield below 4 % reduced funding costs, prompting lenders to quote again after months of paralysis.
Trepp data show $4.8 trillion in total CRE debt—yet liquidity remains selective.
The mood across credit desks is cautious optimism: the cost of capital has stopped climbing, but conviction hasn’t fully returned.

Banks still dominate exposure at 37.7 %, but non-bank share is inching up as life insurers and debt funds re-enter.
Spreads have narrowed roughly 30–40 bps since mid-year, enough to revive underwriting on multifamily and logistics.
Still, most lenders demand DSCR ≥ 1.35 × and haircut proceeds 5–10 %.
In practice, that means only high-occupancy, top-quartile assets clear committee.
Carlyle’s $9 billion raise epitomizes the shift—fresh equity waiting, but disciplined deployment.

After a 9 % drop from 2022 peaks, pricing is flattening.
Green Street’s index (+0.2 % in September, +2.9 % YoY) and the NCREIF Q3 total return (+0.06 %) confirm stabilization, not exuberance.
Cap rates, once expanding 20–30 bps per quarter, have plateaued as lower Treasury yields temper discount rates.
Investors call it “price discovery by exhaustion.”
Sellers no longer cut deeply; buyers no longer demand fire-sale yields.
On balance, equilibrium feels near.

Deal volume rebounded 19 % YoY in September to $42 billion, led by apartments and industrial.
Manhattan’s $1.1 billion 590 Madison trade and Florida’s $193 million Palm Beach sale signal renewed institutional activity.
Yet underwriting guardrails stay tight: exit-cap stress tests +75–150 bps, refinance budgets 50 bps above spot.
Operators describe this as a “pencil-sharpening” phase—viable only where in-place NOI is durable.
For now, financing windows favor those ready to lock early.

After eighteen months of swelling interest expense, a quarter-point cut matters.
Borrowers are calling lenders to reprice floating debt; some even find competition for solid deals.
But field operators still remember 2023’s liquidity freeze.
They’re paying down principal, fortifying cash flow, and timing CapEx with refinance opportunities.
“The mood has shifted from survival to scrutiny,” said one Sunbelt sponsor.
Even modest rate relief reintroduces choice — extend, refinance, or transact — each with newfound realism.

Core assets in apartments, logistics, and grocery-anchored retail draw multiple bids; secondary offices and aging malls remain sidelined.
Life insurers prefer long leases; debt funds chase transitional industrial at ~8 % yields.
This bifurcation defines 2025’s capital map: abundant for resilient cash flow, scarce for speculative stories.
Nonetheless, modest rate relief trims required equity spreads, enabling stalled recapitalizations.
Ultimately, discipline—more than liquidity—sets the recovery’s pace.

The Fed may cut again in early 2026 if inflation stays muted, with each move compressing cap rates ~10–15 bps.
Roughly $400 billion of maturities in 2025 will test lenders’ resolve; expect continued “amend and extend.”
Transaction volumes could rise ~15 % by spring 2026 as bid-ask gaps narrow.
Capital will chase top-quartile assets; laggards face redevelopment or public intervention.
Macro risk — slower growth, geopolitical noise — still argues for high DSCR buffers and interest-rate hedges.
In practice, the market is healing, but with an underwriter’s temperament.