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U.S. hotel performance has diverged sharply: luxury and upper-upscale segments saw RevPAR up +3% YoY, while economy hotels fell –1.9%, according to STR and HotelDive. Flat national RevPAR (–0.1%) and occupancy around 62.5% mark the end of the post-pandemic rebound.
📊 Quick Dive
Luxury RevPAR +3% on the strength of affluent leisure travel; economy –1.9% amid budget fatigue.
Operating costs up: labor +2.6%, insurance +15%, compressing margins to ~34% GOP (–200 bps YoY).
Cap rates widening: trophy hotels sub-7%, limited-service >10%; financing tight except for high-end assets.
Luxury investors returning — resort trades exceed pre-COVID values as private equity re-enters the segment.
Read the full Signal
Fed Rate Cuts Signal Easing Capital Costs — The Fed’s first rate cuts since 2022 (target 4.00–4.25%) mark a turn toward lower borrowing costs. Mortgage rates eased to 6.3%, and 10-year yields dropped 40 bps to ~4.1%. CRE liquidity is improving with $129B in fundraising and 65% of execs reporting better debt access. Expect another 50 bps of cuts by Q1 2026 as refinancing accelerates. Read Full Signal →
Apartment Rents Slide as Supply Peaks — National average rent fell $6 in September to $1,712, the steepest September decline since 2009. Over 525k new units are delivering, pushing occupancy down to 94.2%. Rent growth slowed to 0.9% YoY, while Sunbelt metros post declines (Austin –4.4%, Denver –3.8%). Owners are shifting to retention and expense control until absorption catches up in 2026.. Read Full Signal →
Warehouse Leasing Hits Record Highs as Industrial Surges — Prologis leased a record 62 MSF in Q3, up 15% QoQ, with portfolio occupancy at 94.8%. Rents are inflecting upward again, with 5–8% growth expected for 2025. Investors remain aggressive: industrial cap rates could compress 25–50 bps as rate cuts lower debt costs. The sector remains CRE’s top performer. Read Full Signal →
Operators should view 2025’s bifurcated landscape through a margin-management lens.
For hoteliers, the message is divergence equals discipline: luxury operators can push rate, while economy owners must protect cash flow through expense audits, tech adoption, and dynamic pricing.
For investors, this cycle favors selectivity — high-end hospitality, logistics, and stabilized core multifamily stand to benefit most from rate relief. Stay cautious on overbuilt Sunbelt apartments and unrefinanced office exposure.
Rates drifting lower: Another 50 bps of Fed cuts likely by year-end, translating to cheaper refinancing in early 2026.
Hospitality cap rate spread widens: Expect 200–300 bps between luxury and economy hotels through 2026.
Industrial absorption strong: Rent growth projected 8–10% in primary markets.
Multifamily normalization: Rent growth flat to +1% through winter; recovery begins late 2025.
Selective optimism: Capital will flow first to high-quality, income-secure assets; weaker properties face slow repricing.
