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The Fed trimmed the policy rate by 25 bps (to ~3.75–4.00%), taking cumulative cuts to 150 bps over the past year. The 10-year Treasury briefly slipped sub-4%, lowering CRE debt costs and boosting refinancing and bid activity.
📊 Quick Dive
$42B in U.S. CRE sales closed in September, up 19% YoY, with office transactions +42% in 1H25 YoY (MSCI via brief).
Headline CPI ~3.0% YoY; Fed emphasis is shifting to a cooling labor market (brief synthesis).
Credit spreads remain elevated but are tightening; regulators eye shadow-bank stress tests (Reuters; private credit leaders’ commentary).
U.S. Apartment Rents Turn Negative as Vacancy Hits 7.1%
The national median rent fell 0.4% in September to $1,394 and is now 0.8% lower than a year ago — the first annual decline since 2020 (Apartment List). Vacancy reached a series-high 7.1% amid a 2024–2025 delivery surge concentrated in Class A. CMBS delinquencies climbed to 6.59% in September from 3.33% a year earlier, with special servicing near ~8.2% (Multifamily Dive/Trepp). Operators are prioritizing occupancy and concessions; underwriting should assume 0–2% rent growth and 91–95% occupancy near term. The takeaway: it’s a renter’s market, but supply peaks point to a 2026 re-tightening.
Industrial Leasing Surges: 146.2 MSF in Q3, Highest Since Early 2024
JLL data show tenants signed 146.2 MSF in Q3 (+~20% vs. Q2), with net absorption doubling to 38.2 MSF. National vacancy of ~7.6% appears to be peaking; Inland Empire tightened to 4.1% as absorption outpaced new supply. The construction pipeline ticked up to 246.8 MSF but remains ~80 MSF below its late-2020 peak — starts are selective in port-proximate nodes. With rent growth normalized to ~3–5% YoY, landlords retain pricing power in constrained infill markets. Implication: demand is back, but underwrite exit caps 50–100 bps wide and budget higher TI for big-box specs.
Mortgage Rates Slide to 13-Month Low, Supporting Refi Math
Industry trackers report 30-year mortgage rates at a 13-month low, echoing the Treasury rally post-FOMC (Reuters). While residential isn’t CRE, spillovers matter: cheaper consumer mortgages and improved rate sentiment tend to lower CRE risk premiums and revive lender engagement. Expect a modest pickup in term sheets and extensions as spreads compress from recent wides.
Read Full Signal
Lock in what the market is giving you. For borrowers, move quickly on refis and extensions while the 10-year prints a “3-handle.” Use improved debt service capacity to de-leverage or build reserves rather than maximize proceeds — senior lenders will reward discipline. For buyers, re-run paused deals: cap rates won’t compress overnight, but bid-ask is narrowing as financing stabilizes. In multifamily, shift to occupancy defense and realistic rent growth (0–2%); in industrial, pre-fund higher TI/LC and stagger expirations to smooth rollover.
December FOMC: Market odds favor another 25 bps cut; watch guidance on the 2026 glidepath.
Rates & Liquidity: 10-year stabilizing in high-3% range would reopen CMBS/life-co channels with better quotes.
Macro Prints: September jobs (post-shutdown) and October CPI will set Q4 risk tone for cap-rate paths.
Year-End Deals: Expect a Q4 close-rate push; some core assets could see mild cap-rate compression if bidding deepens.
Multifamily Stress: Watch 2020–2021 bridge maturities for workouts; agency allocations and reserve policies are swing factors.
