CRE This Week - What's impacting the United States market?
December 15, 2025 - US commercial real estate news, macroeconomic indicators and market analysis.
Week of December 15, 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
Job Openings and Labor Turnover Survey
The Bureau of Labor Statistics released the October JOLTS data on December 9, showing continued, gradual cooling in the labor market. Job openings totaled roughly 7.6 million, down modestly from the prior month. Hiring held steady at about 5.1 million, while total separations were also little changed near 5.1 million. The quits rate edged lower to around 2.0%, signaling reduced worker confidence and less voluntary job switching. Layoffs rose to roughly 1.8 million but remain low by historical standards.
The data confirms earlier private-sector releases, pointing to a labor market that is gradually rebalancing rather than deteriorating. Hiring and separations remain largely in balance, while fewer quits signal reduced worker leverage and easing wage pressures. This dynamic may support the Fed’s willingness to deliver at least one additional rate cut in 2026 if inflation continues to cool. For commercial real estate, the implications are mixed: softer hiring and lower churn may continue to weigh on office absorption and expansion-driven leasing, while steady employment levels help maintain a floor under demand in retail, multifamily, and industrial sectors tied to everyday consumption and logistics.
NFIB Small Business Optimism Index
The National Federation for Independent Business released the Small Business Economic Trends (SBET) Report for December on November 9. The headline Small Business Optimism Index (SBOI) rose 0.8 points to 99.0, its highest level in three months and above the long-term average of 98. The increase was driven by a 9-point jump in sales expectations and a 4-point rise in hiring plans to a net 19%, the strongest hiring reading this year. However, 34% of owners raised selling prices, the largest monthly increase on record, and 21% still cite labor quality as their biggest problem.
The November report suggests that small businesses see a cautiously improving economic backdrop, with stronger sales expectations and hiring plans helping to support near-term growth. This is particularly important for the industrial, office, and retail sectors, where small firms account for a large share of occupied space and leasing activity. However, elevated price pressures, persistent labor challenges, and rising uncertainty around costs and demand may limit the pace of expansion. As a result, many small businesses may remain selective about new space commitments, tempering longer-term leasing momentum even as near-term conditions show signs of stabilization.
At its December 10 meeting, the Federal Open Market Committee lowered the target range for the federal funds rate by 25 basis points to 3.50%–3.75%. The statement noted that economic activity continues to expand at a moderate pace, while job gains have slowed and the unemployment rate has edged higher in recent months. Inflation has moved up since earlier in the year and remains somewhat elevated, prompting the Committee to emphasize that uncertainty around the outlook is still high and that downside risks to employment have increased. The decision was not unanimous, with one member favoring a larger 50 basis point cut and two preferring no change. In a technical adjustment, the Fed also said it will begin purchasing shorter-term Treasury securities as needed to maintain ample reserve balances.
The rate cut signals a shift toward supporting the labor market as growth cools, even as inflation remains above target. For the broader economy, this reinforces the idea that the Fed is still trying to engineer a soft landing rather than respond to an outright downturn, but policymakers made clear that future moves will remain data dependent. For commercial real estate, lower short-term rates should provide some incremental relief for floating-rate borrowers and near-term refinancing activity, particularly in sectors facing maturity pressure. However, the Fed’s emphasis on elevated uncertainty and only gradual easing suggests that financing conditions will remain restrictive.
News
News to know
CMBS distress rate climbs to 11.6% | Commercial Observer, December 8, 2025
CRED iQ’s November data shows CMBS distress continuing to climb, with the overall distress rate rising to 11.63% as maturity defaults and sector-specific weakness persist. Delinquencies reached 8.78% and the specially serviced rate hit 11.21%, reflecting a growing number of loans transferred for workout discussions before payments are missed. Office remains the most troubled property type with a 17.55% distress rate, followed by multifamily at 10.8% and hotels at 10.33%, while industrial and self-storage continue to show strong resilience. The report highlights that refinancing challenges, not operational failure, are driving the cycle: more than 40% of distressed loans are nonperforming maturities and nearly 60% of all distressed CMBS loans are past their maturity date without payoff. The data points to elevated refinancing risk heading into 2026 and reinforces the need for close credit monitoring, particularly in office and multifamily-heavy portfolios.
Donald Bren’s Irvine Co. has completed its exit from the downtown San Diego office market, selling its last property, One America Plaza, at a discount of more than 50%. The move signals a lack of confidence in the downtown district, where vacancy rates have hit 35.6%. Irvine Co. is redirecting its focus to high-growth suburban markets like La Jolla and University Town Center. Conversely, entrepreneurial buyers are acquiring these discounted assets with plans to reposition them for smaller tenants, betting on a long-term recovery.
Fed cuts rates yet again | Commercial Property Executive, December 10, 2025
The Federal Reserve delivered its third 25 basis point rate cut of the fall, bringing the policy rate to a range of 3.50 to 3.75%, as it balances stubborn inflation near 3% against a softening labor market and limited recent data due to the government shutdown. CRE investors broadly welcomed the move, with industry leaders noting it signals clearer policy direction and should support transaction and investment activity, though office is expected to see limited benefit given its reliance on equity and continued lender caution. Industrial and other sectors tied to development and tenant expansion may see more upside as lower borrowing costs help projects pencil. Looking ahead to 2026, uncertainty remains high, with the Fed currently projecting just one additional cut, leadership changes at the Fed looming, and market expectations diverging widely on how aggressively policy may ease next year.
Banks see another post-2009 rule loosened, leaving CRE vulnerable | GlobeSt, December 9, 2025
Bank regulators have rolled back another post-crisis safeguard by ending 2013 leveraged lending guidance, even as the Fed continues to flag elevated CRE loan risk. This follows other 2025 regulatory easing, including looser capital rules and changes that reduce visibility into older troubled loans. Critics warn that the system is becoming less transparent at a time when office and multifamily stress is rising, and delinquencies at community and regional banks are drawing attention. With memories of past crises fading and cycle risks building, the sector is not well positioned if conditions deteriorate, making careful credit monitoring and stress testing increasingly important.
Grading 2025 predictions: What CRE got right and wrong this year | Bisnow, December 11, 2025-12
Bisnow’s year-end scorecard shows that several key 2025 CRE predictions held up, despite a year defined by uncertainty. Office vacancy began to edge lower for the first time since 2020, investment activity rebounded more strongly than expected, and data center growth continued to accelerate and spread beyond traditional hubs. Forecasts were less accurate for multifamily, where heavy new supply kept vacancy rising, and for bank write-downs, which did not surge as widely anticipated, even though office loans remain the most distressed segment.
A new Newmark report finds that Gen Z is rapidly emerging as a major force in luxury retail, with real net worth among U.S. households ages 18 to 34 up an estimated 170% since 2019 and global Gen Z spending projected to climb from $2.7 trillion in 2024 to $12.6 trillion by 2030. The cohort is directing spending toward experience-driven categories like apparel, beauty, and travel, with most affluent young consumers defining luxury by in-store experience and showing a strong willingness to pay more for sustainable and secondhand goods. These shifts are expected to reshape luxury retail strategies and concentrate demand in fast-growing markets, including Atlanta, Austin, Dallas, Denver, Houston, Los Angeles, Nashville, New York City, Orlando, Phoenix, and South Florida.
INSIGHTS Spotlight
Catch the latest research and insights from Altus
Article | Large US CRE deals made a comeback in Q3 2025
Large US CRE deals are officially back.
Q3 2025 saw 1,826 transactions over $10M, the most since 2022, and a 48% year-over-year jump in total value, marking the strongest large-deal growth in a decade.
What’s driving the resurgence, and will it hold into year-end?
Podcast | What’s driving demand for alternative CRE sectors in 2026
Newmark’s President of Capital Markets, North America, Chad Lavender, joins the show to discuss the sector-by-sector changes that are redefining today’s capital markets.
From data centers to senior housing to single family rentals, Chad shares a well-defined read on where CRE capital is flowing, who is providing it, and why it matters heading into 2026.
Important dates
Upcoming data releases and events
Data releases (Times in EST)
Monday, December 15
8:30AM: Home Builder Confidence Index
Tuesday, December 16
8:30AM: November US Employment Report
8:30AM: October Retail Sales
9:45AM: S&P Flash Services PMI
9:45AM: S&P Flash Manufacturing PMI
Wednesday, December 17
8:30AM: Consumer Price Index
10:00AM: Existing Home Sales
10:00AM: December Consumer Sentiment (final)
About our research team
Omar Eltorai
Senior Director of Research
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.
Resources
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