CRE This Week - What's impacting the United States market?
July 14, 2025 - US commercial real estate news, macroeconomic indicators and market analysis.
Week of July 14, 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
NFIB Small Business Optimism Index
The National Federation for Independent Business released the Small Business Economic Trends Report for June on July 8. The headline metric, the Small Business Optimism Index (SBOI) dipped slightly to 98.6 in June, down 0.2 points but still above its long-run average. Among the ten index components (focused on hiring plans, earnings, inventories, capital outlays, and expectations) four rose, four fell, and two held steady. The biggest drag came from worsening inventory satisfaction, while job openings rose modestly. Notably, small businesses reported a sharp jump in compensation hikes, despite ongoing concerns over poor earnings, inflation, and labor quality.
Small businesses continue to face headwinds that may temper CRE demand, particularly in sectors like retail and office. The decline in expansion sentiment and capital investment plans suggests muted appetite for new space or buildouts. Although hiring remains challenging and capital outlays weakened to their lowest level since 2020, modest gains in current sales and pricing power offer some stability. Additionally, stronger compensation spending and sales momentum could support lease renewals or modest expansions in sectors tied to consumer demand or labor-intensive services.
On July 8, 2025, the Board of Governors of the Federal Reserve released its May 2025 G.19 Consumer Credit report, detailing trends in U.S. household borrowing. In May, consumer credit growth persisted with a 1.2% annualized gain to $5.05 trillion. The expansion was driven entirely by installment loans, which rose 2.8%, while revolving credit (mainly credit cards) fell 3.2%.
Consumers are slowing their pace of borrowing, with revolving credit (primarily credit cards) declining in May for the first time since November 2024, while installment loans like auto and personal financing continued to rise. This suggests households remain creditworthy for long-term obligations, potentially propping up demand in the housing sector. However, the pullback in revolving credit points to more cautious discretionary spending, which could pressure retail and service-oriented tenants as foot traffic softens.
Wholesale Trade: The U.S. Census Bureau released the Monthly Wholesale Trade Report for May 2025 on July 9. Wholesale sales totaled $697.2 billion, slipping 0.3% from April but rising 4.8% year-over-year. Wholesale inventories came in at $905.5 billion, also down 0.3% month-over-month, yet up 1.4% from May 2024. The inventories-to-sales ratio slightly eased to 1.30 (from 1.34).
Wholesale trends are flashing early warning signs for the economy, with rising inventories and flat sales suggesting weaker consumption and business investment. Durable goods sectors like tech and furniture are pulling back on inventory, signaling reduced warehouse demand from consumer-facing tenants. In contrast, nondurables such as petroleum and pharmaceuticals continue to expand. These shifts may already be showing up in the industrial real estate sector, where vacancy just rose to its highest level since 2014, according to recently released Q2 data.
News
News to know
BlackRock to buy real estate firm with $7.3 billion in assets | Bloomberg, July, 7 2025
BlackRock has agreed to acquire ElmTree Funds, a real estate firm with $7.3 billion in assets under management that specializes in leasing built-to-suit properties to single tenants. The deal, primarily structured as a stock transaction, will fold ElmTree into BlackRock’s Private Financing Solutions platform, created following its $12 billion purchase of HPS Investment Partners. Though small relative to BlackRock’s $11.6 trillion in total assets, the move deepens the firm’s expansion into private markets and complements its recent acquisitions in infrastructure and credit. ElmTree’s portfolio spans 122 properties across 31 states, with a focus on industrial real estate.
Sweeping congressional bill delivers tax relief, permanent Opportunity Zones | GlobeSt, July 7, 2025
President Trump has signed a sweeping bill that enacts major tax reforms with broad implications for commercial real estate. Key provisions include the permanent extension of Opportunity Zones (now subject to stricter eligibility criteria and enhanced incentives for rural areas) and the restoration of 100% bonus depreciation, which is expected to drive tax savings for investors. The law also revises how adjusted taxable income is calculated, expands Section 179 expensing, and raises the estate tax exemption to $15 million. While many in CRE see the bill as a win, others caution its benefits may be overstated. Additionally, deep cuts to Medicaid, SNAP, and ACA funding could strain low-income communities and ripple through sectors like senior housing and neighborhood retail. Despite the bill’s CRE-friendly tax breaks, its long-term effects remain uncertain.
Indoor malls are showing surprising resilience, outperforming open-air shopping centers in foot traffic growth during the first half of 2025, according to Placer.ai. Gen Z shoppers have been key to the rebound, driving nearly 2% year-over-year traffic growth for enclosed malls, compared to less than 1% for open-air centers. While indoor malls still trail pre-pandemic visitation levels, their performance has steadily improved, bolstered by tariff-driven spending and low retail vacancy. Retail REITs like CBL & Associates have benefited, returning to profitability and attracting new investor interest, a shift that suggests growing optimism around the future of enclosed malls.
Trump megabill revives hopes for Fannie and Freddie’s exit | GlobeSt, July 9, 2025
Industry experts at Mphasis Digital Risk believe the end of Fannie Mae and Freddie Mac’s conservatorship may be just a few years away, spurred by momentum from President Trump’s recently passed megabill. However, success depends on implementing an explicit federal guarantee on MBS and ensuring the GSEs have adequate capital. Senior executives Jeffrey Taylor and Kimberly Lanham argue that returning the entities to private ownership – with clear oversight from Treasury – is preferable to keeping them as quasi-utilities. Key details, including which products receive the guarantee, still need to be resolved, but conversations with FHFA and Treasury suggest progress is underway.
Law firms leased a record 4.6 million square feet of office space in Q1 2025, a 25% year-over-year increase and 35% above pre-pandemic levels over the past five quarters, according to Cushman & Wakefield. This outperformance is driven by stabilized hybrid work policies, sustained headcount and revenue growth, and a strong preference for premium space to support talent, culture, and client engagement. With new office construction down sharply, firms are locking in long-term leases, while downsizing has largely plateaued. Despite growing investments in AI, most firms are expanding rather than contracting, signaling continued leasing momentum.
Research Spotlight
Catch the latest insights from the Altus team
Podcast | Just how liquid is commercial real estate?
Dr. Philip English, PhD, CFA from Temple University joins us to explore commercial real estate liquidity, sharing insights from an upcoming joint research paper with Altus Group along with a broader discussion on how liquidity shapes investment decisions, the limits of traditional market metrics, and what new research reveals about true liquidity.
From transaction-based indices to the evolution of market structures, this discussion highlights the complexities and opportunities for investors and lenders regarding commercial real estate liquidity.
Important dates
Upcoming data releases and events
Data releases (Times in EST)
Tuesday, July 15
8:30AM: Consumer Price Index, Data Release
Wednesday, July 16
8:30AM: Producer Price Index, Data Release
2:00PM: Federal Reserve Beige Book, Report Release
Thursday, July 17
8:30AM: Retail Sales, Data Release
10:00AM: Home Builder Confidence Index, Data Release
Friday, July 18
8:30AM: Building Permits and Housing Starts, Data Release
10:00AM: Consumer Sentiment (Preliminary), Data Release
About our research team
Omar Eltorai
Research Director
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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