CRE This Week - What's impacting the United States market?
May 5, 2025 - US commercial real estate news, macroeconomic indicators and market analysis.
Week of May 5, 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 U.S. Bureau of Labor Statistics released the March 2025 Job Openings and Labor Turnover Survey (JOLTS) on April 29. The number of job openings decreased by 288,000 to 7.2 million, marking the lowest level since September 2024. Hiring rose modestly by 41,000 to 5.4 million while layoffs fell by 222,000 to 1.6 million. The number of voluntary quits increased slightly to 3.3 million.
This final JOLTS report before the White House’s April 2 tariff announcement reflects a labor market that is slowing, but not unraveling. The job openings rate fell to 4.3%, its post-COVID low, while the hires rate declined to levels last seen in 2014, indicating increased employer caution. Still, layoffs remain near historic lows and the quits rate rose to 2.1%, suggesting workers remain confident in job prospects. The ongoing drop in postings (despite low, stable unemployment) signals firms are adjusting headcounts gradually rather than making deep cuts. A labor market marked by selective hiring and minimal layoffs may support steady leasing activity, particularly in the office sector, but could potentially limit expansion demand. Industrial and retail demand may moderate as hiring slows, especially in logistics-heavy and consumer-facing sectors.
S&P Case-Shiller Home Price Index
S&P Dow Jones Indices released the Case-Shiller Home Price Indices for February 2025 on April 29. The National Index showed an annual price gain of 3.9%, while the 10-City Composite Index showed an annual gain of 5.18%. The 20-City Composite showed an annual increase of 4.5%.
The largest annual price gains are clustered in supply constrained Northeast and Midwest metros where single-family construction has either lagged since the GFC or faces strict impediments to new supply, such as zoning: New York (+7.7%), Chicago (+7.0%), Cleveland (+6.6%), Boston (+5.9%), and Detroit (+5.8%) lead the way. Limited affordable options for ownership in these cities will continue to push would-be buyers to the multifamily market.
The Bureau of Economic Analysis released the Personal Income and Outlays report for March 2025 on April 30. Through March, consumer spending showed healthy growth with PCE increasing by $134.5 billion (0.7%), with $54.5 billion in goods spending and $79.9 billion in services spending. Personal saving was $872.3 billion in March, with the personal saving rate (personal saving as a percentage of disposable personal income) at 3.9%, down from 4.1% in February and 5.2% one year ago. The PCE price index for March decreased less than 0.1% from the preceding month and core PCE index (excluding food and energy) increased less than 0.1%. From the same month one year ago, the PCE price index increased 2.3%, while the core PCE price index rose 2.6% year-over-year.
The March 2025 Personal Income and Outlays report painted a picture of an economy with continued income growth, healthy consumer spending, and moderating inflation. The report captured the period leading up to but excluding the tariff turmoil that rocked the capital markets at the start of April, and showed that at least through the first quarter consumer spending was resilient. The massive jump in auto spending suggests that even if this data did not capture the impact of tariffs, many consumers may have been making purchases in anticipation of tariffs affecting certain sectors. The declining savings rate suggests that consumers are having to dip a bit deeper into to fund their purchases. PCE and core PCE are still above the Fed’s target range for inflation, but the downward trend shows progress made, albeit slowly towards target and supportive of near-term interest rate cut. However, it will be interesting to see how the April data looks – particularly around consumer spending and inflationary trends.
The Bureau of Economic Analysis released its advance estimate of Q1 2025 GDP on April 30. Real gross domestic product contracted at an annual rate of -0.3%, the first contraction since 2022. In Q4 2024, real GDP increased 2.4%. A record import surge, led by pharmaceuticals up about 60 percent and computers up about 50 percent, widened the trade deficit and dragged on growth, although inventories and equipment spending kept core private demand roughly 3 percent higher.
Firms rushed to import goods ahead of President Trump’s proposed April 2 tariff hikes. The stockpiling wave is lifting near-term demand for warehouses, cold storage, and port logistics tied to drugs and electronics. However, if tariffs and related volatility sap business and consumer confidence, delaying capital spending, future leasing could soften significantly.
The U.S. Census Bureau released the Value of Construction Put in Place Survey for March on May 1. Total construction spending declined 0.5% month-over-month in March but rose 2.8% year-over-year to a seasonally adjusted annual rate of $2.2 trillion. Spending for Q1 totaled $486 billion, up 2.9% from a year earlier. Private construction spending fell 0.6% month-over-month but increased 2.3% annually.
Private nonresidential construction spending dropped 0.8% on the month and grew just 1.6% year-over-year (the slowest pace since July 2021) reaching an annualized rate of $750 billion. Annual spending declined across lodging, commercial, healthcare, and education sectors. Manufacturing, which comprises the largest share of nonresidential activity, posted just 3.6% annual growth, the weakest since April 2021.
ADP Employment and the April Employment Situation
The ADP National Employment Report, released on April 30 by ADP and the Stanford Digital Economy Lab, showed that private employers added 62,000 jobs in April, a sharp slowdown from 147,000 in March. Job gains were concentrated in construction (+16,000), trade/transportation/utilities (+21,000), and financial activities (+21,000), while education and health services saw a loss of 23,000 jobs. Businesses with 20–49 employees shed 9,000 jobs, while other size categories posted modest gains.
The Bureau of Labor Statistics (BLS) released its April Employment Situation report on May 2, showing nonfarm payrolls rose by 177,000. Though the headline was solid, the previous two months were revised down by 58,000 jobs. Unemployment held steady at 4.2%, and the labor force participation rate edged up to 62.6%. Healthcare led job creation (+51,000), while federal employment declined by 9,000 and has fallen 26,000 since January.
The labor market data suggest a slow, steady normalization rather than a sharp deterioration, even as business sentiment continues to signal caution. This divergence between what firms are saying and what they're actually doing (modest but ongoing hiring particularly in resilient sectors like healthcare) indicates that occupier fundamentals may remain more stable than headlines suggest. While office and industrial demand may ease in line with slower headcount growth, persistent hiring in healthcare could support activity in a sectors such as medical office. CRE professionals should remain mindful of performance that appears tied to actual labor dynamics rather than sentiment-driven fears.
News
News to know
The tariffs and retail: Winners and losers emerge | Commercial Observer | April 28, 2025
New tariffs announced by the Trump administration are already reshaping the retail sector, with small and mid-sized businesses that heavily depend on imports facing steep cost increases. While major chains like Walmart and Target are expected to be more insulated due to their scale and diversified supply chains, smaller retailers, especially those in apparel, footwear, electronics, and coffee, are struggling to absorb higher prices. Many companies are scrambling to find new suppliers, but shifting supply chains is a slow and costly process. Real estate activity tied to retail development has slowed as material costs rise, and consumer behavior is beginning to shift as higher prices force households to cut back on discretionary spending. Overall, the impact is expected to weigh heavily on small businesses, commercial real estate, and the broader economy.
StepStone closes largest real estate secondaries fund at $3.77B | Connect CRE | April 28, 2025
StepStone Real Estate announced it closed its fifth flagship fund, StepStone Real Estate Partners V, securing $3.77 billion in primary commitments and setting a record for the largest real estate secondaries fund raised to date. Including co-investments and related vehicles, the total investment capacity exceeds $4.5 billion. Despite a difficult fundraising environment and broader market challenges, the fund was significantly oversubscribed. So far, it has deployed $1.7 billion across eight deals, with more in the pipeline. StepStone’s focus on providing liquidity solutions in a tight market has proven especially timely given reduced transaction volumes and rising borrowing costs
Cargo slowdown threatens warehouse demand and retail inventories | GlobeSt | April 29, 2025
A steep drop in cargo shipments from China, triggered by new U.S. tariffs, is beginning to ripple across the commercial real estate and retail sectors. Port officials and shipping analysts expect import volumes to fall by up to 60 percent in the coming weeks, straining warehouses that depend on a steady flow of goods and raising concerns over holiday inventory shortages for retailers. Efforts to quickly shift supply chains are proving slow and complex, and even companies that stockpiled goods face storage costs and obsolescence risks. The National Retail Federation projects a major decline in imports through the second half of 2025, which could lead to rising warehouse vacancies, weaker retail performance, and broader economic pressure.
Deloitte has signed a landmark lease for 800,000 square feet at Related Companies’ planned tower at 70 Hudson Yards, making it one of the largest pre-construction office commitments since the pandemic. The move signals renewed demand for premium office space, especially in Manhattan, where Q1 leasing activity hit 7.9 million square feet, well above recent averages according to CBRE. Deloitte will relocate its North American headquarters from Rockefeller Center and gain access to a suite of modern amenities, including event space, a terrace, and wellness features. The deal highlights a flight to quality in top-tier buildings, even as older properties struggle with vacancy and broader economic uncertainty looms.
Private equity firms pull back on investing in US hotels | Commercial Observer | April 30, 2025
Private equity firms, once dominant hotel investors, are pulling back amid rising interest rates, trade policy volatility, and a plunge in international tourism. Their share of U.S. hotel acquisitions dropped from 55% in 2021 to 30% in 2024, per JLL. Major players are staying cautious, but family offices and niche funds are stepping in, targeting discounted assets and favoring domestic travel markets. With a wave of hotel debt maturing in 2025 and limited new development, distressed sales may create openings despite overall deal flow remaining slow.
Chicago tower hitting market at big discount shows city’s stress | Bloomberg | April 30, 2025
Canadian pension fund CDPQ is marketing a 31-story Chicago office tower at 125 S. Wacker Drive at a steep discount, with bids expected around $60 million, 59% below the $145 million Ivanhoé Cambridge and Callahan Capital paid in 2017. The building is currently 63% occupied, according to Jones Lang LaSalle marketing materials. Despite renovations, it reflects broader distress in Chicago’s office sector, where the CBD vacancy rate reached nearly 24% in Q1 2025, according to JLL. The offering comes debt-free and highlights ongoing efforts by Canadian funds to reduce U.S. office exposure, following moves like CPPIB’s $1 sale of its Manhattan stake in 2023.
Fed warns CRE could see further price drops | GlobeSt | May 2, 2025
The Federal Reserve is warning that commercial real estate prices may be more fragile than they appear, cautioning that transaction-based indices may not reflect underlying stress in the market. In its latest report, the Fed noted that property owners face heightened refinancing risks, and that forced sales in today’s thin market could trigger “significant price declines,” even for assets that aren’t distressed. Tight credit conditions, diminished valuations, and elevated interest rates continue to weigh on the sector. The Trepp Property Price Index, frequently used by CRE analysts, shows continued property value declines across most asset types, with office leading the downturn year-over-year
Research Spotlight
Catch the latest insights from the Altus team
Podcast | Gen Z, AI, and the mall: What’s driving retail real estate’s next golden age
Retail real estate is back, and it looks nothing like the past. We sit down with Brandon Isner, Head of Retail Research at Newmark, to celebrate retail’s emergence as one of the most compelling asset classes in 2025. From Gen Z’s interest in in-person shopping to the role of AI in optimizing operations and experiences, we break down the factors fueling a potential golden age for retail.
Also in this episode:
• The long-term impact of historically low new construction
• How malls are evolving into multi-purpose lifestyle hubs
• The rise of tech-enabled, omni-channel retail strategies
• What market participants should be watching for in retail performance and tenant mix
Tune in to our latest episode to keep pace with one of the fastest-evolving CRE segments
Important dates
Upcoming data releases and events
Data releases (Times in EST)
Monday, May 5
9:45AM: S&P Final Services PMI, Data Release
Tuesday, May 6
8:30AM: US trade Deficit, Data Release
Wednesday, May 7
2:00PM: Federal Open Market Committee Rate Decision
3:00PM: Consumer Credit, Data Release
Thursday, May 8
10:00AM: Wholesale Inventories, Data Release
Upcoming Industry Events
May 12 – May 14: ULI Spring Meeting
May 13 – May 14: RERI Annual Conference
May 18 – May 20: ICSC Las Vegas
May 18 – May 21: MBA Secondary and Capital Markets Conference
May 18 – May 21: MBA CRE Finance and Technology Conference
May 30 – May 31: AREUEA National Conference
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
Latest insights
May 1, 2025
EP60 - Gen Z, AI, and the Mall: What’s driving retail real estate’s next golden age
Apr 17, 2025
EP58 - From volatility to opportunity - AEW's Justin Pinckney on the CRE debt landscape
Apr 8, 2025