CRE This Week - What's impacting the United States market?
March 24, 2025 - US commercial real estate news, macroeconomic indicators and market analysis.
Week of March 24, 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
The U.S. Census Bureau released its advance estimates of monthly retail and food sales for February on March 17. Sales rose 0.2% month-over-month and 3.1% year-over-year to a seasonally-adjusted annual level of $722.7 billion. Retail trade sales, excluding food services, rose 0.5% month-over-month in February, and were up 3.4% year-over-year.
Although consumer spending remains strong – supported by low unemployment, steady job growth, and rising incomes – the sector-specific landscape tells a more nuanced story and shows some early signs of softening consumer spending. Non-store retail, an important indicator for logistics and warehouse demand, grew 6.5% annually in February, but its pace has been slowing since mid-2023. Grocery stores, previously stagnant, have accelerated to nearly 5% growth, and furniture stores rebounded sharply from deep contractions to a 4.5% annual increase. Still, since these figures aren't inflation-adjusted, real growth in certain segments such as at building materials stores could be negative, underscoring continued sector-specific complexities for commercial real estate investors and owners.
Building Permits and Housing Starts
The U.S. Census Bureau and Department of Housing and Urban Development released their monthly report on new residential construction for February on March 18. Housing starts rose 11.2% month-over-month but declined 3.0% year-over-year to a seasonally adjusted annual rate of 1.5 million units, marking six consecutive months of annual decreases.
February's uptick may reflect builders accelerating construction in anticipation of proposed tariffs, notably the 40% tariff on Canadian lumber announced by President Trump. However, permitting activity, a key indicator of future construction, fell 1.2% month-over-month and declined 6.8% year-over-year.
Looking at the change from a year ago, multifamily permits have declined in all but one month since March 2023, indicating a pipeline contraction typically associated with recessionary periods. Multifamily starts have also dropped by 6.6% year-over-year in February, continuing a downward trend evident in all but two months since June 2023.
As expected by markets, the U.S. Federal Reserve made no change to interest rates on Wednesday, March 19, leaving the range for the Federal Funds rate at 4.25% to 4.50%. The Federal Open Markets Committee (FOMC) released the first iteration of their Summary Economic Projections for 2025, which showed that the median real economic growth forecast for 2025 to be 1.7%, down from 2.1% in December 2024, and core inflation projection for 2025 to be 2.8%, up from 2.5% in December.
Despite foregoing a cut to interest rates and the overall negative adjustments to the FOMC’s median outlooks for 2025 and 2026 in terms of slower real growth, higher inflation, and slightly higher unemployment, US equity markets reacted positively to the Fed’s releases and Fed Chair Jerome Powell’s press conference, while the yield on US Treasury securities came down slightly. During the press conference, Chair Powell acknowledged that uncertainty and recession odds have increased, though the economy remains on solid footing, downplaying some of the recent soft data and souring sentiment, and reiterating the Fed’s focus on hard data. While there was no change to the Fed’s “wait-and-see” stance on rates, the elevated uncertainty and increased recession risk slightly lifted the market’s rate cut expectations for 2025 to 75bps, with the first starting in June.
The National Association of Realtors (NAR) released February data on sales of existing homes on March 20. Sales of existing homes rose 4.2% month-over-month but were down 1.2% year-over-year to a seasonally adjusted annual rate of 4.26 million. The median price of an existing home price rose 3.8% year-over-year to $398,400.
Inventory grew 5.1% month-over-month to 1.24 million units, equating to a 3.5-month supply, still notably below NAR’s benchmark of a balanced market at six months. Experts at NAR, Fannie Mae, the Mortgage Bankers Association, and the National Association of Home Builders each anticipate 30-year fixed mortgage rates to remain above 6% through 2026, a sign that affordability issues may persist in the for-sale market. Coupled with the ongoing contraction in multifamily construction activity, these conditions are likely to push potential homebuyers toward rental options, bolstering apartment demand and supporting sustained rent growth.
News
News to know
The Trump administration is launching a task force to identify federal land for affordable housing, aiming to address the U.S. housing shortage by transferring or leasing land to local governments. While developing Bureau of Land Management properties could yield millions of new homes, challenges include infrastructure gaps, zoning laws, and environmental concerns. Critics note much of the land is in remote areas, but in cities like Salt Lake City and Las Vegas, where shortages align with federal land, the initiative could make a meaningful impact.
Forever 21 will wind down US operations in second bankruptcy | Connect CRE | March 17, 2025
Los Angeles-based F21 Opco, the U.S. licensee of Forever 21, has filed for Chapter 11 bankruptcy for the second time in six years and plans to wind down its U.S. operations. While all stores will remain open during the process, the company is exploring a sale or restructuring that could allow it to continue operating. The bankruptcy filing does not impact Forever 21 stores outside the U.S., which are run by separate licensees.
Bass looking into pause on measure ULA for postfire rebuilding | Bisnow | March 17, 2025
Los Angeles Mayor Karen Bass is exploring a possible temporary suspension of Measure ULA, the real estate transfer tax that has faced criticism from the commercial real estate sector since its implementation. The rebuilding effort following January’s fires has sparked discussions on whether the tax could be frozen without requiring a voter referendum. While legal opinions vary, the city is investigating potential options. Measure ULA, designed to generate $1.1 billion for affordable housing and homelessness initiatives, raised only $300 million in its first year.
Walgreens acquisition sets stage for major retail real estate changes | GlobeSt | March 17, 2025
Sycamore Partners’ $23.7 billion acquisition of Walgreens Boots Alliance marks the end of its nearly 100-year run as a public company and could significantly reshape the retail real estate landscape. With over 8,175 U.S. stores, mostly leased, Walgreens may see store closures and lease renegotiations as Sycamore looks to streamline operations. The transition to private ownership gives Walgreens flexibility to cut costs, reposition assets, or restructure divisions, impacting landlords and investors, particularly those in CMBS. As traditional retailers navigate shifting consumer trends, the deal underscores potential opportunities for consolidation in the retail pharmacy sector.
Institutional investors are shifting to a more risk-on approach, expanding private market allocations amid evolving macro conditions, according to Nuveen’s latest survey of 800 institutions managing $19 trillion in assets. Key trends include renewed interest in real estate and infrastructure, with allocations to private real estate and private infrastructure expected to rise significantly in 2025. Data centers and energy infrastructure credit are emerging as top investment priorities. Insurers are leading in complexity and specialization, increasing allocations to private credit and impact-driven investments. While commitment to clean energy remains strong, investors are adopting a pragmatic approach to balancing traditional and renewable energy sources.
Trump's trade war tests Canada's longtime obsession with US assets | Bisnow | March 19, 2025
International investment in U.S. commercial real estate faces growing uncertainty amid heightened tensions between the U.S. and Canada, its largest foreign investor, according to data from JLL. Canadian firms contributed $7.8B of the total $21.3B foreign investment in 2024, part of $73B invested since 2019, which is four times greater than any other country. President Trump's aggressive trade stance, including recent tariffs and political rhetoric, combined with rising nationalist sentiment and regulatory shifts in Canada aimed at boosting domestic investment, could prompt Canadian pension funds and other firms to reconsider U.S. allocations. While market volatility has historically enhanced the appeal of U.S. real estate as a safe haven, experts believe it's still too early to assess the long-term impact of these developments.
Rapid changes continue at GSEs under new FHFA leadership | GlobeSt | March 21, 2025
Leadership changes continue at Freddie Mac and Fannie Mae, as FHFA Director Bill Pulte appointed Michael T. Hutchins interim CEO of Freddie Mac following Diana Reid’s dismissal. Hutchins, Freddie Mac’s president since 2020 with prior senior roles at UBS and Salomon Brothers, steps in amid broader restructuring by Pulte, who removed 14 board members from both organizations and appointed himself chairman, signaling deeper changes under the Trump administration. Additionally, 35 unionized FHFA employees were abruptly placed on leave as part of efforts to streamline operations. Freddie Mac will also require employees to return to the office five days a week starting May 1, with Fannie Mae expected to implement a similar policy soon. Meanwhile, Christopher Stanley, a cybersecurity engineer associated with Elon Musk, resigned from Fannie Mae’s board just one day after his appointment, adding further uncertainty to the situation.
Important dates
Upcoming data releases and events
Data releases (Times in EST)
Monday, March 24
9:45AM: S&P Flash PMI, Data Release
Tuesday, March 25
9:00AM: S&P Case-Shiller Home Price Index, Data Release
Wednesday, March 26
8:30AM: Durable Goods Orders, Data Release
Thursday, March 27
8:30AM: GDP Second Revision, Data Release
8:30AM: Trade Balance, Data Release
8:30AM: Advance Retail Inventories, Data Release
Friday, March 28
8:30AM: PCE Price Index, Data Release
10:00AM: University of Michigan Consumer Sentiment, Data Release
Upcoming Industry Events
March 25 – March 27: ShopTalk
March 26 – March 27: NAIOP I.CON West
March 26 – March 27: PREA Spring Conference
March 31 – April 2: ADISA Spring 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.
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