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This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Friday, November 7, 2025. Here’s what we’re covering today: a nationwide look at commercial real estate markets and capital flows, the latest on interest rates and credit conditions after the Fed’s move, some notable deals and distress signals in key sectors, and an emerging opportunity in high-growth markets outside New York City.

Let’s start with the big picture. Across the United States, commercial real estate is showing tentative signs of stabilization as we head toward year-end. Transaction activity picked up modestly through the third quarter – investment sales are on the rise again, driven largely by refinancing and a “flight to quality” for prized assets. Overall deal volume is up slightly from last year at this point, though still below pre-pandemic levels. Crucially, the composition of deals is shifting: many trades happening now are smaller transactions under $100 million, yet a surprising number of large deals are also closing, indicating that well-capitalized investors are selectively coming off the sidelines. In fact, nearly 30 of the top 50 property sales in September exceeded the $100 million mark, as buyers with cash seize opportunities in an otherwise cautious market. This bifurcation – where trophy assets still attract strong bids while lesser properties struggle – defines the current market mood.

Interest rates and financing conditions have been a central theme for CRE this week. Just over a week ago, the Federal Reserve delivered another quarter-point rate cut, the second in as many meetings, bringing the benchmark federal funds rate down to around 3.8%. This marked a notable pivot after the aggressive tightening cycle of prior years. Fed Chair Jerome Powell signaled that further easing is not guaranteed and emphasized a “wait and see” stance going into December. Even so, the recent cuts are already rippling through the capital markets: the 10-year Treasury yield has eased to roughly 4.1%, down from its peaks earlier this year, providing a bit of relief on borrowing costs. Lending rates for commercial mortgages have edged down in tandem, and we’re hearing that some deals pencil out now that wouldn’t have when rates were at their highest. Crucially, credit conditions are showing early hints of thawing. According to the Fed’s latest Senior Loan Officer Survey, banks reported the first uptick in demand for commercial real estate loans since early 2022. That’s a potential inflection point – for the past couple of years, higher rates and tighter standards have kept borrowers and lenders on the sidelines, but now demand for new loans is finally turning positive. Banks still haven’t meaningfully loosened their underwriting standards – lenders remain vigilant and selective, especially for riskier projects – but at least standards are no longer tightening. In other words, the credit environment has stabilized: debt capital is becoming a bit more accessible again, especially for solid deals in strong markets, after a prolonged squeeze. It’s a welcome development for investors and developers hoping to finance projects in 2026.

The improving interest rate backdrop has spurred a wave of refinancing and capital markets activity. New data show a refinancing surge is underway as owners rush to lock in lower rates and address looming loan maturities. Through the third quarter, commercial mortgage originations jumped nearly 50% compared to last year, reaching about $587 billion, according to one industry report – that’s an enormous rebound. Refinancings made up over half of that volume, propelled by falling rates and a wall of debt coming due on properties purchased or financed during the last cycle. Notably, even hard-hit sectors like office and retail have seen a jump in lending volume – originations for office properties were up over 70% year-on-year, and retail loan volume climbed more than 60%. A lot of this is lenders extending credit to better-quality assets or restructuring loans to give borrowers breathing room, but it underscores that capital is starting to flow again into sectors many had written off. Traditional banks have actually been a major driver: bank lending for CRE surged roughly 85% from a year ago as some regional banks re-engage and big banks pick their spots. Meanwhile, the commercial mortgage-backed securities (CMBS) market is coming back to life – issuance is up by roughly a third this year, led by single-borrower deals on large, well-leased properties. Life insurance companies and the GSEs (Fannie Mae and Freddie Mac) also stepped up their lending for apartments and other stable asset classes, riding the wave of improved sentiment. All this points to healing in the capital markets. Industry forecasts are increasingly optimistic: The Mortgage Bankers Association now projects total CRE loan originations will surge by about 24% next year, topping $825 billion, assuming the Fed continues to ease policy. In short, debt liquidity is returning, and with it, transaction activity is poised to accelerate.

Of course, not everything is rosy – we’re still working through some pain in the system. Perhaps the clearest signal of remaining stress is in loan performance. Commercial borrowers have been under strain from the earlier spike in interest rates and pandemic-driven disruptions, and that’s still showing up in delinquencies and defaults. In October, the delinquency rate for loans in CMBS (commercial mortgage-backed securities) ticked up again to about 7.5%. That’s the highest level we’ve seen in many years. The office sector in particular continues to “rewrite the record books for all the wrong reasons,” as analysts put it. Office mortgage defaults reached an all-time high last month – roughly 11.8% of securitized office loans are now delinquent, surpassing even the worst levels from earlier this year. After a brief summer respite, office distress is rising again as landlords grapple with persistently high vacancies, falling rents, and maturing debt they can’t refinance without injecting more equity. We’ve seen a string of high-profile office towers in big cities land in trouble – owners of some aging skyscrapers from Los Angeles to Chicago and San Francisco have opted to hand back the keys rather than continue sustaining losses, and those properties are hitting the market at fire-sale prices. Multifamily loans are also feeling some pressure: apartment-building delinquencies, while much lower than offices, have crept above 7% in the CMBS universe, a level not seen in about a decade. That reflects a combination of factors like oversupply in certain apartment markets, higher operating costs, and expiring low-rate loans that are resetting to much higher interest payments. So, while the credit outlook is improving going forward, there is still a backlog of distressed debt that needs to be worked through. We should expect to see more loan workouts, rescue capital infusions, and even a few foreclosures, especially in the office sector, well into 2026. The good news is that so far this appears to be a manageable downturn rather than a systemic meltdown – lenders are negotiating and extending loans where they can, and buyers are starting to emerge for some of these distressed assets at the right price.

In terms of property sectors, the narrative is shifting a bit. Just a year ago, industrial and multifamily were the golden children of CRE and office was the problem child. Now, industrial and apartments are still solid in many markets but are cooling off from their red-hot pace, while some previously lagging sectors like office and retail are seeing glimmers of life. Let’s break it down. Office: It remains a bifurcated story. On one hand, as we discussed, many older urban office buildings are deeply distressed – remote work and higher vacancies have pushed their values way down, and some are being auctioned at pennies on the dollar. But on the other hand, investors are selectively coming back to the office market where they see quality and value. In a surprising turn, office deal volume is up year-over-year in 2025, albeit from very low levels, as bargain hunters and even some end-users step in. Tech giants, for example, made headlines recently by buying office campuses: Apple purchased a portfolio of office buildings in Sunnyvale, CA for about $365 million, and Nvidia bought a Silicon Valley office property for $83 million – these are strategic buys allowing them to expand their own footprint at a discount. Even some institutional investors are tiptoeing back into top-tier offices; in New York and San Francisco, roughly 40% of office building acquisitions this year involved big institutional players (up from virtually none last year), attracted by prices that are a fraction of replacement cost. The takeaway is that office isn’t “dead” everywhere – high-quality, well-leased offices or those that can be repurposed are finding buyers, and companies with cash see an opportunity to consolidate space on favorable terms. Open-air retail is another bright spot. Investor demand for neighborhood shopping centers and retail parks has surged as these assets proved their resilience through the pandemic. Many of these centers – the ones anchored by grocery stores, home improvement retailers, or popular restaurant chains – kept strong occupancy and steady foot traffic, and now they look especially attractive. In September alone, nearly half a billion dollars flowed into retail center acquisitions by major players like Nuveen and Tanger Outlets, who cited solid returns and low new supply as key reasons. Essentially, retail has transformed from an out-of-favor sector a few years ago to something of a comeback kid – investors appreciate the stable cash flows and the fact that new development of retail is scarce, which limits competition. Meanwhile, industrial properties – warehouses and distribution centers – remain in high demand, but after several years of hyper-growth, this sector is normalizing. Nationwide industrial rents are still rising, but the pace has slowed (annual rent growth is now around 6%, down from double digits before). And vacancies, while still relatively low, have inched up to roughly 9.5% as a massive amount of new logistics space has been delivered. This year has been a bit of a transitional period for industrial real estate: supply chains are still reconfiguring and companies continue to need modern warehouses, but we’re seeing more balance in the market. Some metros that experienced explosive industrial booms – places like Atlanta, South Florida, and Southern California’s Inland Empire – have plenty of new facilities coming online and a bit of slack in leasing, which is giving tenants slightly more negotiating power than they had a year ago. That said, the top logistics hubs with strong population growth are still performing exceptionally well. A city like Atlanta, for example, saw warehouse property values jump by as much as 30% this year thanks to its strategic role in distribution networks – investors are paying premiums there for high-quality logistics parks, confident that demand will catch up to the new supply. And speaking of demand, it’s worth noting one niche: cold storage facilities (for food distribution) are practically full in many regions – Philadelphia’s cold storage market, for instance, has near-zero vacancy right now because of rising grocery delivery and food supply needs. Those specialized industrial assets are commanding strong interest despite overall industrial softening. Lastly, multifamily housing: apartments continue to be bolstered by solid tenant demand in most cities, but they are grappling with a few challenges. A lot of new apartment projects that were started in 2021–2022 are finishing up now, leading to pockets of oversupply. We’re seeing rent growth flatten or even turn slightly negative in some previously red-hot rental markets as new buildings try to lease up by offering concessions. In fact, national apartment rents have ticked down for three consecutive months through October, especially in certain Sun Belt cities where construction was most active. Occupancy rates have slipped a bit as renters have more choices. None of this is catastrophic – vacancy rates for multifamily nationally remain in a normal mid-single-digit range – but it does mean landlords have lost a bit of pricing power in the short term. The upside is that the new supply pipeline beyond 2025 is thinning out (because high interest rates halted many planned developments), so beyond this current wave, there may actually be a shortage of rentals again by late 2026. And notably, despite near-term headwinds, multifamily still has a big pool of financing available from government agencies and banks, which is helping the sector stay liquid. So, on balance: the fundamentals in CRE are mixed, with some sectors doing better than others, but generally we’re far from the free-fall that some feared – there’s resilience and even bright spots to be found.

Now let’s highlight a few asset-level developments and deals making news. One significant leasing deal to mention: in Las Vegas, a major industrial lease was just signed that underscores how strong the logistics market remains for quality space. A leading heavy-duty truck manufacturer agreed to take an entire new distribution center – that’s over 300,000 square feet – in North Las Vegas’s Speedway Logistics Park. The building is a brand-new, state-of-the-art warehouse (complete with high ceilings, lots of dock doors, and even infrastructure for future electric truck charging) developed by Prologis. The fact that it was pre-leased in full on a long-term deal speaks volumes – even with a lot of warehouses being built, tenants are still committing to big spaces in prime locations, especially near major transport corridors like the I-15 in Vegas. On the investment side, we saw one of the largest industrial portfolio acquisitions of the year close recently in California: Prologis, again in the news, purchased an 11-building warehouse portfolio just south of San Francisco for about $315 million. That’s notable not only for its size – it’s the Bay Area’s biggest industrial sale of 2025 – but also for what it says about institutional confidence. Prologis is essentially doubling down on infill industrial assets in supply-constrained markets, betting that demand from e-commerce, manufacturing, and data centers will keep those properties near full occupancy. Meanwhile, in the office sector, we continue to witness the fallout of distress but also the entrance of bold investors: several downtown Los Angeles office towers, for instance, have traded at huge discounts to their previous values. One example, the landmark Gas Company Tower in L.A., reportedly sold for roughly 80% below its last sale price a decade ago – a stunning drop. That sale, and ones like it, show how far values had to fall to attract buyers. But the silver lining is, they did attract buyers – there are opportunistic investors out there willing to snap up these heavily discounted offices with the idea of repositioning them or patiently waiting for an eventual recovery. It’s a similar story in Chicago’s Loop and parts of San Francisco: deep-pocketed private equity firms and local investors are bargain-hunting, acquiring some distressed office assets at prices not seen in a generation. These deals might ultimately establish a pricing floor for troubled offices. And speaking of distress and deals, one name that popped up in headlines: Kennedy Wilson – a real estate investment firm – received a buyout offer that boosted its stock valuation by 38%. While that’s more of a corporate development than a single asset deal, it underlines that real estate companies themselves are in play when their valuations get low, suggesting that private investors see hidden value in real estate platforms for the long term.

Finally, let’s turn our focus to opportunities emerging outside of New York City – because not everything in CRE revolves around Manhattan. Some of the most compelling real estate trends right now are playing out in high-growth markets across the Sun Belt and heartland. A prime example: Texas. The Lone Star State is experiencing remarkable population and job growth that’s translating into real estate demand. In fact, a recent analysis of U.S. Census data showed that Texas utterly dominates the list of America’s fastest-growing cities – 12 of the top 15 growing cities are in Texas, particularly around the Dallas-Fort Worth and Houston metros. This kind of explosive growth drives needs for housing, shopping centers, warehouses, and offices to serve expanding communities. Investors are taking note; we’ve seen strong capital flows into Dallas industrial parks, Houston medical offices, and Austin tech campuses, all aiming to ride that demographic wave. Another place investors should keep an eye on: Florida. Florida has long been a magnet for migration and business expansion, and now there’s a new policy tailwind as well. As of this month, Florida officially eliminated its state tax on commercial leases – historically, Florida was unique in taxing commercial rent, but that’s gone now, which will save businesses nearly $1 billion annually in aggregate. It’s essentially an immediate reduction in occupancy cost for any tenant in Florida, making it even more attractive for companies to set up offices or stores in Miami, Tampa, Orlando, and beyond. We anticipate this will further boost demand for commercial space statewide and could spur new development as companies capitalize on the friendlier tax environment. Outside the Sun Belt, other niche opportunities are emerging too. For instance, the data center boom is spreading into smaller markets: one notable project on the horizon is a massive AI-focused data center campus in rural Texas, backed by major investors and even a former state governor – it’s a $13 billion initiative aimed at tapping into the surging need for computing power. This highlights how growth in tech (like artificial intelligence and cloud services) is creating real estate plays well outside Silicon Valley – secondary markets with available land and cheap power are becoming the new data center hubs. And consider Nashville, Tennessee – known for its explosive growth over the past decade – it’s continuing to climb in prominence. There’s buzz about a potential new landmark project there carrying the Trump brand, which would be the former president’s first U.S. real estate venture in years. If that materializes, it would underscore Nashville’s status as a city where national developers want to plant a flag, drawn by its business-friendly climate and cultural cachet. More broadly, places like Nashville, Charlotte, Raleigh, and Boise remain on investors’ radar because of their population inflows and strong job creation in industries ranging from healthcare to fintech. The bottom line is, for CRE investors seeking the next big opportunity, looking outside the traditional gateway cities is a must. Markets in the Southeast, Texas, and Mountain West are brimming with growth – and with that comes demand for new apartment communities, warehouses, hotels, and everything in between. In many of these areas, local governments are also modernizing zoning laws to accommodate growth, such as upzoning commercial corridors in cities like Los Angeles and simplifying approvals in parts of California’s Bay Area and suburbs. These policy shifts, though not as attention-grabbing as interest rate cuts, can unlock significant development potential and are worth watching closely.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael — until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Monday, November 3, 2025. Here’s what we’re covering today: the latest developments in the commercial real estate market – from a new Fed rate cut shaking up capital markets, to an uptick in deal activity and leasing as we kick off November, and what distress signals and economic trends investors need to keep on their radar.

The biggest story on everyone’s mind is interest rates. After holding steady for over a year, the Federal Reserve cut its benchmark rate by a quarter point last week, marking the second rate reduction in two months. That brings the fed funds target into the high-3% range – a notable drop of about one and a half percentage points from the peak a year ago. For real estate investors, this is a welcome turn. It’s the first meaningful rate relief we’ve had in a long time, and it’s already easing some pressure on financing. In fact, the 10-year Treasury yield briefly dipped below 4% on the news, which is the lowest we’ve seen in quite a while. Now, it didn’t stay under 4% for long – it bounced back up as markets absorbed the Fed’s cautious messaging – but that momentary drop was like a breath of fresh air for borrowers. It gave anyone refinancing or arranging debt a chance at slightly cheaper money. The broader point: the cost of capital is finally inching down instead of up.

Now, Chair Jerome Powell did warn that another rate cut at the Fed’s next meeting isn’t guaranteed. The Fed officials are a bit divided – some wanted a bigger cut now, others wanted to hold off entirely. And with inflation around 3% (getting closer to their 2% goal) and unemployment roughly 4.3%, the Fed is navigating a fine line. Plus, a curveball: the federal government shutdown through October delayed a lot of economic data. With Washington at a standstill for weeks, key reports like jobs and inflation data were coming in late or not at all, making the Fed’s job harder. Powell basically said, “Look, we think we’re on the right path, but we’re not sure yet if we’ll cut again in December.” Translation for investors: enjoy the lower rates, but don’t bank on a rapid free-fall to low rates of the past. The central bank is still laser-focused on beating inflation, and they won’t slash rates aggressively unless they see clear evidence the economy needs it.

So what does this shift in rates mean for the commercial real estate market? In a word: momentum. Even before the Fed’s move, we were starting to see signs of life, and now they’re growing. Buyers and sellers had been in a standoff for much of 2024 and early 2025 – deals were tough to pencil with financing so expensive. But with borrowing costs stabilizing and now dipping, deals are coming back. September was actually the busiest month of the year for CRE transactions. Roughly $40 billion in property changed hands in September, which is about 20% more than the same time last year. That’s a remarkable turnaround. Investors seem to have a clearer sense of property values after the big price adjustments of the past year, and they’re feeling more confident that now is the time to strike a deal. We saw a real mix of activity: multifamily and retail led the pack in sales volume, as they often do, but get this – office deals also ticked up. Yes, office, the sector everyone had largely written off. In the first half of this year, office property sales were actually up over 40% compared to the dire lows of last year. What’s going on there is largely opportunistic buying: properties in distress or trading at deep discounts are finally finding buyers willing to take a chance, often with plans to renovate or even convert them to other uses. In short, capital that was on the sidelines is starting to move.

Investor sentiment heading into November is cautiously optimistic. The phrase I’m hearing a lot is “guarded confidence.” No one thinks we’re entirely out of the woods, but the mood is much better than it was six months ago. Back then, there was a real fear that commercial real estate values would just keep spiraling down and that credit markets would stay frozen. Now, with a couple of rate cuts under our belt and pricing adjusting, there’s a sense that the market is finding its footing. One tangible sign: lenders are gradually opening their wallets again. Banks, which were extremely tight on credit a year ago, are easing up. By mid-2025, only about 9% of banks were still tightening their lending standards (down from a majority of banks tightening in 2023). That’s a huge shift. And it’s not just banks – alternative lenders like insurance companies and CMBS buyers are stepping in too. Securitized real estate debt issuance is up compared to last year, and private credit funds have raised a lot of money to deploy into real estate deals. The Mortgage Bankers Association even predicts a major surge in loan originations next year – on the order of a 20%+ jump to roughly $800 billion in volume. Why? Because falling rates and stabilizing markets could unleash a wave of refinancing and new deals. So, financing is becoming a bit more available, and the expectation of easier money ahead is prompting investors to get busy now.

Let’s talk about leasing and property fundamentals across the major sectors. Starting with the office sector, since it’s been the problem child: Office leasing is still slow by historical standards – there’s no sugarcoating that. Companies continue to reassess their space needs in this post-pandemic hybrid work era. However, there are glimmers of hope. For the first time since 2019, the national office vacancy rate actually ticked down slightly recently, instead of rising. Think about that – vacancy had been climbing quarter after quarter for years, and we may have finally hit the peak. The improvement is small, but it suggests that we’ve bottomed out in the office market, at least for now. In some cities, high-quality (“trophy”) office buildings are managing to backfill space as tenants flight to quality, and a number of obsolete office buildings are being removed from inventory – whether converted to residential, hotels, or labs – which also helps tighten supply. A notable example: we saw Sotheby’s headquarters in Manhattan sell to a university medical center earlier this fall. They’re planning to turn an office tower into a research and medical facility. That kind of creative reuse is becoming more common, and it’s one reason to be a bit optimistic that downtown cores will reinvent themselves. Additionally, markets like New York are reporting a slight uptick in activity – a “Midtown revival,” as some are calling it, with big leases being signed by firms seeking modern, amenity-rich space. It’s a slow recovery for offices, but it’s at least not a free-fall anymore.

Meanwhile, industrial real estate continues to be the star performer. Warehouse and logistics space is still seeing strong leasing demand. Vacancy rates for modern distribution centers remain extremely low in most major hubs, and rents are holding up near record highs. There was some concern that as e-commerce growth normalizes, industrial might cool off – and we did see leasing pace moderate a bit – but structurally there’s still a huge appetite for space. Just in the last month, a partnership of an Australian pension fund and a U.S. developer announced a $1.3 billion investment into U.S. warehouse properties, which underscores global confidence in the sector. New construction is trying to keep up, but in key locations (near ports, near big cities), land and zoning are constraints, so that supply-demand balance remains healthy. For investors, industrial remains a favored asset class – practically the opposite of office in terms of sentiment.

Retail real estate has been quietly resilient. It hasn’t grabbed headlines like office or multifamily, but many retail landlords are actually having a decent year. High-street retail in tourist cities is recovering now that travel has come roaring back. Take Chicago’s Magnificent Mile or Manhattan’s SoHo – foot traffic and store sales are improving, and we’re seeing new tenants taking up spaces that sat empty during the pandemic. In the suburbs and smaller cities, well-located grocery-anchored shopping centers are still very much in demand from investors, and their parking lots are full on weekends. Consumer spending has held up enough to keep retail occupancy fairly stable. Now, not all is rosy – certain malls and outdated centers are still struggling (especially those without strong anchors). But overall, retail isn’t the crash story some expected; it’s evolving. Landlords are bringing in more entertainment, dining, and experiential uses to fill space and it’s working in many cases. Investors are noticing that some retail assets can produce solid cash flow and might have been undervalued, so we’ve seen selective acquisitions there as well.

On to multifamily, the long-time darling of commercial real estate. Apartments largely weathered the pandemic and the high-rate environment better than most sectors – people always need a place to live, after all. Occupancies nationally are still quite high, and collections have been strong. But even multifamily isn’t without challenges. Over the past year, a record number of new apartment units have been under construction and are coming to market. In many cities – especially fast-growing Sun Belt metros and parts of the Midwest – this new supply is finally catching up to demand. As a result, renters are gaining leverage. We’re seeing an uptick in concessions (like a free month’s rent or discounted parking) as landlords compete to fill all these new buildings. Rent growth, which was red-hot in 2021 and 2022, has cooled considerably in 2025 – in some markets rents are flat or even slightly down from a year ago. It’s a bit of a breather after years of surging rents. For renters, this is welcome news; for owners and investors, it means you have to be more realistic with revenue projections. Slowing job growth is part of this story too – if fewer new households are being formed, that also tempers rental demand just a touch.

Another factor hitting multifamily, particularly affordable housing, is the knock-on effect of the government shutdown we experienced in October. With federal agencies like HUD largely closed for weeks, new funding for affordable housing developments got frozen, and housing assistance payments were in jeopardy. If the shutdown had dragged on much longer, millions of low-income renters who rely on things like Section 8 vouchers and other subsidies could have missed payments – which would have been a crisis for tenants and landlords alike. Industry groups are warning that if Washington doesn’t resolve its budget issues for good, we could see a wave of strain in the low-income housing segment. Already, developers of affordable projects are reporting delays in closing deals and getting approvals because so much depends on federal programs. It’s a reminder that policy and politics can swiftly impact real estate. As of this morning, there’s hope that a resolution is near (or just passed), but the episode has shaken confidence a bit. Markets just don’t like that kind of uncertainty.

Let’s zoom out and consider distress and risk in the market, because it’s not all sunshine and rainbows. Yes, activity is picking up, but we still have a lot of troubled loans and struggling properties out there. The office sector remains ground zero for distress. Office loan delinquency rates have climbed to all-time highs this year as landlords unable to refinance at reasonable rates simply default or hand back the keys. We’ve seen some headline-making examples: in San Francisco, a major apartment owner (Veritas Investments) is on the brink of foreclosure on a portfolio of thousands of units – that’s multifamily, not office, showing that pain isn’t confined just to offices. In various cities, older office towers have loans coming due that far exceed the buildings’ current value, forcing fire sales or restructurings. The commercial mortgage-backed securities (CMBS) market data through Q3 showed a slight improvement – overall distress rates ticked down a bit in September from their peak in August – but distress is still double or triple what it was a few years ago. And the vast majority of loans in trouble are backed by office buildings. So we’re not out of the woods. The question is, can these troubled assets find new life (through redevelopment or significant capital injections), or will they drag down their lenders?

The good news is that banks and lenders are generally approaching this pragmatically. Rather than forcing every delinquent borrower into foreclosure, many lenders are open to workouts and extensions. It’s the old “extend and pretend” playbook: if a borrower can continue making at least the interest payments and the property is covering its operating costs, a bank might extend the loan’s maturity in hopes that conditions improve in a year or two. We’re seeing a lot of that. Some big banks and debt fund lenders have quietly renegotiated loans on office buildings, perhaps adjusting interest rates or asking borrowers to put in more equity, but ultimately avoiding default. This is important because there’s a wall of maturities hitting the market – nearly $1 trillion of commercial mortgages are due in 2025. It’s a huge number. About half of that is held by banks, and a large chunk in CMBS and other vehicles. Refinancing all that debt at once, in a high-rate environment, is a massive challenge. So far, we haven’t seen a tsunami of foreclosures; instead we see a slow trickle of distress and a lot of behind-the-scenes negotiation. How this plays out will be a key story for the next year. If interest rates continue to ease and property values start to recover, many of these loans will manage to refinance or extend without major losses. If the economy takes a turn for the worse or if credit markets tighten again, then we could still be facing some pain.

Amidst these risks, it’s worth noting that some big players are capitalizing on the moment. Just as one example, Blackstone – one of the world’s largest real estate investors – reported that its real estate division’s earnings jumped nearly 50% in the third quarter, largely because they sold a number of properties. In other words, they found liquidity even in this choppy market and took profits. That tells us there are buyers out there for the right deals. And many opportunistic funds have been raising capital to scoop up distressed assets at discounts. There’s a lot of dry powder waiting for the right price. Private equity, pension funds, and global investors are all on the hunt for bargains, whether that’s a downtown hotel that’s recovering, an office building they can convert to apartments, or a portfolio of rental homes. This influx of capital, combined with the market’s adjustment, suggests that we might actually see a relatively orderly healing process – more of a grind through the difficulties rather than a sudden crash.

Finally, on the economic outlook: the broader economy is holding up better than many expected, which is indirectly good news for real estate. Growth in the third quarter came in solid (the exact numbers have been in flux with the data delays, but generally it’s been positive). We’re not in a recession at this moment. The cooling of inflation means consumers aren’t getting squeezed as badly as before, and consumer spending – while not booming – is still chugging along enough to support retail and hospitality real estate. Job growth has decelerated from the torrid pace of the last two years, but we’re still adding jobs in many markets, and importantly, wages are growing modestly. That helps people pay rent and gives businesses confidence to lease space. One concern on the horizon: if the Fed pauses on further cuts and we get some negative shocks (for instance, another flare-up in oil prices or global conflicts causing uncertainty), we could see hiring pull back more sharply or investors get skittish again. But so far, the soft landing scenario – where inflation comes down without a severe recession – is looking more plausible. Real estate investors, naturally, are hoping for that Goldilocks outcome because it would mean improving fundamentals and lower cap rates at the same time.

To wrap up, the commercial real estate landscape as of today is much improved from earlier this year, but still navigating a lot of change. Interest rates are trending down and giving the industry a shot in the arm, but the Fed is keeping everyone on their toes. Deal volume and investor confidence are creeping back up – we’re seeing buyers re-engage and lenders re-open for business, which is a big deal heading into year-end. Leasing activity and fundamentals vary by sector: industrial is powering ahead, retail and multifamily are steady with some headwinds, and office – while still shaky – might be bottoming out with creative strategies helping it along. And on the flip side, distress and challenges haven’t disappeared: there are still defaults brewing and refinancings to tackle, and the aftermath of economic policy moves (from interest rates to that government shutdown) will play out over coming months.

All in all, it’s a time of opportunities and caution. The phrase I’d use is “cautious optimism.” Many in the industry expected 2025 to be a turning point, and it appears to be turning in a better direction now. But the key for investors will be to stay data-driven and diligent – take advantage of the favorable shifts, like lower financing costs and motivated sellers, but underwrite deals carefully, because the market isn’t forgiving mistakes. As one industry veteran put it recently, “This is the part of the cycle where fortunes are made – and lost – based on getting your assumptions right.”

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael—until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Friday, October 31, 2025. Here’s what we’re covering today: the Federal Reserve’s rate cut this week and what it means for commercial real estate financing; a surge in end-of-month deal activity as October wraps up; how different property sectors are performing – from offices to apartments to retail – and what that says about market sentiment; plus the latest on loan workouts and notable transactions shaping investor outlook. Let’s get into it.

Fed Eases, CRE Reacts: We start with the big macro news. On Wednesday, the Fed delivered a widely anticipated interest rate cut – 25 basis points off the benchmark rate – marking the second cut in two months. That brings the federal funds target range down to 3.75% to 4.00%. It’s a notable shift: after a long stretch of higher-for-longer rates, the Fed is now in easing mode. For commercial real estate, this move is a double-edged sword. On the upside, lower short-term rates should gradually ease financing costs. Many commercial loans are tied to benchmarks like SOFR or prime, which will tick down thanks to the Fed’s move. Borrowers facing refinancings or rate resets can breathe a small sigh of relief – every basis point helps when you’re staring at a big monthly payment. We’re already hearing that some banks and debt funds are starting to trim their loan rates a bit, and there’s talk that lenders might loosen loan loss reserves, potentially freeing up more capital for new loans.

However, let’s temper the optimism: long-term yields are not falling as fast as the Fed’s overnight rate. The 10-year Treasury is still hovering in the mid-4% range. In fact, many analysts say the 10-year could stay above 4% for a while despite the Fed’s cuts. That means cap rates – which move with long-term expectations – aren’t likely to compress overnight. In other words, the immediate effect on property valuations may be modest. We’re not expecting cap rates to suddenly drop back to 2021 levels, but this could mark the beginning of a gradual shift.

It’s also important why the Fed is cutting. The central bank cited softening economic fundamentals, especially a cooling job market. Recent employment reports have shown slower hiring, and the Fed is pivoting from fighting inflation to making sure it doesn’t choke off growth. For real estate investors, that’s a mixed signal: cheaper debt is coming, but perhaps because the economy is losing a bit of steam. A slowing economy could mean slower leasing, whether it’s apartments, offices, or retail stores. So we have to balance the relief of lower rates with the risk that demand for space could weaken if unemployment rises. The Fed’s own forecasts suggest unemployment might tick up to the mid-4% range by next year from under 4% now. That’s not a recession per se, but it could take some exuberance out of tenant demand.

Capital Markets and Financing are already adjusting. Mortgage bankers are turning more bullish about next year – the Mortgage Bankers Association just released a forecast calling for a 24% surge in commercial and multifamily loan originations in 2026. They’re predicting roughly $827 billion of lending, up from this year’s volume, on the assumption that interest rates will continue to ease and transaction activity will rebound. That optimism lines up with what we’re seeing: after a very quiet first half of 2025, lenders are coming back to the table. In the first half of this year, loan volumes actually rebounded more than many expected. Large national banks stepped up their commercial real estate lending, nearly doubling their volume year-on-year as some stability returned to credit markets. At the same time, private “debt fund” lenders are still active and have even been willing to offer higher leverage – average loan-to-value ratios in recent deals crept up a couple of percentage points to around 64% on average, compared to the low-60s last year. That suggests a bit more confidence in asset values and in borrowers. We’ve also seen foreign capital playing a bigger role in high-value deals – lenders from Canada, Europe, and Asia are contributing to big loan syndications, a sign that global capital still views U.S. real estate debt as attractive.

All that said, credit conditions remain selective. The phrase we’re hearing is “cautiously open for business.” Lenders are picky about what deals to fund – strong sponsors and strong assets can find money, but anything perceived as high risk or obsolete (like an old office tower with vacancy issues) is still going to struggle to get financed. The Fed’s rate cuts will help on the margins by lowering the cost of funds, but they don’t magically fix a weak property’s story. So, quality and strategy matter more than ever in securing financing. As one market veteran told me, capital is available – just on tighter terms. That means more scrutiny, more equity required in many cases, and creative structures like mezzanine debt or preferred equity filling gaps in the capital stack.

Deal Activity Perks Up: Now, let’s talk about the deal market. As we hit the end of October, we’re finally seeing some real traction in commercial property sales. Over the summer, the market was in a bit of a stalemate – buyers and sellers were far apart on pricing, and deal volume was anemic. But momentum has been building into the fall. In fact, September 2025 turned out to be the busiest month of the year so far for CRE transactions. According to data from LightBox, about $27 billion in commercial real estate deals closed in September – that’s the highest monthly total of 2025 and a sharp jump from August. It appears both buyers and sellers are adjusting to the “new normal” on pricing and interest rates. Sellers have become more realistic about pricing – recognizing that the market reset from higher rates is not temporary – and buyers, for their part, are gaining confidence that we’re near the peak in financing costs. The Fed’s actions reinforce that feeling; if rates are now on a downward path, a buyer today can underwrite a deal assuming financing might even be cheaper down the road.

Digging into the numbers, what’s interesting is which sectors led the pickup. Multifamily was a big chunk of September’s activity – no surprise, apartments have been the darling of CRE for years and even with rent growth cooling a bit, there’s a ton of capital eager to buy into that space for the long term. Retail was another leader – especially grocery-anchored shopping centers and necessity-based retail, which have proven their resilience. And believe it or not, office deals contributed significantly too – roughly one-fifth of the September volume was office properties. Now, that doesn’t mean office is back in favor broadly, but it shows that at the right price, even office buildings will trade. What we’re seeing is a barbell: high-quality, well-leased offices in prime locations can find buyers, and on the other end, deeply distressed office assets are attracting opportunistic investors who smell a bargain. Everything in the mediocre middle is still tough to move. But September saw a few headline-grabbing office transactions: notably, Rithm Capital acquired a $1.6 billion portfolio of Class A office buildings from Paramount Group. That deal encompassed 17 properties – a huge vote of confidence that offices can have a future if they’re prime assets. To be fair, the pricing was likely very attractive for the buyer (Paramount had been under pressure to reduce debt), but it shows that private capital is willing to step in on large office deals now. Another big deal was a $640 million net-lease retail portfolio sale to New Mountain Capital – fifty-plus single-tenant properties. That indicates investors are also keen on steady income streams that net-lease assets provide, especially if bond yields stabilize.

Overall, the fact that nine-figure deals (transactions over $100 million) jumped by about 23% month-on-month in September is a strong signal of renewed investor confidence. Mid-sized deals in the $50-100 million range were up nearly as much. It’s not a crazy boom by any means – we’re still well below the deal volumes of 2021 and early 2022 – but it does feel like the market is finding its footing again after a long pause. One analyst described it perfectly: “It’s not a breakout rally, but the tide is slowly coming back in.”

Price Discovery and Valuations: With more deals happening, we finally get clarity on pricing. And the story is somewhat encouraging. About 70% of properties sold in recent months traded above the seller’s original purchase price. That means a majority of owners who choose to sell now are still seeing gains over what they paid years ago – likely because many bought before the peak or have created value through leasing or improvements. On the other hand, roughly 30% of deals are trading at a loss versus the last sale, and that’s concentrated in sectors that boomed and busted or in older assets. The office sector continues to show the steepest discounts. For example, a prominent Manhattan office tower – 1177 Avenue of the Americas – sold recently for around $570 million, which was a 42% drop from its value in 2007. Think about that: an office building in Midtown Manhattan lost nearly half its value over 18 years (with most of that decline coming post-pandemic). That kind of price reset is sobering, but it also may represent the clearing of the market that needed to happen. Once those distressed or repriced assets trade and find a stable footing with new owners at lower basis, the sector can start to heal. We’re seeing similar deep cuts in some other office trades, especially older buildings in cities that haven’t fully regained their pre-COVID vibrancy.

Contrast that with retail and multifamily examples, where there are gains. In New York, a flagship retail property (the former Niketown on 57th Street) was bought by IKEA for around $213 million – reportedly about 45% higher than what the previous owner paid in 2012. And a shopping center outside Chicago that underwent a big repositioning sold for triple its last sale price after a value-add program. These are isolated examples, but they show that real estate is very asset-specific right now. Good real estate, with the right location or right business plan, is holding value or even appreciating. Outmoded real estate is getting marked down until a new use or new capital structure makes sense.

Sector-by-Sector Check-In: Let’s turn to how each major property sector is faring as of late October:

• Office: Arguably the most troubled sector of the past few years, office is showing the first glimmers of stabilization. New data from Q3 show that national office vacancy actually ticked down slightly – a 0.05% decrease – which sounds tiny but is the first decline in vacancy since 2019. The nationwide office vacancy rate is around 22.5%. That’s extremely high by historical standards (pre-pandemic it was more like 12-15%), but the important part is that it stopped rising for the first time during the pandemic era. What’s causing that? Leasing activity has been slowly improving. Gross leasing volume in Q3 was up about 6% from the previous quarter, and it’s now over 80% of pre-Covid norms. Some big tenants are in the market again: we saw tech and finance companies inking major leases – for instance, Amazon committed to a new one-million-square-foot lease in the Seattle area, and Goldman Sachs signed for 700,000 square feet in Dallas. These are long-term bets, and they signal that companies still see value in office space, especially in markets where they’re consolidating operations or building for future growth.
  Additionally, net absorption – that’s the net change in occupied space – was positive to the tune of about 6 million square feet nationally in Q3. That’s the largest positive absorption we’ve seen post-pandemic. It means more office space was filled than was emptied, a reversal of the relentless space give-backs we saw in 2020-2024. How did that happen? Two factors: renewed tenant demand for quality space, and a dramatic slowdown in new office construction. There’s less than 6 million square feet of office space currently under construction in the U.S., a pittance compared to the 50 million-plus square feet that was underway in 2019. With so little new supply, any uptick in leasing goes straight toward eating into vacancy. And indeed, we’re seeing it: newer, high-quality offices – often called “Trophy” or Class A+ buildings, especially those built after 2000 – are leading the recovery. Their vacancy rates have actually fallen about a full percentage point over the last year, as top-tier tenants compete for the best space to entice employees back. Landlords of these buildings even have a bit of pricing power; we’ve heard of slight rent upticks or at least firming rents for prime offices, while older Class B/C buildings are still cutting deals to attract tenants.
  It’s premature to declare victory for offices – 22% vacancy is still very high and many downtowns remain quiet. But the narrative is shifting from a free-fall to a bottoming-out. Look for more consolidation: owners of weaker buildings will either repurpose them (to labs, residential, etc.) or transact at distressed prices, while the better buildings gradually lease up. For investors, office is still risky territory, but the rewards for buying at the bottom could be significant if you have a long-term view. At least now we can say: we might have seen the worst in the office sector’s fundamentals.
• Industrial: The industrial sector keeps humming along, one of the stalwarts of commercial real estate. Demand for logistics facilities, warehouses, and data centers remains robust. The e-commerce boom hasn’t abated – retailers and suppliers are still expanding distribution networks. On top of that, we have new drivers like the push for reshoring manufacturing (bringing production back to North America) which is boosting demand for factory and warehouse space in certain regions, and the explosive growth in AI and cloud computing, which is fueling the construction of data centers at an unprecedented pace.
  Vacancy rates for modern warehouse space are low, generally in the single digits nationally, and even tighter – often 2-5% – in key distribution hubs. Rent growth has moderated from the double-digit annual jumps we saw in 2021 and 2022, but it’s still positive. Anecdotally, landlords continue to have leverage to raise rents on renewals, especially in infill locations near big cities where adding new supply is difficult. Some headwinds exist: higher construction costs and interest rates over the past two years did temper some new development, but with rates easing and demand steady, developers are ramping up projects again, particularly in the Sun Belt and Midwest where large tracts of land are available.
  One sub-sector worth mentioning is data centers – often classified under industrial. Data center development is surging to meet the needs of cloud providers and AI training facilities. Northern Virginia, for example, is the world’s largest data center market and it’s still growing rapidly – though not without challenges. The power grid and communities there are straining under the pace of development. Building these facilities has become a huge undertaking – you’re talking billions of dollars and even innovative steps like partnering with energy firms. (There’s even a story out of Texas where a data center campus plans to incorporate nuclear reactors to ensure power supply – that’s how intense the demand for energy is for these projects.)
  The bottom line: industrial remains the investor favorite. It’s not achieving the sky-high growth of a couple years ago, but it’s stable and lucrative. Lenders view industrial loans as among the safest in CRE, and we continue to see major financings and portfolio sales in this sector with relative ease. If anything, the challenge in industrial is finding products to buy at a reasonable yield – prices didn’t correct as much here, so competition for acquisitions is still fierce.
• Retail: Retail real estate has quietly turned into a story of resilience. After years of “retail apocalypse” headlines, the survivors of that purge – primarily well-located neighborhood and community shopping centers – are doing fairly well. Consumer spending has held up better than expected through 2025, and brick-and-mortar sales have been solid, especially for segments like groceries, home improvement, discount goods, and other everyday needs. Many retail landlords report stable occupancy and even rising foot traffic in open-air centers. Mall performance is more bifurcated: the top-tier malls are holding value (with luxury and experiential tenants drawing people in), whereas lower-tier malls continue to struggle or are being redeveloped into other uses.
  In terms of deals, retail had strong representation in the recent uptick. Investors are particularly keen on grocery-anchored centers – those have become almost a “bond substitute” for many funds, offering steady cash flow and typically anchor tenants (grocery chains) that are internet-resistant. Cap rates for those centers have compressed to quite low levels (often in the 5-6% range, even in a higher rate environment) because of their perceived safety. We saw numerous retail trades in October in secondary markets – usually local investor groups picking up well-performing centers from REITs or institutional sellers who are reshuffling portfolios.
  That said, retail isn’t without challenges. There’s still virtually no new development of retail (outside of maybe some freestanding single-tenant stores) because it’s hard to justify new builds with e-commerce competition. And retailers are cautious – we aren’t seeing a lot of big store expansion plans; many are focusing on omni-channel strategies and optimizing existing store footprints. The specter of an economic slowdown is a concern: if the consumer loses steam in 2026 due to higher unemployment or other factors, retail sales could falter and hit tenant revenues. Also, one under-reported issue: insurance costs for commercial properties (including retail) have soared, especially in disaster-prone regions. Some shopping center owners in places like Florida, Texas, even parts of the Northeast are facing 20-30% jumps in insurance premiums, which cuts into the profitability of their properties and can delay deals as buyers re-evaluate underwriting. In fact, rising insurance expenses have delayed or derailed a few multifamily and retail transactions recently, as buyers and sellers haggle over who bears that ongoing cost.
  Overall, investor sentiment on retail has improved from a few years ago. It’s no longer a pariah sector – it’s quite in demand if the property has the right story. Adaptive re-use is also a theme: we’re seeing investors buy struggling retail sites with plans to convert them partially to other uses (like adding apartments or self-storage) to diversify income. That creativity is helping transform the retail landscape into something more resilient.
• Multifamily: Apartments have been the backbone of commercial real estate for the past decade, and they remain relatively strong, but we’re at an inflection point in fundamentals. The big story in multifamily is new supply. A construction wave that began a couple years ago is cresting now. By some estimates, 2025 is delivering the largest number of new multifamily units nationwide since the 1980s. You can see it in skylines – cranes in many cities building high-rise apartments, and in suburbs, lots of low-rise rental communities coming online. This influx of new units is starting to tip the supply-demand balance, at least in the short term. Vacancy rates for multifamily have edged up slightly in many markets, especially those that had the most construction like parts of Texas, Nashville, South Florida, and so on. We’re not talking about a glut – vacancies might rise from say 4-5% up to 6-7% in those cities – but it’s enough to put downward pressure on rent growth.
  Indeed, rent growth has essentially stalled in 2025 for many major apartment owners. The big publicly traded apartment REITs, for example, have reported that rents on new leases are flat or even a touch negative in some markets compared to a year ago. Some Sun Belt cities that had 15% rent growth year-over-year during the pandemic are now seeing rents basically unchanged or just barely keeping pace with inflation. It’s a rebalancing: incomes need to catch up to the huge rent surges of 2021-2022, and with more choices available, renters can shop around or negotiate concessions. Speaking of concessions – free months, move-in discounts – those are creeping back in certain submarkets to help fill brand-new buildings.
  None of this is to say multifamily is in bad shape; on the contrary, occupancy nationally is still around 95% and the long-term need for housing is enormous. Affordability of homeownership is still very poor with mortgage rates having been high (though maybe coming down soon), so renting remains the only viable option for many households. But from an investor standpoint, the super-normal growth phase is over for now. We’re back to normal fundamentals: modest rent increases, more competition to sign tenants, and likely more moderate returns.
  On the investment sales side, multifamily was and is the most liquid sector – it’s usually the first to rebound when things improve. We saw plenty of apartment communities trade in recent weeks as buyers look to lock in deals before any further cap rate compression. Financing is easier here thanks to Fannie Mae and Freddie Mac, which continue to lend actively on apartments. Those government-sponsored entities have actually increased their lending volume as other lenders pulled back earlier this year, so they’ve been a crucial support, especially for refinancing older loans.
  One area of concern is that, like offices, multifamily is not entirely immune to distress. There were a lot of multifamily deals done in 2021 and early 2022 at peak pricing, often with floating-rate debt that had very low interest rates initially. Many of those deals assumed rent growth would continue at a high clip – and obviously that environment changed. Now those loans are repricing or coming due, and some owners are under water, unable to refinance at current rates without injecting more equity. We’ve started to see an uptick in loan defaults and foreclosures on multifamily properties, particularly Class B/C apartments in oversupplied markets or properties that just didn’t meet their pro forma income. In fact, mid-2025 saw the highest level of apartment loan foreclosures (by dollar volume) since around 2011. It’s still a relatively small fraction of the overall market, but it’s notable. Most of these troubled assets are getting taken over by their lenders or being sold off quietly to stronger operators who can recapitalize them. The good news is, unlike the single-family housing crash of 2008, this is not a widespread collapse – it’s pockets of pain, often confined to highly leveraged owners. The broader apartment market has enough equity and demand in it to absorb these issues. And as the Fed lowers rates, some of that pressure will alleviate – perhaps giving borrowers a chance to refinance at more reasonable rates next year or at least sell at prices that clear the debt.

To sum up the sector view: Industrial is strong, Retail is stable and improving, Multifamily is solid but cooling off from a boil to a simmer, and Office – while still facing big challenges – is showing faint signs of a turning point. Hospitality (though not a focus for many core CRE investors) has also been doing decently with travel demand, but it’s a very market-specific story – leisure travel destinations thriving, some business travel hotels still lagging. We’ll cover hotels in depth another day, but in brief, it’s been a decent year for hotel revenues, and investors are cherry-picking opportunities there too.

Distress & Workouts: No market update would be complete without addressing the distress that’s still out there. We’ve touched on some in office and multifamily. Let’s broaden that lens. There was a lot of talk coming into 2025 that a “tsunami” of CRE defaults was imminent – especially after interest rates spiked and regional banks had their well-known troubles earlier this year. What’s actually happened is more of a slow-moving wave of workouts rather than an all-out crash. Lenders, borrowers, and investors have been playing a patient game of extend-and-pretend in many cases – extending loan maturities, pretending (or hoping) that conditions will improve enough to make things work later. And to some degree, that strategy is paying off now that rates are starting to fall and asset values are stabilizing.

We still have a wall of maturities ahead: an estimated $300+ billion in commercial mortgages set to mature in the second half of 2025, and even more coming due in 2026. A sizable chunk of these are office and multifamily loans, which, as discussed, are the two sectors that saw either big fundamental changes (office demand falling) or huge refinancing needs (multifamily growth deals hitting debt hurdles). Many of those loans have been or will be extended – sometimes by a year or two – to avoid immediate default. Banks and bondholders would often rather not foreclose if they believe the borrower can find a way to refinance given a bit more time, or if selling the collateral today would fetch a fire-sale price. We’re seeing negotiations on a case-by-case basis. For example, some high-profile office owners in cities like San Francisco and Los Angeles have indeed opted to hand back the keys on properties where occupancy has crashed and the math of the new loan just doesn’t pencil out. Those instances make headlines – for instance, earlier this year a few marquee towers in LA’s financial district went back to the lenders, and in SF we saw the huge downtown Westfield mall essentially be surrendered. In New York, too, certain older midtown offices with looming debt have entered special servicing. These are reminders that pain is still working through the system.

But at the same time, we are not seeing a contagion of panic. Banks that have exposure to these bad loans had already marked down values and increased reserves. Many of the problematic loans were also bundled into CMBS (commercial mortgage-backed securities) or held by private investors, spreading out the risk. So the system is absorbing the losses in pieces, rather than all at once. Investors with dry powder are circling these situations – providing so-called rescue capital. That might be mezzanine loans to replace an existing loan, or partnering with the owner to inject equity and restructure the deal. This is happening quietly but frequently, effectively refinancing the property under new terms that all sides can live with.

One trend to note: because equity capital (actual cash investment) has been scarce during the slump, those who have cash are in the driver’s seat now. In any given troubled deal, if a new investor can come in with capital to solve the problem – say, buying a loan at discount, or recapitalizing a building – they can demand a strong return or significant ownership as compensation. So the power dynamics in negotiations have favored fresh capital. That’s why we are hearing about more preferred equity deals, more structured finance solutions, and basically more complex transactions rather than simple buy-and-sell. Everyone is trying to fill capital gaps and wait out the storm without realizing huge losses.

Investor Sentiment: Last but not least, let’s consider the overall market sentiment as of today. I would characterize it as guardedly optimistic heading into the end of the year. At mid-year, surveys showed investors were extremely cautious – in fact, one industry “fear & greed” index hit historically fearful levels around Q2, with over 70% of investors saying they were in “wait-and-see” mode, not ready to deploy capital. Now, by late October, that pendulum is inching back towards cautious engagement.

The Fed finally cutting rates was a big psychological signal – it suggests the worst of the inflation-and-rates shock is behind us. That removes one big uncertainty. We also have more clarity on property values now that some deals have happened; buyers and sellers can use those comps to strike deals going forward. There’s a sense that inaction is no longer the only safe move – because if the market is bottoming out, those who stay on the sidelines could miss opportunities. Limited partners (LPs) are starting to re-engage with real estate fund managers, asking about opportunities especially in debt strategies or special situations where they can earn high yields with some downside protection. General partners (GPs) – the deal sponsors – are more active in sourcing deals and bringing ideas to investors than they were six months ago, when everyone was frozen. Early-stage deal discussions are picking up.

Now, not everything is rosy. Traditional equity fundraising for new real estate funds is still tough. Many institutional investors (like pension funds) are managing through the so-called denominator effect, where their real estate holdings became an outsized portion of their portfolio after stock values fell last year. Some of those big investors actually trimmed their real estate allocations for the first time in over a decade. That means big checks are harder to come by, and many sponsors have had to delay or downsize their fund targets. But interestingly, investors are showing a lot of interest in private credit (debt funds) and structured equity – essentially pref equity – as a way to get into the market with a bit less risk than pure equity ownership. These strategies offer attractive yields and are senior in the capital stack, so they feel safer in an uncertain environment. We’re seeing money flow into those vehicles, which in turn is providing the capital for some of the rescue financing and loan originations we discussed.

On the public market side, real estate investment trusts (REITs) had a rough go for much of 2025 with rising rates, but in the past few weeks REIT indices have bounced off their lows. Investors seem to be rotating into REITs expecting that lower interest rates will boost real estate values and that perhaps the worst earnings hits are past. Notably, some big players like Blackstone – although not a REIT but a private equity giant – signaled optimism by selling assets at gains. Blackstone’s latest earnings came in strong, largely because they sold a number of properties and real estate holdings for substantial profit, taking advantage of pockets of demand. When a major firm known for its savvy starts to sell and book profits, it implies they found good pricing – which is a positive sign for the market overall. Meanwhile, their opportunistic funds are surely looking to reinvest in the next round of distressed or value-add deals.

In summary, the mood among CRE investors has improved from “deep freeze” to “early spring thaw.” People are stepping back into the water, but carefully. Everyone’s eyes are on the Fed’s next moves and on the economic data – will inflation continue to cool, will the job market stabilize without a large spike in unemployment? Those factors will determine if this nascent rebound in real estate can solidify. There’s also some external risks – for instance, we just went through a lengthy federal government shutdown this fall (which, by the way, caused some delays in government-backed real estate projects and data releases, though nothing too catastrophic) and political uncertainty remains a background worry. Geopolitical tensions, energy prices, you name it – those can all trickle into confidence levels. But absent a major negative shock, the pieces are in place for a continued gradual recovery in the CRE world: financing getting cheaper, asset values re-priced to more realistic levels, and ample capital on the sidelines that will jump in when it sees the right conditions.

So, big takeaways for today: The Fed is now friendlier to real estate than it’s been in a long time, and that’s good news for deal-making, even if the benefits take time to fully materialize. The end of October finds the commercial real estate market showing real signs of life – higher deal volumes, a narrowing bid-ask spread, and improved sentiment. Each property type has its story, but broadly we’re moving from an environment of correction and fear to one of adjustment and opportunity. Investors who were on hold are starting to find angles to play again, whether that’s picking up a distressed office at a 50% discount, financing a new apartment deal with an expectation that interest costs will be lower by completion, or simply buying shares of beaten-down REITs.

It’s a pivotal moment: we are likely at or near the bottom of the cycle in many respects. That doesn’t guarantee a quick rebound – recoveries in real estate typically take time and can be uneven. But it does feel like the market has reset rather than collapsed. As we head into the final two months of the year, keep an eye on how much follow-through this positive momentum has. Will Q4 transaction totals come in strong? Do lenders continue to open the spigots modestly? And does the economic picture allow real estate to stabilize without major new strains?

We’ll be here to track all of that for you.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael — until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Thursday, October 30, 2025. Here’s what we’re covering today: the Federal Reserve’s latest policy move and the market’s reaction, what it all means for interest rates, bond yields, and commercial real estate financing costs; plus fresh signs of both momentum and stress in the property markets – from big deals and lending forecasts to rising loan modifications, notable asset sales, and a few distress signals that investors should know about.

Federal Reserve delivers a rate cut: Let’s start with the Fed’s policy decision from late yesterday. The U.S. Federal Reserve cut interest rates by a quarter point, bringing the federal funds target range down to 3.75 to 4.00%. This is the Fed’s second straight rate cut in two months, and it caps a cumulative 1.50% reduction over the past year. The move was expected by most investors, but it wasn’t unanimous – the Fed’s vote showed deep divisions (some policymakers actually wanted a bigger cut, others wanted no cut at all). Chair Jerome Powell struck a cautious tone in his press conference. He emphasized that another rate cut in December is not a sure thing, stressing that the central bank will be data-dependent amid an uncertain economic outlook. Notably, Powell highlighted that inflation, while down to around 3%, is still above the 2% target, and the labor market is showing signs of cooling. Complicating matters, a ongoing federal government shutdown has delayed key economic reports, leaving the Fed partially “flying blind” on the latest data. In short, the Fed is trying to balance supporting a slowing job market without reigniting inflation – and that means future rate decisions are going to be a close call.

Market reaction and yields: So how did the markets take yesterday’s quarter-point cut? Initially, we saw a positive reaction: bond yields dipped sharply right after the announcement, and at one point the benchmark 10-year Treasury yield briefly fell below the 4.0% threshold – a level we hadn’t consistently seen in months. For a moment, it looked like a bit of relief for borrowers. In fact, one analyst at Moody’s even called the sub-4% yield a “momentary gift” for anyone looking to refinance or hedge debt, given how high rates have been. But that gift didn’t last long. As Powell spoke and made it clear that further easing isn’t guaranteed, the bond market reversed course. By the end of the day, the 10-year yield had bounced back up to just over 4.0% – roughly 4.06%, up a few basis points from before the Fed decision. In other words, investors initially cheered the cut but then reconsidered, thinking “maybe we won’t get as many additional cuts as we hoped.” The result: long-term borrowing costs are slightly lower than a week ago but still historically elevated. Meanwhile, the 2-year Treasury yield – which is more sensitive to Fed policy – also ticked up a bit, hovering around 3.6%. That means the yield curve (the gap between short-term and long-term rates) has started to re-normalize; it’s much less inverted now than it was earlier this year, which is an interesting development for banks and lenders.

On the stock side, equities were choppy. The S&P 500 initially dipped on Powell’s cautious messaging but ultimately closed about flat (down around 0.1%). Investors seem torn between relief that rates are coming down and concern that the Fed won’t cut as quickly or as much as some hoped. The U.S. dollar actually strengthened after the announcement – hitting its highest level in weeks – as those hawkish overtones (the possibility that the Fed might pause again) gave the currency a boost. All in all, financial conditions have eased modestly compared to a few months ago: we’re off the peak in interest rates, but the road ahead for monetary policy is murkier. The Fed also quietly announced it will start limited Treasury bond purchases again to add liquidity to money markets (which recently showed signs of strain). That’s a technical move, but it signals the Fed is attentive to any funding stresses. For real estate investors, the key takeaway is that the cost of capital appears to have peaked for this cycle – we’re not expecting rates to go higher from here, and indeed short-term rates are on their way down. However, the pace of decline will be gradual and not without setbacks, as yesterday’s market whipsaw demonstrated.

Implications for CRE financing: Now, let’s connect this to commercial real estate financing. The Fed’s rate cuts are starting to filter through to borrowing costs. The primary benchmark for many commercial loans, SOFR (the overnight financing rate), has edged down to about 4.2% on a 30-day average. That’s down from the mid-5% range we saw before the Fed began easing. So, floating-rate borrowers are seeing some relief in their interest expense at last. Likewise, fixed mortgage rates tied to Treasuries have come off their highs – for instance, yields on 10-year loans or commercial mortgages have retreated from the peaks reached last year when the 10-year Treasury was up around 5%. We’re currently looking at the 10-year yield roughly a full percentage point lower than its highs of the past year, and that can translate into materially lower coupon rates on new loans or refinances. In practical terms, the difference is significant: a few months ago many commercial borrowers were facing all-in interest rates of 7-8% or higher on new loans; now that might be closer to the 6-7% range, depending on the deal. It’s still expensive relative to the ultra-cheap money days of 2021, but the direction is finally lower, not higher.

That said, lenders remain cautious. The Fed’s hesitancy means banks and other lenders are not assuming a rapid return to low rates. Credit spreads – the extra margin lenders demand above benchmark rates – are still wider than normal for riskier properties. For high-quality assets and strong sponsors, debt capital is available, but underwriting standards are pretty strict. We’re in a market where there’s capital out there, but it’s choosy. If your property has stable cash flows and solid occupancy, you can likely find financing at somewhat improved terms now versus six months ago. However, if you’re trying to refinance a half-empty office tower or a troubled retail center, lenders are far less eager – even if base rates are coming down, they might simply say “no thanks” or only lend at very conservative leverage. So, financing costs for CRE investors are easing on the margins, but the availability of that financing strongly depends on the asset’s profile. We’ll get into some of those asset-specific dynamics in a moment.

CRE market momentum – deals and lending outlook: Interestingly, even before this latest Fed cut, the commercial real estate market had started to show flickers of revival in transaction activity. After a very quiet first half of 2025, investor confidence is creeping back as prices adjust to the new rate reality. September, in fact, turned out to be the busiest month of this year for CRE deals. By one industry report, nearly $27 billion in commercial property sales closed in September – making it the high-water mark for 2025 so far and roughly a double-digit percentage increase from the same month last year. Buyers and sellers are finally narrowing their price expectations. Asset values have corrected downward over the past year, and with interest rates stabilizing, more investors are stepping off the sidelines.

We’re seeing this momentum across multiple sectors. Notably, office sales – which had been ice cold – showed signs of life, up about 40% year-over-year by midyear 2025, according to market data. Now, 40% growth is impressive but remember it’s coming off a very low base in 2024 when almost no one wanted to touch offices. Still, it suggests some investors are bargain-hunting, especially for higher quality or well-leased buildings at today’s discounted prices. In other sectors, industrial and logistics properties remain hot thanks to e-commerce and, lately, the AI and cloud computing boom fueling demand for data centers. In a major deal this month, a subsidiary of Brookfield acquired a $1 billion portfolio of data centers across North America, betting big on the need for digital infrastructure. That’s a strong signal that even amid higher financing costs, certain growth areas like tech infrastructure are attracting capital. Retail real estate is more of a mixed bag: essential retail is doing well – for example, grocery-anchored shopping centers are still trading. Just this week, a partnership led by Bain Capital closed on a $260 million purchase of a 10-property retail portfolio anchored by Publix supermarkets. Investors clearly still have an appetite for necessity-based retail assets with steady foot traffic. On the other hand, weaker retail assets in troubled urban markets are struggling (more on that in a moment when we discuss distress).

Looking ahead, commercial lending is expected to bounce back strongly next year. The Mortgage Bankers Association just released a new forecast calling for a 24% surge in commercial and multifamily loan originations in 2026, reaching about $827 billion in volume. The MBA essentially predicts that as the Fed’s rate cuts gradually lower borrowing costs, pent-up demand for deals will be unleashed. They point out that multifamily lending in particular should grow (they estimate +16% next year) thanks to the relative resilience of apartment fundamentals and continued support from government-backed lenders like Fannie Mae and Freddie Mac. In fact, multifamily has held up better than most sectors – lending for apartments has already shown year-over-year growth in early 2025, a remarkable feat given the broader slowdown. The MBA’s chief economist noted that the Fed’s stance is shifting from battling inflation to shoring up the job market, which indicates a friendlier environment for borrowers in the near term. However, they also caution that this rebound might be temporary. Their projections show lending peaking in 2025-2026 and then cooling off by 2027 once the boost from rate cuts fades and if the economy softens due to higher unemployment. In short, 2025 could be a window of opportunity for investors to secure financing and get deals done, before longer-term headwinds potentially re-emerge. For now though, it’s encouraging to hear major industry groups anticipating more capital availability after a very tight period.

Big players and capital flows: We should mention what the major real estate investors are doing in this environment. Case in point: Blackstone – one of the world’s largest real estate private equity firms – just reported earnings that were up nearly 50% year-over-year in the third quarter, driven largely by gains from selling properties. They’ve been strategically disposing of certain assets (taking advantage of whatever buyer demand exists) and that’s boosted their profits. It goes to show that there are buyers for quality assets, and selling into this relative strength has been a successful strategy for some. At the same time, other institutional investors are tapping the brakes: interestingly, for the first time since 2013, big institutions (think pension funds and endowments) are reportedly reducing their target allocations to real estate. After a decade of pouring money into property, some are now over-exposed due to the recent valuation drops, and they’re being more cautious, waiting for the dust to settle. This pullback by traditional institutional capital is creating a gap – and guess what – opportunistic private capital is rushing in to fill it. There’s a “money in motion” trend happening: private equity funds, family offices, and sovereign wealth funds see the price corrections in CRE as a chance to deploy capital at better yields. For example, a joint venture between Warburg Pincus and Madison International Realty just announced a $300 million investment into secondary market real estate deals, targeting assets like data centers, industrial properties, and residential complexes at discounted values. Likewise, we’re hearing about more “dry powder” being allocated to distressed real estate strategies – essentially investors gearing up to buy loans or properties from distressed owners at a bargain.

Another strategy gaining traction is the “continuation fund” or “hold-and-roll” approach: Many property owners who might have normally sold by now are instead rolling assets into new vehicles to hold them longer, giving themselves and their investors more time for the market to recover. This is happening because, frankly, selling today might not fetch a great price in certain sectors (like office). So sponsors are saying, “Let’s hang on a bit longer rather than sell at the bottom, and in the meantime maybe return some capital to investors through refinancing or partial sales.” All of these maneuvers reflect a market in transition – capital is still out there, but it’s being selective and creative.

Signs of stress – loan modifications and defaults: Of course, not everything is rosy. We need to talk about the stress building up, especially in segments of the market facing the harshest combination of higher interest costs and lower property cash flows. Banks, for one, are bracing for loan losses in commercial real estate. One clear sign: we’ve seen a wave of loan modifications this year as lenders try to give struggling borrowers some breathing room. According to Federal Reserve data, the value of modified commercial real estate loans jumped 66% year-over-year through the first half of 2025. That’s a huge increase in “extend and pretend” activity – where banks extend maturities, adjust interest rates, or offer temporary payment relief on loans that would otherwise be in danger of default. Why is this happening? Because many loans made during the ultra-low interest rate era (say, loans from 2018, 2019, 2020) are now maturing or facing rate resets, and the borrowers simply can’t refinance at current rates without a major increase in debt service costs. To put it bluntly, a lot of those deals only made financial sense at 3% interest or with optimistic rent growth baked in. Now those loans are coming due in a world of 6%+ interest and softer rents, so a lot of properties are underwater – meaning the loan balance is higher than the property’s market value. If forced to refinance today, many owners would have to inject fresh equity (which they may not have) or default. Lenders know this, and rather than foreclose en masse, many are choosing to “kick the can down the road”, hoping that conditions improve (for instance, hoping that interest rates fall further or that property values recover a bit in the next couple of years).

This strategy – while understandable – is essentially buying time, not solving the underlying issue. Banks are boosting their loan loss reserves in anticipation that some of these modified loans won’t ultimately be repaid in full. We’re approaching what a lot of folks call a “maturity wall”: a big wave of commercial mortgages (especially those originated in 2019-2021) are coming due over the next 12-24 months. A huge chunk of that is in the office sector and in older retail properties. These are asset classes that have seen valuations drop 20, 30, 40% from their peaks in some cases. Refinancing them is extremely challenging. Even with interest rates now trending down, borrowing costs are far above the levels of the original loans, and property incomes haven’t grown enough – in many cases they’ve fallen – to cover the new higher debt payments. So it’s a squeeze. We’re likely to see more defaults and distressed sales as this plays out. In fact, we’ve already seen a number of high-profile defaults: owners of several big city office towers (from Los Angeles to Chicago to New York) have already walked away from properties this year because they couldn’t refinance or justify pouring in more cash. And just to highlight how dire it got in one segment: the delinquency rate on office loans in CMBS (commercial mortgage-backed securities) hit an all-time high around 11-12% this summer, surpassing even the worst levels seen in the aftermath of 2008. That’s a record nobody wanted to break. The overall CRE loan delinquency rate for CMBS has since come down slightly – it was about 9.4% in August and improved to roughly 8.6% in September – but that’s still very elevated. The slight dip suggests some distressed loans might have been resolved or sold, but we’re still near decade-high levels of default, especially in offices, and to a lesser extent in sectors like hotels and retail malls.

The takeaway on distress is that we are in the midst of a typical real estate down-cycle, but so far it appears manageable. Analysts are saying this looks more like a necessary market reset rather than a systemic collapse. Banks and investors are absorbing losses gradually, and there’s opportunistic capital ready to pick up distressed assets, which helps put a floor under the market. Still, for individual owners, the pain is real and ongoing. If the Fed’s rate cuts continue, it could alleviate some of this pressure – essentially lowering the bar for refinancing – but unless rates drop a lot more or property values rebound, we’ll continue to see extensions, restructurings, and some foreclosures throughout 2026.

Sector check – winners and losers: Let’s quickly tour the major real estate sectors to see how they’re faring in this environment:

• Office: As we noted, it’s the most stressed sector, but there are a few glimmers of hope. For the first time since 2019, the U.S. office vacancy rate ticked down slightly in the third quarter. It’s a small decline, but symbolically important – it means leasing activity is starting to outpace new vacancies for once. Companies have largely settled into their post-pandemic work strategies by now, and some are indeed in the market taking advantage of cheaper rents to upgrade their space. In fact, here in New York, Manhattan’s office market is on track for its strongest leasing year since 2018. Big deals have been signed – from finance firms to tech – amounting to tens of millions of square feet leased so far this year. That doesn’t mean office is out of the woods (far from it, vacancies remain historically high, and older B-minus buildings are still struggling to find tenants), but it indicates that the bleeding may have finally slowed and the flight-to-quality trend (where tenants move to better, newer buildings) is boosting the top tier of the market. For investors, this means there could be selective opportunities in office, especially if you have the capital to reposition or renovate properties to make them more attractive. But generally, any optimism in office is cautious and focused on prime assets; the weaker offices will likely continue to face distress or repurposing.
• Multifamily (apartments): Apartments have been a relative safe haven through this period, but even they are seeing some pressure. We’re coming off a decade of phenomenal rent growth, but that has cooled significantly in 2024 and 2025. With a lot of new multifamily supply hitting certain markets and renters reaching the limits of what they can pay, landlords have had to get competitive. In fact, renters currently hold the advantage in many cities, with landlords offering concessions like free months of rent to fill units. Occupancy rates in some metros have dipped, and rent growth is flat or even slightly negative in a few overbuilt markets. Essentially, the power dynamic has shifted a bit towards tenants for the first time in years. However, the long-term fundamentals still favor multifamily. The country faces a housing shortage of around 7 million units, and high mortgage rates (until recently) have kept many would-be homebuyers in the rental market. So demand for rentals is expected to remain solid. Also, financing for multifamily is more readily available thanks to government-backed loans and the sector’s strong track record. That’s why we see the Mortgage Bankers Association projecting robust multifamily lending growth next year and beyond. So, while landlords might have to offer a concession or two today, the apartment sector is still viewed as one of the more stable, resilient plays in real estate – especially compared to office or struggling retail.
• Industrial and logistics: Warehouses, distribution centers, and data centers continue to shine. The industrial sector had a mild slowdown in leasing earlier this year, but demand remains high for modern logistics facilities, particularly near major cities and transport hubs. E-commerce growth, although not as explosive as during the pandemic, is still on an upward trend and companies are refining their supply chains, often needing more localized warehouse space. Also, an interesting twist: the data center boom driven by cloud computing and artificial intelligence is creating huge demand for specialized industrial-type properties (often with heavy power and cooling infrastructure). We already mentioned Brookfield’s big data center acquisition. Another facet is the energy side: for example, Apollo Global just acquired a renewable energy company to ensure power supply for future data centers – a sign of how intertwined real estate and infrastructure have become in this AI era. For investors, industrial has been a darling sector with low vacancies and steady rent growth, and it looks set to continue performing well, although pricing is still quite high (cap rates in industrial are among the lowest, reflecting that strength). Financing is available for good industrial projects, often from a range of sources including banks, life insurers, and debt funds eager to lend on high-quality logistics assets.
• Retail: This is a bifurcated story. On one side, essential retail – grocery stores, home improvement centers, well-located shopping plazas – is doing fine or even great. Those kinds of centers have high occupancy and investors like them for their stable cash flow (as evidenced by that Publix-anchored portfolio deal). On the other side, discretionary retail and especially urban flagship retail is still recovering very slowly. A striking example: San Francisco’s once-premier downtown mall is now 93% vacant and losing money, after big departures and foot traffic plunging in the wake of remote work and safety concerns downtown. That mall’s owner basically walked away from the property earlier, which underscores how severe the situation got. Across many cities, older malls and high streets that haven’t reinvented themselves are under real pressure. However, it’s not all doom and gloom: we are seeing shoppers return to physical stores for the experience – there’s talk of retail spaces reviving as social hubs (think bookstores, gyms, and experiential concepts bringing people together in person again). Some brands like Barnes & Noble, interestingly, are staging a modest comeback by adapting their store formats. So retail is evolving. Investors are cautious here, but there are opportunities in redevelopment – turning vacant retail into mixed-use, or capitalizing on the lower rents to bring in new types of tenants. Still, financing for retail properties is generally tougher unless you have a strong anchor tenant or a unique repositioning plan, because lenders remember the retail struggles of the past decade.
• Hospitality: We’ll briefly touch on hotels because they’re relevant to commercial real estate too. Hotels saw a solid rebound in travel in 2023 and 2024, but 2025 has been a bit mixed. Business travel is still not fully back to pre-pandemic norms, and leisure travel, while strong, is normalizing. The higher cost of capital has stalled some hotel development and renovations. Most existing hotel loans that needed refinancing have faced steeper terms, and we’ve seen some distressed sales in this arena too. However, well-located hotels in markets with good tourism or corporate demand are doing okay and have even been able to push room rates. It’s a very market-specific situation. Lenders are selectively financing hospitality deals, often preferring those with strong brands or unique niches (like resorts).

Policy and external factors: One more layer to consider is public policy and external events. We mentioned the U.S. government shutdown that’s been unfolding – it’s now nearly a month with federal agencies partially closed. This is affecting real estate in subtle but important ways: development projects are seeing delays in permits and approvals, as federal offices that issue those permits aren’t fully staffed. Some government data (like certain economic reports or funding programs) are on hold, which makes it harder for investors and lenders to gauge the market or move forward on projects that rely on federal programs (for example, HUD-backed multifamily deals). The uncertainty in Washington is something the markets are watching; a prolonged shutdown or, say, a close call on the debt ceiling down the line could rattle financing markets just when they’re starting to calm. On a local level, politics can also impact real estate. Take New York City – it appears likely the city will soon have a new mayor with a much more progressive stance on housing and development (there was a major election this week, and a progressive candidate won). That has some property owners a bit nervous about possible new regulations, like expanded tenant protections or higher taxes on luxury developments. However, it’s also true that campaign rhetoric doesn’t always turn into rapid policy change; often there are checks and balances that moderate any drastic shifts. Still, investors in urban markets are keeping an eye on these political changes because they can affect everything from rent control laws to zoning for new construction.

Wrap-up – financing costs and capital availability: Bringing it back to the big picture for commercial real estate investors: financing costs are finally inching down after a steep climb over the past two years. The Fed is in easing mode (however cautiously), and both short-term rates and long-term yields are below their recent peaks. This means if you’re looking to borrow for an acquisition or refinance a loan, the numbers today are slightly more favorable than they were a quarter ago. Many in the industry expect this trend to continue, albeit gradually – perhaps a couple more small Fed cuts over the next meetings if the economy cooperates. Just remember, “gradual” is the operative word; we’re not going back to zero interest rates, but we might see commercial mortgage rates slip from the high-single-digits toward the mid-single-digits over the next year or so. That can be the difference that makes deals pencil out again.

Capital availability is likewise poised to improve in pockets. Banks are still digesting existing exposure, but they are lending selectively, especially on better assets. More importantly, alternative lenders – debt funds, mortgage REITs, private equity – have raised funds to step into the gap. We talked about private capital being on the move; these players are ready to provide financing where banks pull back, although often at a higher cost or with profit participation. Additionally, the public markets for real estate debt (like CMBS and CRE CLOs) have been thawing. Spreads on new commercial mortgage-backed securities have narrowed slightly since mid-year, reflecting a bit more investor appetite to invest in these loans. And if the MBA’s forecast of a big lending surge comes true, that means both traditional and nontraditional lenders expect to be much more active in 2026 than they were in 2024-25. Part of that is simply cyclical – after a slow period, any increase feels like a surge – but part is genuine confidence that the worst of the credit tightening is behind us.

To sum up the situation: commercial real estate investors today face a market with improving conditions but plenty of caution signs. Interest rates are moving in a favorable direction and capital is starting to trickle back, which is good news if you need financing or are looking to do deals. At the same time, the landscape is very uneven. The best assets in resilient sectors are rebounding and finding financing, while weaker assets are struggling and in some cases heading into distress. It’s a time to be selective and diligent – lock in those lower financing rates while you can, but also underwrite conservatively and have a plan B if conditions shift again. As the Fed signaled, nothing is guaranteed beyond the moment. Volatility is still in play, whether from economic data uncertainties or political wrangling, so flexibility is key.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael — until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Wednesday, October 29, 2025. Here’s what we’re covering today.

The Federal Reserve is expected to deliver its second rate cut of the year later today, easing borrowing costs as inflation cools and job growth slows. Commercial real estate investors are watching closely — because this shift could mark the official start of the next cycle.

In short, borrowing costs are finally coming down. Treasury yields have dropped for four straight weeks, with the ten-year sitting near four percent. That’s its lowest level since early spring. Mortgage rates have fallen to around six-point-three percent, the lowest in over a year. Refinancing activity jumped last week, and lenders are reporting stronger loan applications as investors move to lock in lower costs. The Fed’s target range is expected to fall to roughly four percent after today’s decision — a major psychological milestone for a market that’s been living with high rates for two years straight.

For commercial real estate, the mood is shifting. Banks and private lenders are back in the game, and spreads are narrowing as competition heats up. Financing is still selective, but the capital window is opening. Borrowers with strong cash flow and good-quality assets are finding real options again — something we couldn’t say six months ago.

Meanwhile, deal volume is starting to rise. Data from the third quarter show commercial property transactions up nearly twenty percent from last year. Retail, industrial, and even office properties are seeing renewed investor interest, helped by better access to credit. Senior housing deals have surged this year as investors chase yield and demographic-driven demand. Buyers are still disciplined, but they’re back in the market — and that’s a clear sign that confidence is returning.

Blackstone echoed that optimism this week with its strongest real estate earnings in nearly three years. The firm reported a forty-eight percent jump in quarterly profit, driven by property sales totaling more than seven billion dollars. They called this “the deal dam breaking” — the point where frozen assets finally start moving again. Their flagship real estate fund just logged its third consecutive quarter of positive returns, and investor redemption requests are down sharply. Blackstone says it’s positioning for a steeper recovery in the next twelve months, betting heavily on data centers and logistics assets tied to the AI economy.

Now let’s talk about the office market — long the symbol of post-pandemic distress. For the first time since 2019, national office vacancy actually ticked down. It’s a tiny improvement — just five basis points — but it’s a meaningful shift. Developers have pulled back sharply, and new construction is at its lowest level in more than a decade. That slowdown in supply is helping the market find balance.

There are bright spots in key cities. In New York, two major leases closed this month that turned heads: a global insurer taking roughly three hundred thousand square feet at a new tower on Madison Avenue, and a fast-growing AI firm signing a one-hundred-thousand-square-foot lease at One Madison. Those two deals pushed New York’s leasing activity to its highest annual level since before the pandemic. It’s not a full comeback, but it’s proof that high-quality buildings in strong locations are still commanding demand and rent growth.

Retail real estate is also showing signs of life. In Chicago, the Magnificent Mile — once written off as a casualty of remote work and crime — is beginning to recover. Foot traffic is approaching pre-pandemic levels, crime has eased, and rents have dropped to more affordable levels. That’s drawing new tenants: smaller brands, experiential stores, and even medical and educational users filling long-vacant spaces. Vacancy remains high, but the corridor is slowly reinventing itself, and that’s symbolic of retail’s broader recovery across the country.

Still, not everything is rosy. Many owners are surviving thanks to lender flexibility rather than improving fundamentals. Loan extensions and modifications are surging as banks choose to delay foreclosures. In the last quarter alone, more than eleven billion dollars in loans were restructured — mostly in the office and hotel sectors. Lenders would rather buy time than take losses, but that means the real stress in the market is being pushed forward to 2026 and 2027, when many of those extended loans come due again.

And another quiet threat is rising insurance costs. Property insurance premiums have jumped by double digits this year, especially for multifamily and coastal assets. Some investors are reporting six- or seven-figure insurance bills that are killing deals outright. Higher insurance costs, combined with stricter lender coverage requirements, are adding friction to acquisitions and refinancings nationwide.

Despite those challenges, the tone across the industry is improving. Financing is easing. Deal flow is returning. Even troubled sectors like office and retail are finding their footing. The market feels different now — less defensive, more forward-looking. Investors are still cautious, but they’re no longer frozen.

If you’ve been waiting for the moment when real estate starts to turn, this might be it. Rates are falling, capital is thawing, and sentiment is rising. It’s still a grind, but the direction of travel is finally positive.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael — until next time.

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Tuesday, October 28, 2025. Here’s what we’re covering today.

The Fed is expected to cut interest rates again this week as inflation continues to cool and job growth slows. Borrowing costs are easing for the first time in nearly two years, giving commercial real estate investors some long-awaited breathing room.

Property prices are finally showing signs of life. After more than a year of corrections, national CRE values are up nearly three percent from last fall. Retail and industrial properties are leading that rebound, while apartments are stabilizing and offices—well, they’re still a mixed story.

Credit stress hasn’t disappeared, but it’s no longer accelerating. CMBS delinquencies have edged down for the first time in months, and banks are leaning on loan extensions instead of foreclosures to keep deals alive. Lenders don’t want to own real estate right now; they want time for values and occupancy to recover.

And across the macro landscape, the economy looks soft but not broken. Inflation is running around three percent, unemployment just over four, and the Fed’s easing stance suggests they believe a gentle landing is possible. For CRE players, that combination—lower rates and steady demand—could mark a turning point heading into winter.

Financing conditions are improving. Treasury yields have slipped to roughly four percent, down from the highs of last year, and competition among lenders is quietly heating up. Banks, debt funds, and private credit shops are loosening just enough to get deals moving again. Spreads are tightening, fees are shrinking, and borrowers with clean balance sheets are finally seeing term sheets that make sense. Debt isn’t cheap, but it’s available—and that’s a big shift from the freeze of twenty-twenty-three.

In valuations, the market seems to have found its footing. Retail remains the standout—think grocery-anchored centers and essential-goods strip malls with solid foot traffic. Industrial is steady, supported by logistics demand and manufacturing projects tied to infrastructure spending. Multifamily is uneven: Sunbelt metros are still building fast, while urban cores face slower rent growth. Offices continue to struggle; trophy towers are stabilizing, but older buildings need conversions or deep discounts to move. The big picture? Prices are no longer falling off a cliff—they’re hovering, consolidating, and in some cases, inching upward again.

Credit quality tells a similar story of gradual repair. Office distress is still elevated, but lenders are working the phones instead of calling the sheriffs. Extensions, workouts, and joint-venture rescues are the order of the day. Multifamily loans are under pressure in markets that overbuilt, yet delinquency rates there remain manageable. Retail and hotels, surprisingly, are showing genuine recovery as consumers keep spending and travel stays strong. The system isn’t healthy yet, but it’s healing.

From the policy side, everyone’s watching the Fed meeting tomorrow. Markets expect another quarter-point rate cut, which would take the benchmark down toward four percent even. That move would cement the shift from tightening to easing, a clear sign that monetary policy is now leaning in favor of growth. Lower rates should feed into cap-rate stability and refinance activity, though investors should remember the other side of that coin—a slower economy means softer rent growth and more cautious tenants.

So what does all this mean for investors? The refinancing window is reopening. It’s a good time to revisit your maturities and lock in lower rates before spreads move again. Value hunters should stay active; stabilized retail and industrial assets are trading with renewed interest, and some distress-driven office or apartment deals could offer deep discounts for those with patient capital. Keep underwriting conservative—cash flow is king right now. And watch the macro signals closely, because every Fed statement between now and year-end could shift sentiment overnight.

Elsewhere around the industry, Blackstone reported a major earnings surge on the back of real-estate sales, a signal that institutional capital is once again finding liquidity. Meanwhile, in San Francisco, the massive Parkmerced apartment complex has entered receivership after a billion-dollar loan default—a reminder that the refinancing crunch isn’t over. And in Boston, One Lincoln Street has officially changed hands after the owner returned it to the lender, underscoring how office distress continues to ripple through gateway markets.

The mood across CRE today is one of cautious optimism. The storm hasn’t completely passed, but the clouds are thinning. Rates are falling, prices are stabilizing, and investors are tip-toeing back into the market. After years of turbulence, discipline is back—and with it, a path to steady recovery.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael—until next time!