The CRE Weekly Digest by LightBox

Episode 53: The Midyear CRE Pulse Check Reveals a CRE Ground Holding Strong

July 3, 2025

Martha Coacher: This is the CRE Weekly Digest by LightBox a firm transforming the commercial real estate landscape by connecting every step of the CRE process with comprehensive tools and data. I'm Martha Coacher with our experts Manus Clancy and Dianne Crocker. For the week ending July 4th, a shortened holiday week.

As we close the book on the second quarter and the first half of 2025, we've made it through a turbulent, noisy, and sometimes surprising first six months tariffs, wildfires, economic wobbles, and geopolitical tensions. But. Beyond the headlines. The real story is unfolding in the data, and that's what we're going to be unpacking today in this mid-year recap and second half outlook. We're breaking down the headlines, market data and light box insights that define the first half and what that's signaling for the second half of 2025. Just this week, stocks ended the quarter at record highs. The Trump bill approaches a deadline and the tariff July 9th deadline is also approaching. But if you had to sum up the first half of 2025 in the headline, what would that be? Dianne? 

Dianne Crocker: Yeah. First of all, I can't believe it's July already, but when I think about our market and where we've been in the first half, I guess the headline I land on is something like CRE marches to the beat of its own drum, even when the market skips a beat, because as we've been reporting here, it's been in commercial real estate, remarkably steady even while some other metrics are really all over the place. You know, we've talked so much about the need to ignore the noise and focus on what's really happening, and we're seeing good deals getting done. We're seeing capital, finding a home in real estate, and we're seeing that risk is in the front seat. But being cautious, it's a good thing. If I can quote Martha Stewart. 

Manus Clancy: I think any headline we talk about for the first half of the year has to include the word resilient or resilience. I think that was the most shocking thing to me over the last six months that we saw a bevy of really concerning market turns, headlines, geopolitical events, and both the stock markets and the bond markets really soldiered on. In the case of the stock markets, we did see that April swoon for about two weeks. That made everybody a little petrified, but we never saw really a swoon in the commercial real estate market. You know, I don't have that gift that the New York Post headline writers have where I can come up with something clever and pithy in short order. But I do think it has to include the word resilient. 

Martha Coacher: So let's go through the first half a little bit. Dianne, there were a number of big stories that ended up impacting the market at large. What stories or events stuck with you the most? 

Dianne Crocker: Certainly a lot happened. I mean, the devastating LA fires were in early January. We got a new president taking office. There was a whole slew of new policies coming out of that. But I think, you know, as I reflect on the first six months, I'd have to say the story that sticks out in my mind the most was the tariff announcement in early April because that, to me, looking back, really felt like a pivot point. Tariff coverage was on steroids, the markets got spooked. We saw that sharp drop in the stock market, and suddenly that word stagflation was back in the conversation and tariffs hit earnings calls as a popular topic. And since then, I feel like it's been all about what happened before that announcement and what happened after, because it affected construction costs and it affected investment strategies. Folks got out the pencil eraser and rewrote their forecasts for the rest of the year. So I think that early April story really sticks out with me as the lightning rod of the first half. What do you think Manus? 

Manus Clancy: I certainly think that that was the big biggest headline that, and I guess you would say the war in the Middle East as well, being the two really impactful events, at least on the psyche of people in this country and what the future looks like. My big takeaway is that when you compare the first six months, we saw a higher velocity of unusual events compared to past years, in my opinion. Yet we saw a much more muted response compared to things like the failure of Silicon Valley Bank, early COVID, the oil bust in 2015. In each of those markets, lenders really turtled and people thought we are going to see big credit losses. Banks are going to see their non-performing loans skyrocket. Some people were out there calling for a hundred banks to fail. Remember when Silicon Valley Bank failed and none of that came to pass, but it didn't stop people from turtling back then and saying, we're not going to put out loans right now, we're going to see how things play out over the next few months, we're going to sit this one out, and yet that didn't happen in the first half of 2025. People just continue to put money out there and not just on stabilized assets. Capital was readily available for construction loans, for office conversions, really anything that borrowers needed money for, it was available to them. 

Martha Coacher: Well against all of those news items as a backdrop, let's talk about the LightBox CRE activity index. What does the rebound into the triple digits in Q1 signal about the market resilience? And resilience is the word that man has already picked up on, so let's take it. 

Dianne Crocker: Yeah, I think, Martha, that what we've seen in the index really demonstrates the points that you just made. Manus, I looked back, we ended 2024 in December with the index dropping to 58.8 from 83.8 in November, and then it was really terrific to see that the index rallied up to the triple digits by February. It stayed in the triple digits in March and April, although the increases were a bit more moderate. And May was really the first monthly decline that we saw, but it was the fourth consecutive month that was in the triple digits, and that's after all the turbulence that we just talked about in the overall market after the tariff announcement. So June just ended at midnight last night, so no data yet, but it's starting to come in. So we should have that new index over the next few days and we'll roll that out. And your prediction for June was that it won't blow the doors off, but it should be up modestly, so stay tuned to see if you're correct.

Manus Clancy: I might even adjust that. I have to say, I said a modest uptick in June. I think we might see an even better than modest uptick last month, and I'm basing that over the last seven days on the sheer number of nine digit sales. We've seen in the second half of June and nine digit sales have been plentiful in the apartment segment for a long time.

Every month we see somewhere between five and 15 sales of a hundred million dollars and up, and this, and June was no exception. We saw another great month of big ticket sales in the multifamily. Part of the market. But what we saw this month was that started to spread to other parts. We saw five or six, if you can believe it, retail sales.

Malls basically that sold for nine figures and up we saw a three property portfolio in Oklahoma trade for over 200 million. We saw TMG partners paying 121 million for the Metreon Mall in the Bay Area in North Carolina, the Crabtree Valley Mall selling for nearly $300 million. So, it's those types of things that.

Makes me feel that the market has some breath here. We certainly have breath among lenders all for. Cylinders of the CRE lending engine are functioning right now, CMBS, banks, non-banks, private equity, and insurance companies, and we're seeing a very diverse buyer pool. In the apartments segment, you rarely see the same buyer showing up more than once.

The pool is very deep and now we're seeing things spread out into other asset classes, offices. We see a lot of offices trade every month, often at sizable discounts. Disappointingly, we're starting to see hotels sell malls, sell things that were really unloved. A few months ago, and that's why I'm getting more bullish as the days go on, 

Dianne Crocker: I feel like we have to start placing some wagers, Manus, and if you're right maybe I deliver you a cup of coffee by drone.

Manus Clancy: There we go. In a box of Poptarts, maybe the strawberry kind, the frosted. 

Dianne Crocker: And I'll add to what you just said, Manus, that the prong that feeds into the CRE activity index that declined in May, that I'm very curious about, was the demand for lender driven appraisals, and that was down a bit in May. Under April volume.

So I'm very curious to see when the June numbers come in, if we continue to see that weakness or if that demand for appraisal starts to rally back up a little bit. 

Manus Clancy: One of the nice things that we could take away from the last 45 days or so is that after that April swoon in stocks, what we saw at the same time was an uptick, a sharp uptick in treasury yields, and we remember the.

Yield on the 10 year went above four 80 at one point this morning, I think we're at 4 25, so hopefully Dianne, that gives us a little bit of tailwind on the appraisal slash lending side. That will show up in your numbers next week. Let's keep our fingers crossed. 

Dianne Crocker: Yeah, same. Good point. So Manus, you talked about transaction trends, you highlighted a few specific ones there that give you great hope.

I did look back historically at the transactions data that we track at LightBox just to see how we were fairing thus far in the year. And as our listeners know, if you've been with us for a while, we tracked deals. That are nine digits, so that's over a hundred million. And then we also track deals in a lower tier from 50 to a hundred million, and through the end of May, we tracked 460 big deals in both of those size categories.

190 were the nine digit deals, and 270 were in the 50 to a hundred million bucket. So it's generally been trending up. I will note that in May it was the 50 to a hundred million tier where we saw the first signs of a slowdown. So while the bigger deals were still up, those are the institutional buyers that were still remaining very active on the big deals.

But it was the smaller deals that suffered, you know, probably as more cautious debt markets slowed down the pace. So looking back to last year, the second half of 2024, we tracked. 220 deals above 100 million. So that's gonna be the number to beat in the second half, where in the first half we saw 190 of those deals.

So we'll see if we can top two 20 in the second half. 

Manus Clancy: And one thing I want to point out on the transaction side, I've talked about apartments, I've talked about retail. I think one of the. Items that hasn't generated a lot of ink but is really true is the comeback of the big tech bid either for property acquisitions or for big leases. If you remember Dianne and Martha 2022, 2023, 2024, the big story was all these firms allowing leases to expire, not renewing, putting space back on the market. We saw it with Facebook in New York. They went through a big cost cutting phase. Amazon and Seattle, several other Microsoft in Seattle as well, Microsoft and California. It was a real drag on the market. They had been big drivers of class, a space in the major 24 hour cities and in the tech hubs, and that bid kind of disappeared for two, two and a half years. That bid is back. We are seeing that in San Francisco. We're seeing it New York. We're seeing sizable leases being signed. Six figures and up and this week over the last week and a half, let's call it Apple, with two huge purchases, one in Cupertino and one in Sunnyvale, totaling 500 million in spend. On a three building campus in Cupertino and a two building campus in Sunnyvale. So I love that it's going to take some of that class A office space off the market, and as people find that there's only so much class A to go around, maybe it gives us a little bit of improvement in that Class B space. Let's hope so anyway. 

Martha Coacher: We've seen the rhetoric between Trump and Powell, who's actually kind of towed the line and not really jumped into the fray, but the Fed dilemma is something that is front and center in the commercial real estate market. We've seen that the FOMC members now are essentially split on the forecast for the so-called dot plot. The summary of economic projections showed a growing divergence. Eight officials foresaw two cuts this year while seven predicted there will be none. 

Dianne Crocker: I mean four Fed meetings so far this year. Zero rate cuts. Powell's firmly entrenched in wait and see mode. We still have four more meetings to go and most of the forecasts I'm seeing are that we'll see at least two cuts this year. Rates are certainly front and center for the folks that I'm talking to. I'm kind of split on whether we'll see a cut in the July meeting, you know, maybe if this year trends like last, we won't see any movement in July, and then we'll see 25 basis points in September. I don't think we'll see 50 basis points, but I'm kind of split on whether we'll see it in July or September. What do you think Manus? 

Manus Clancy: Well, I do think that Martha mentioned it before we have. The tariff expiration on July 9th. We have a couple of deals which are said to be close a deal with China, a couple of other deals that have been hinted at and so forth. And I do think that having these finalized would allow the Fed to make a move that if they could take tariff driven inflation, either off the table or at least.

To be able to calculate what the impact would be, would give them more room to cut. But the one thing I think about when I watch all the back and forth between. The White House, Donald Trump and Jay Powell. The one thing Trump doesn't do is reverse psychology, right? That's just not part of his repertoire, right?

Maybe he should get out there and say, Jay Powell should be hiking rates. Short term interest rate should be 6%. No. Make it 7%. How about 8% Right? Every time he's yelling at the Fed share. I think it makes it harder and harder to get a rate cut out there. How about a little reverse psychology for a change?

Dianne Crocker: You might be onto something. 

Manus Clancy: We worked with our kids. Right? It's, you know, it's worth a try. 

Martha Coacher: That's when the kids got scared. We talk about the Fed and their position and Jay Powell has been pretty firm in that they're watching the data and responding. A number of the data elements they look at are the ones we talk about every week, inflation, unemployment, GDP, and what have we seen that gives us any indication that things aren't really going to change? 

Dianne Crocker: I mean, inflation is still above target, so that's obviously a concern. The latest read from Core PCE Inflation, it rose to 2.7% year over year in May. So that was slightly above what was expected. The Chief Economist at Morningstar, Preston Caldwell just predicted that tariffs will push inflation. Based on that PC index to 3.2% in early 2026. So, you know, if that happens, obviously the pressure is going to be on the Fed to not lower rates, you know, we'll see. That's the big question mark, I think. 

Manus Clancy: I think there's a big difference between investor psychology and reality right now.

Reality, and that Morningstar prediction could be onto something. I think the sentiment right now is. Because we haven't seen a blow up in tariffs. That means that there'll be no tariff inflation. I think that that's kind of the psychology right now, but the reality is even if the White House comes in at the low end on these trade deals, even if we're only 10% higher.

Than we were last year. That's still 10% higher than we were last year. So that has to factor in at some point. And I feel like the market at this point thinks there'll be no impact when the reality is there'll be some impact. How big it'll be, I think remains to be seen. But you also have the other. Part of the coin, which is people seem to be buying things hand over fist right now to fill their warehouses to get in front of the tariffs.

What does that do? Does that delay the inflation? What does that do to earnings down the road? Are people going to be sitting on inventory they don't need? There's just a lot of what ifs in this, and that's really. The only thing that concerns me about what I think will be a nice second half for both the equity markets and even more so for the CRE markets, 

Martha Coacher: Manus to the point you make, the average tariff in the US is 18.8%, which is lower than some of the tariffs that were announced earlier this year that were 145 and other numbers, but it's still pretty high compared to last year, which was 2.4%. 

Manus Clancy: I do think, as I said before, I do think this will have an impact at some point, and the people I'm most concerned about are retailers and when you talk about retail, we'll talk about electronics and apparel. I do think that they could face a rocky road down the way. I am also concerned as I take a detour here, because I heard this on the radio yesterday, fireworks makers. Apparently all of our fireworks now that we're on the cusp of 4th of July come from China, 30% more expensive than they were last year and wait for it... the firecracker importers are hoping for an exemption in the big beautiful bill, so they will be exempt from tariffs. Just what we need, right? More fireworks, cheaper in this country. A country, which by the way, has seen a lot of wildfires over the last year. Right? What could go wrong there? 

Dianne Crocker: For me, it draws an analogy between the fireworks that we're seeing in the dramatic news headlines this year and what you just said about fireworks prices. That's interesting. I hadn't heard that before, Manus. 

Martha Coacher: I did hear that and the only thing I can say is, that'll be a lot less noise in my neighborhood. 

Manus Clancy: Well, in South Carolina here, there are two things or three things that you can't get away from, every street corner has them. Boiled peanuts, churches, and firework sellers. So it's kind of front and center down here in the south. 

Martha Coacher: Two other barometers that we've talked about several times over the last several months, unemployment and GDP, and in the unemployment area, we've seen that it's held steady, but there is softening beneath the surface. Companies aren't laying off and mass, but they're being selective about hiring and in some cases waiting to hire.

Dianne Crocker: And I think that's the other thing that Powell is obviously keeping a close eye on. You know, obviously in addition to pricing, what is the labor market doing? And thus far it's been holding steady, but job growth in May was just slightly below the 12 month average. It was 139,000 versus an average of 149,000.

So I think we might see the labor market starting to tighten. Are cool and it's going to be influenced by a lot of the factors that we've been talking about here. You know, the prospect of rising tariffs and what that means, economic uncertainty, spending levels, all of that adds up to more cautious sentiment, and that affects whether corporations are hiring people or not.

Manus Clancy: I put that in the same category as the top of the hour. What I talked about resilience, just like we all expected inflation to be higher once the tariffs were announced. I think we were all surprised at how benign the numbers have been. I think when we look at things and we remember how front and center the DOGE cuts were two months ago, how we thought that was going to lead to higher inflation, or the fact that tariffs were going to make perhaps or lead to higher layoffs among import centric companies, retailers, apparel companies, et cetera. And none of that happened. And it leaves you a little bit head scratching, doesn't it? That we feared the worst and none of that has come to pass yet. It's hard to get your arms around that really.

Dianne Crocker: That's why we caution our listeners to not get too hung up in the noise in the headlines. And this is a perfect example of paying attention to the data. And there might be a time to worry, but I don't think that's yet. 

Martha Coacher: So Manus, several weeks ago you laid out four conditions. I think it was four for CRE recovery, low volatility, low rates, strong economy, and available capital. It sounds like you're thinking we're checking all of those boxes. 

Manus Clancy: Right now we are, we always know that conditions can change on a dime, and they often do, but for right now, we talked about the four cylinders of the lending engine functioning right? All lenders really being willing to put risk on, even if it's certainly higher risk than usual, like construction. We have seen volatility retreat enormously. We have seen. Interest rates come down to some degree. The curve has steepened. In addition to that, and while nobody's going to be popping corks over GDP, we're certainly not talking about a recession, at least this month. And so I do think that we're meeting those conditions and it probably explains why not only am I glass half full like I usually am. I feel like I'm glass three quarters full right now. 

Dianne Crocker: Yeah, I have to say, Manus, I've been thinking about your forecast over the past few days, you know, and whether the second half could be the best that we've seen in three years. I have to say, I am not fully on board. The optimist in me wants to be. I love optimism, but I have some reservations thinking about the first half and the volatility. I'm starting to sense that, when we have a few calm weeks, it feels like a win, you know? And so the danger is that, that we get all a flutter because things suddenly don't seem as awful today as they did a few months ago. And I don't want the forecasting to confuse less bad with we're out of the woods. So, you know, I love that we're seeing the strong momentum on large transactions that you talked about. I love that across LightBox platforms, we're consistently seeing property listings come in fast and furious. And that started in the last two weeks of 2024. I love that we're seeing new buyers coming into the market to file non-disclosure agreements to say, Hey, let me take a closer look at this asset that just came on the selling block. I think if our listings start to fall and if those non-disclosure agreement volumes go back down, I start to get worried. But you know, I am worried about the mix of macro headwinds that are kind of looming like storm clouds over the positive fundamentals that we're seeing across asset classes. You know, GDP is shrinking for the first time in three years, and I know you can write that off to the surge in imports in response to tariffs, but to me it's a sign of our economy's vulnerability. And you know, you can pick which metric in the economy you want. Could be the home building sector, it could be consumer spending. Those are weakening of late and we talked about inflation already, talked about the 10 year treasury, we talked about the labor market. Geopolitical clouds haven't exactly cleared, so I'm just concerned that if there's one more big surprise or one more global flare up or you know, some other lightning rod, take your pick that we could see sentiment shift really fast. And yes, to use your word, commercial real estate is, it's resilient. And yes, May's commercial real estate activity index was still in the triple digits, but I'm just not feeling like it's pedal to the metal in the second half. We had Spencer Levy from CBRE as a guest in December, and I guess I land still even though it's six months later with his forecast that this will be a good year, but not a banner year. And just to tip my hat to another podcast we had Brian Olasov, you might remember last October, and he used the term blue sky territory. You know, to say we're not in blue sky territory anymore, like we were back in the days of zero interest rates leading up to the feds ratcheting up of rates. But back then everybody was in agreement and his word of warning to everybody, which I think bears repeating now as we head into the second half, was our market's very, very differentiated now, and his point was that you can't apply conventional wisdom. So what does that mean? It means industry averages and benchmarks and generalizations, they might not apply. So it can be misleading if you're an investor looking at a shopping center in St. Louis or a multifamily in Charlotte to talk about average performance in retail or average performance in multifamily. So Brian's point I think is important for repeating here, just to proceed with caution, to go deep into the data, to understand an asset. 

And then to just kind of close with the second half in the forecast. I looked back, we came out with a predictions report in January, and that was based on a survey that we did of our market advisory councils, and we said, you know, what's your forecast for commercial real estate deals in 2025? What's your forecast for lending their forecast for commercial real estate deals? I'll throw out to you, Manus, was that they would be up by 17% year on year, and that lending would be up 22%. Pretty low. Those seem doable. And remember, 2024 was a pretty slow year. So I think I'm generally optimistic, but really with a long list of caveats, certainly there's capital available. There are opportunities and things are okay now, there's a sense that some bad things might not happen for a while, but I'm not sure I'm with you on this being the best second half since 2022. 

Manus Clancy: Well, there is that possibility that, you know, there's one more straw that breaks this camel's back. There's no doubt about it. There are storm clouds out there, and it seems like every quarter or every six month stretch has its narrative, right? And in 2024, the narratives seem to be the price of eggs, right? That's all people could talk about. That a dozen eggs cost $12, now it's $13, you can't source them. These narratives take off. And if the narrative in the second half becomes something where, to your point, one of these storm clouds becomes the dominant thing, I can't believe how much I had to pay for my kids back to school clothing, or I can't believe how much the new laptop costs me to get my kid ready for seventh grade. If that becomes the narrative I think everything changes. I think there's no question about that. But if I could narrow it down to maybe two or three final thoughts. I do think that where we stand today, and I wrote this up on LinkedIn last week, if you don't follow me there, I put out my rants periodically. I do think that the equity markets have come too far too fast. I do think some of these tariff impacts will weigh on earnings in the second half of the year. I don't feel that CRE has come too far, too fast. I remain very, very optimistic about CRE, especially given the resilience. But if there is an Achilles heel to the CRE markets, I do think it comes from tariffs having a much bigger impact than we're currently accounting for. And that impact really weigh on corporate earnings and retailers in particular, to the point where retailers are closing stores, laying off people. We see a real retrenchment in that segment. And from there it grows into something bigger where people are saying, well, I don't need that much office space because I'm laying off here at my advertising firm, or my accounting firm, or my retailer back office or so forth. So give me like an eight to two ratio of positive to negative. 

Martha Coacher: I want to add one point to Dianne's rebuttal, and that is on the softer side, the sentiment data. About two thirds of our economy consists of consumer spending, so it is absolutely understandable that investors watch. Consumer mood because that impacts their spending, their travel, and other things that are especially sensitive to consumer mood about the economy and whether they feel secure in their jobs and secure in their income. And so we've seen over the course of this year that number bounce up a little bit towards the latter few months, but it is historically very low compared to what it was in 2020 when we had the University of Michigan Consumer Sentiment Index at about 101 and the conference board's consumer confidence index at about 132. Those numbers currently are at 93 and 60. So it just gives you some indication of where the consumer's mood is currently compared to where it's been. 

Dianne Crocker: I think a lot of it has to do with the news headlines too and the news cycle that really kind of stoke the sentiments fire and lead to some dramatic result.

Martha Coacher: All right. Here's your chance. Rapid Fire across asset types. Give me what your thoughts are for the second half of the year. I'll start with office Dianne. 

Dianne Crocker: I think, you know, the return to office mandates are pointing to employers who are directionally moving back toward in-office models. So I think that'll be really good for a sector that's been kind of the black sheep of commercial real estate.

And just quickly remember, CBRE just reported that for the first time, more office space is being demolished or converted. So I think that effort to kind of give old office assets a makeover will be a big part of the second half. 

Manus Clancy: On the sales front, I think office sales continues very rapidly, although offices continue to sell at huge, huge discounts, but they clear, I think that it's a really long game on conversions, reducing inventory back to office in big numbers.

So I think that office continues to bounce along in terms of valuations at a disappointingly low level. 

Martha Coacher: Have you seen that? They've started to hire etiquette coaches for the kids that are returning to office for the first time? Never having worked in an office, and I guess some of them wear their pajamas to work and don't talk to their supervisor and sometimes bring their parents to job interviews.

Manus Clancy: There's no telling what an etiquette advisor would've done for me back in the day. I remember showing up for interviews. I look back on this not as a badge of honor, but more as like a. Just how unworldly I was in a polyester suit in the dead of summer when it was 98 degrees. I remember, you know, pulling long threads out of this suit. It was like a cartoon where if you kept pulling it was going to completely unravel you and it was like this navy blue thing with purple pen stripes. Good god. What could I have been with somebody just giving me a little bit better advice. Tell 'em you got a shoe shine for God's sakes, not wear those earth's shoes.

Dianne Crocker: That is a funny visual. I really balk at the idea that anybody would wear pajamas into the office. I'm super traditional and conservative and if I were hiring somebody and they brought their parent to a job interview, that's a deal killer right there. 

Martha Coacher: All right, back to the program Multifamily. Are rent pressures and expenses weighing heavier than expected? We've seen a lot of activity Multifamily. 

Dianne Crocker: We have, and I think, you know, rent growth is slowing in multifamily, and the challenge right now is that rent growth in some metros is no longer guaranteed. We're starting to see developers pull back a little bit, so I think that'll kind of shift the supply demand balance a bit. But what's really driving this sector in a positive way, I think is the housing crisis affordability issues for anybody who wants to buy a house and can't, as well as migration trends. You know, folks are moving in a big way from states in New England to states like South Carolina, Georgia, Florida. So, that I think is going to be a big driver of demand for multifamily moving forward.

Manus Clancy: I think we continue to see a lot of sales there. I think there's great appetite for the apartment asset. We've seen it for six months now. So I think that economic activity remains very, very strong. But I think recent buyers will be disappointed by their total returns. I think that expenses will continue to go up and cap rate compression will be slow to come. I think we've seen some already. I think a lot of the gains have been made already, and I think that people buying now, hoping for double digit returns over the next five years may be disappointed ultimately. But I do think the market continues to soldier on. 

Martha Coacher: Industrial still the golden child or cooling off?

Dianne Crocker: Well, I think after years of industrial being the bell of the ball, demand has fallen. I read somewhere that demand for industrial last year was one fifth what it was in 2021. So it's slower, but I think it's still desirable in terms of drivers in e-commerce, AI hardware, and cold storage. And those will all keep it moving.

Manus Clancy: At some point, the industrial party has to end. There's been so much supply built over the last five years and so much run up in valuation that at some point we have to hit the wall there. Is it 2025, 2026, 2027, who knows? I thought we would've reached max saturation by now, but certainly we haven't. I don't think you could separate the future of industrial from the future of retail. If tariffs have a big impact and people have to stop buying, I think that, that will weigh on industrial valuations. If retail muddles through with tariffs, then I think industrial is probably fine, but not the investment it was five years ago. 

Martha Coacher: And retail... is the quiet comeback story real? 

Dianne Crocker: I think in some sectors it is, you know, investors wrote off retail, but I think what it's showing us now is that it's adapting, especially in suburban markets, especially with open air formats, because the closed malls of the eighties and many regions are dead. I think top of mind is that retail is the sector that will bear the brunt of any direct impact of higher prices stemming from tariffs, and some will adjust their supply chains. Some will adjust their real estate portfolios. I think there will be winners and losers. Discount retailers could have the upper hand in some cases, but I think retail could be a star performer in, in some sectors and in some sub-asset classes.

Manus Clancy: Yeah, for me it's the biggest wild card of all. I said before, it could be the Achilles heel of the CRE market if tariff expenses really bite us. But you're right, Dianne, it's segment by segment. I think in the grocery anchored segment that will be terrific. Right? That will be great. Certainly to import fruit and other things that's impactful. But you're not importing apparel, you're not importing computer goods. But when you're talking about the inline stores and malls or big boxes, Best Buy, whoever took over for Radio Shack, whoever is selling those gadgets, any type of apparel maker out there, you know, the Gap and so forth. I think that's the big wild card. And that's where I'd be, I'd be underweight in that segment, to be honest. 

Martha Coacher: So here's my question for you. If there is a song that fits the second half outlook, what would it be? I will give you my pick first to make it easy and give you 30 seconds to think about it. Stronger by Kelly Clarkson. The vibe is a confident comeback with a post shock strength. So I think it fits. 

Dianne Crocker: That's a good one. I think the first one that came to mind was, I'm Still Standing by Elton John. Maybe that's right for retail or Class B or C office. But you know, it might be because I'm in the middle of binge watching Ted Lasso and I'm probably the last person who's never seen that series, but I think I'm going to go with a Mumford and Sons song called I Will Wait, because there's a line in I Will Wait that talks about being bold and using your head alongside your heart. And I think that kind of spoke to the patients I think this market requires, and the focus that Brian Olasov brought up about focusing on data, hard data over the sentiment and making smart decisions. 

Manus Clancy: Maybe in a choice that will surprise no one. I am going to go with Higher and Higher by Van Halen. That's the Sammy Hagar Van Halen, not the David Lee Roth Van Halen and should not be confused with [Your Love Keeps Lifting Me] Higher & Higher by Jackie Wilson. You know, and why Higher and Higher, let's be very precise, higher and higher on property valuations, economic activity and CRE, and probably to some degree in the US equity markets, but definitely not in spreads and definitely not in interest rates.

Martha Coacher: We'll see. We're also taking the pulse of your opinions and thoughts about what's going to happen for the remainder of the year. We've just released the LightBox midyear 2025 market sentiment survey. We'd like your responses on how you think the second half will go. Check out our podcast page on lightboxre.com for a link to the survey and let us know.

And with that, we'll close. Thanks to our producer, Josh Bruyning . Please join us every week as our LightBox team shares CRE news and data in context. You can listen on any of your favorite podcast channels and send your comments or questions to podcast@lightboxre.com. Thank you for listening. Have a great long weekend and have a great week.

Manus Clancy: Let's go.