Despite Tariff Turmoil Fatigue and Retail Recalibration, CRE Investment Holds Steady

Markets may have cheered a court ruling limiting presidential tariff power—but don’t mistake it for clarity. The LightBox team—Martha Coacher, Manus Clancy, and Dianne Crocker—unpacks what’s really moving CRE: supply chain strains, shaky retail guidance, and tariff whiplash. Retailers are pulling forecasts, investors are fatigued, and Manus warns we’ve moved “from panic to complacency” way too fast. Still, CRE activity remains resilient. LightBox data shows strong listing volumes and investor interest, with more than 130 NDAs per deal on average. Plus: a rare $865M hotel deal, a bullish $535M multifamily buy in Atlanta, and a surge in law firm office leasing. The team also dives into the latest twists in New York’s rent stabilization saga—and whether bathing suits might be the new eggs.

02:49 Investor Sentiment and Market Complacency

06:04 Retail Earnings and Tariff Impact

11:34 CRE Activity and Market Trends

13:38 Noteworthy Sales in Multifamily Sector

22:35 The Impact of Rising Interest Rates on Multifamily Loans

27:37 Challenges in Rent Stabilization and Property Management

30:58 Positive Trends in Office Space Leasing

36:10 Emerging Trends in Retail and E-commerce

Have questions for the pod team? Send them to Podcast@LightBoxRE.com. 

www.lightboxre.com

Transcript

The CRE Weekly Digest by LightBox

Episode 48: Despite Tariff Turmoil Fatigue and Retail Recalibration, CRE Investment Holds Steady

May 30, 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 from May 26th to the 30th, this week offers more hard data for investors to digest with earnings inflation, consumer spending, and housing sales.

But the focus has been on the continuing topsy-turvy trade situation. A federal court has ruled that the president does not have the authority to impose sweeping tariffs, and the administration has responded with plans to take their case to the Supreme Court as early as Friday. Manus markets welcome the court ruling, but has anything really changed?

Manus Clancy: Well, it's funny you posed the question that way. Has anything changed? I feel like we don't go 15 minutes without something changing. Uh, normally I don't get emotionally invested in the news. The pace of change, it doesn't unsettle me. Some people get frenetic with. Tariffs on tariffs off markets. Up markets down.

Treasury yields up, treasury yields down. That's not really me, generally speaking, but I do have to say I'm getting some news and pivot fatigue at this point, and there are a couple things that are important to me. That I'd like to see happen. I'd like to see the government reduce the pace at which it's spending.

I'd like to see the government narrow its deficit. I'd like to see a leveling off of our total debt at 36 trillion. Let's not see it go to 40. I love the idea of cutting out waste, uh, out of our spending. I think all of that contributes to something else I really like, which is lower interest rates, because that.

Boosts not only the consumer in the US makes housing more affordable, but it also boosts property values, which is very important to our listener base. Those are the things I really root for, generally speaking and what we've seen, I. Between the budget negotiations and Congress, the big beautiful bill, what we've seen with the ping ponging of tariffs, not just on and off from the White House, but also on and off per market, different for the UK than it is for the eu, different for China than it is for Taiwan.

It's a lot going on, and I have to say. It's kind of wearing me out. I'd like to see some of these issues resolved and I'd like to see us for the sake of our clients and for the sake of the broader US economy, have some certainty about what's coming down the road. 

Dianne Crocker: Agreed. You know, and one thing that came to mind as you were talking manis is, you know, looking back like we've been on this seesaw now for a few months, you know, the tariffs on, tariffs off, there's a market shocking development.

Then there's a dust storm that ensues and then it settles down. We all exhale and then something stirs it up again. And you know, I feel like the, as I'm talking to people. There's kind of a sense of, you know, is this just the ride that we're on now? You know, where we reach a point where news of a lawsuit or another threat or a, a ramp up in, in the tariff war that it starts to have a more muted effect because the markets are.

As you said, getting tired of it, you know, getting anesthetized a little bit to it, you know, or do investors look at it and say, okay, I guess we're stuck in this risk on risk off environment for the near term, and I wanna invest capital and bet on the long term. So I'll make assumptions and, and pencil them in because I might have to get my eraser out in a couple months when things change, but that there's this eagerness, you know, to move ahead rather than being in the limbo that.

The market feels like it's been in for the past few years. 

Manus Clancy: I do feel though, maybe you disagree, but I feel like I'm in the minority of having this whipsaw fatigue. We've seen now almost a month where the markets have been up, equities have erased all of their. Post four two selloff, which was really, really severe.

We haven't seen any meaningful dip in the velocity of money as it pertains to CRE, and the word that keeps going through my mind is complacency. I think we are as a. As an economy, way too complacent right now. I was very greedy after April 2nd. I believed that the 20% drop off in equities was a great opportunity to deploy capital.

People were terrified. People were selling. The markets weren't bear market territory. I said this two weeks ago, and I'll reiterate it today. I think we've gone from complete panic. To overly enthusiastic way too fast. Jamie Diamond said the other day, he expects s and p earnings to collapse because of the tariffs, because people can't pass through the cost or they can't sell as much or the impact on inflation, the consumer potentially becoming tapped out.

If that's true, then what we have right now is people whistling past graveyards and, and that's kind of where I am today. 

Dianne Crocker: So maybe you weren't behind the Consumer Confidence Index jump in May to 98, Manus improving from 85.7 in the prior month. 

Manus Clancy: Well, I think that really underscores the old time belief in the wealth effect.

I think it tumbled in April when everybody saw their 4 0 1 Ks collapsing. Mm-hmm. And I think it was. Logical, I suppose, that it rebounded once all those losses were erased. But I do think that the market is discounting way too much. The supply chain pain that is built up into the system right now. We have so many things that can go wrong.

Maybe are already on the way towards going wrong. Right. What have retailers been doing for the last two weeks? What have they been doing for the last three months? Do they have excess inventory that they're gonna have to sell off at deep discounts, or are they not prepared and they're gonna have to pay through the nose to get these items down the road?

And then where do you factor in the courts? It's exhausting for me about this, and I don't think we've seen the last of. Stock market volatility as a result of what's going on today, 

Martha Coacher: and we're seeing that traders are now calling this the taco trade, where you have aggressive tariffs that come out, scares the markets.

Then of course you walk it back where there's a pause and people are left wondering, well, what's next after this? 

Manus Clancy: Well, it's funny, I saw a tweet just about two minutes ago before we came on the air that. Somebody was saying later today that Treasury Secretary Bessant will go into the White House.

They're having a meeting later today, and this person was speculating or urging perhaps, that the Treasury Secretary should say to the White House and to President Trump, use this court case as your way out. These tariffs were a bad idea to begin with. We never should have done this. You can now in perpetuity blame the courts for having tied your hands and allow you to reset your strategy here.

You know, the sad thing about all of this, maybe it applies to both of you as well, is I can't keep up with the tariff theory honestly. And, and you know, the, the, the business school theory is tariffs are terrible. And I get that. Bad trade deals are terrible too. What we can't get our arms around is when the White House says we have bad trade deals, how would we ever know?

We don't have time to read 400 page trade agreements between us and Canada, us and the uk, us and the eu. So you're, you know, at the mercy of people that are, are talking about this, but we're not educated on this and it's, it's really hard to know. 

Martha Coacher: As we're trying to decode what tariffs mean overall, we're seeing some signs in retail earnings.

'cause obviously retailers have to provide guidance as well as their reports on how they performed in the quarter. We saw last week Target, Walmart, Ross stores and others report, and this week, Macy's. Best Buy and a bunch of others report as well. I thought it was interesting that across a number of these, they had language that was specifically talking about tariffs in the same way.

And the way they were talking about it was using levers to mitigate tariffs across the board and. Depending on who you were talking about, which retailer, they were very specific in how they were shifting their priorities into different regions, into different countries to mitigate some of the risk. 

Manus Clancy: I think what you're saying there, Martha underscores why I'm so uneasy right now.

I think kind of peeling this back three or four layers. Number one, during COVID we saw. The impact on prices when supply chains were messy and it was meaningful and it drove inflation and drove product shortages. This is another version of this. If Walmart or Target or others can't source things or things get gummed up because they're moving it from China to Taiwan or China to Thailand.

That is a risk over buying. We mentioned this before, that is a risk under buying is a risk, and I don't think Market Watchers have really connected the dots here that this could look a lot like COVID with the supply chains if they don't get it right. What was interesting to me about these earnings was the number of big names.

That we're pulling guidance Walmart, they do not feel comfortable giving Q2 guidance any longer because they have no idea where the tariffs are gonna play out. Raw stores, same thing. I believe Target may have also pulled their guidance as well, and that should be alarming to people. If they can't tell you what's gonna happen next, how can we possibly be enthusiastic?

About retailer earnings in the next couple quarters. 

Dianne Crocker: Yeah, and I kept seeing the, the phrase better than feared, but you know what I came away with Manus was similar to what you just said. It's still very fragile and it's because tariffs are, are the big wild card. You know, best case tariffs remain at current levels, maybe they even get rolled back and some retailers will be able to absorb cost pressure.

Maybe they shift their sources or they. You know, gain efficiency and you know, consumers, maybe we keep spending. That's best case, worst case obviously is tariffs increase. Maybe they hit a broader swath of products. Maybe retailers can pass more costs onto consumers. Bending drops, economic slowdown deepens, you know, but tariffs are the wild wildcard.

They could be huge and widespread. They could be more narrow, narrowly focused. My read on the. The retail reports is that they're in triage. You know, they're not panicking yet. They're, they're clearly repositioning. And I'll give you a real world perspective. You know, consumer spending has not collapsed, but consumers aren't seeing dramatic price increases yet either.

And maybe it's partially because consumers are stockpiling that they're thinking ahead. You know, I have friends who are buying back to school supplies already and stuff to. Furnish their kids' dorms at Target in Ikea now, and summer hasn't even started yet. 

Manus Clancy: It'll be interesting to see will bathing suits and golf shirts become the new eggs, right?

For two years. All we could talk about how I. Eggs were, egg prices were skyrocketing and they were doubling in price month over month. In some places they were hard to find. Who knows, maybe people will be clutching their pearls over the price of bathing suits in the coming months. I don't, I don't really know, but I would be very cautious right now about retail.

I think retail is troubling and obviously retail is one of the big five pillars of. Commercial real estate and when retailers do bad badly, they pull back. They close stores, they, you know, reduce their leasing footprints and so forth. We've seen this over the last 10 years in spades and, and we hope that that doesn't take place 'cause that will weigh on REITs, property owners, portfolio managers, and so forth.

Martha Coacher: I thought some of the commentary from Best Buy's earnings call was interesting. They were talking about this concept of flexing their manufacturing locations so they can dial up and down in and out of China depending on where the tariffs are. And believe me, they mentioned tariffs at least 18 times in their earnings call.

So it is part of their consideration set. And while they have apparently only. Direct imports of about two to 3%. They have indirect supply that they get from other vendors that are sourcing their inventory from China. 

Manus Clancy: That's interesting. Martha, even if they move the entirety of their supply chain from one region to another, or half of it from one region to another, it doesn't move the needle.

They're at the mercy of their suppliers running their operations. Efficiently, and if that's the case, what possible control could they have over their inventory in the future? This does not bode well for apparel makers, discretionary item sellers, electronic sellers, et cetera. I think this is, this will bite us at some point, is my prediction.

Martha Coacher: The other thing I thought was interesting was the Burlington CEO Michael Sullivan. In referencing the court's decision, he said that there's now a huge rush on production and shipping across the industry. The court decision could add to that and the disruption could lead to excess supply, which will help off price retailers.

And I think you had mentioned some of that, Manus, if they. Have, you know, retailers like Macy's and others that have oversupply that they can't offload, that obviously benefits those in the discount. 

Manus Clancy: It's funny what some people think of as off price retailers. I think of Burlington and Marshalls. Is they the upper end of my buying preferences?

So, uh, but I think you're right. I do think that. Even if they do don't benefit from excess inventory from other people, they may benefit from the fact that they are at the lower end of the price scale. And if the US consumer gets tapped out or inflation bites us again, then they would be the winners there, right?

The Burlingtons, Marshalls, et cetera, that, you know, sell things at half the price of a Macy's and a Dillard's. 

Martha Coacher: Let's turn to the light box data dive as we move toward the end of the month. We're tracking CRE activity for this month. Dianne, what are we looking at so far? 

Dianne Crocker: We are, it's almost the end of may, believe it or not.

So I'll have our may numbers for the CRA activity Index in just a few days. The C activity index for April was up, but we noticed that the pace of growth was moderating and that was the first month post tariff announcement. So I think May will be really telling as the second month after tariffs. And so as an appetizer for what the full month's Index may show, I took a quick look at property listings in the LightBox platforms for the past eight weeks or so, back to early April and current through last Friday.

And it was interesting with the exception of last week, which was leading up to the Memorial Day Holiday. May's average property listings brought to market per week. They were running above this year's weekly average by about 10 to 15%. So I think that's an early sign of what we might see in the index coming out next week.

Maybe I'm, I'm just trying to force the optimism, but you know what I'm hearing from folks like Victor Kaan who was on our webinar yesterday, is there are a lot of investors who wanna do business right now and they wanna take advantage of. What they're seeing is more opportunities to place capital and that it's just a matter of pricing risk, right?

And getting deep into the data at, at an asset level and paying attention to making, you know, as clear assumptions as they possibly can and, and what's a pretty cloudy market near term? 

Manus Clancy: It's been one of the amazing parts of the last two months for me. And I'm not foreshadowing any light box data. I haven't seen the may numbers yet.

As I see anecdotally, sales week over week, the velocity of the sales and the size of the checks that people are writing to acquire things, and we'll talk a little bit more about that as the next half hour evolves. There has been really no discernible downturn in the pace of transactions since April 2nd, as far as I can tell.

The may numbers from the light box index may paint a different picture. Let's hope not. But anecdotally, the market has just completely stiff armed the impact of tariffs thus far. And higher rates. By the way, we did see higher rates of a 10 year treasury of over four 60 a couple weeks ago. None of that seemed to take the wind out of the sails of the CRE market yet.

So a moment ago I talked about big ticket sales taking place. Morgan Stanley wrote a research piece this morning about one, which is one of the bigger transactions we've seen over the last two months here. Equity residential acquired a. $535 million multifamily portfolio in the Atlanta area. Uh, eight separate properties containing over 2000 units.

The sale price, 535 million. Some interesting metrics here. The cap rate on an as is basis in the high fours on a pro forma basis in the low fives, EQ expects to fund the acquisition. By disposing of older assets in coastal markets. So I thought this was a really, really interesting piece, right? That big size in a market that we heard about it yesterday from Cindy Cook, the Southeast.

Not seeing huge upticks in occupancy yet because those regions have been overbuilt, not seeing big upticks. In rental growth yet because of the supply considerations, but here comes EQ writing a nine digit check for 2000 units. What says bullish about a market beyond buying at a high four cap rate and paying $500 million?

Dianne Crocker: Yeah, that was, it was a great story, you know, and it, it kind of took me back to something that Cindy said on the webinar yesterday, you know, that that there's, there will be differences from one multifamily property to another, you know, and it, it comes down to the individual asset. Like is it a new multifamily?

Is it old? Is it fully occupied? Are you in a market where you have wiggle room to raise rents and improve your NOI, you know, are you able to take a long-term perspective? You know, if populations are growing, if. The market is oversupplied now, but it's expected to balance out in a few years. So it's, you know, I think this is Atlanta.

She certainly talked about that being a hot market, if not right. Um, an appealing one, a year or two down the road. So it's an interesting buy. I thought lot to think about there. 

Manus Clancy: And I'm gonna take a quick detour in the multifamily segment. I wanna touch upon this. It came up in our webinar yesterday, and by the way, you'll be able to find a recording of this webinar.

Next week, uh, on our website, it'll probably distribute it via email as well. It was a great conversation, but this is a long-winded way of me bringing up something that I wrote and put out on Twitter. It came on the heels of some research coming out saying that delinquencies on multifamily that was using floating rate debt on properties that were acquired in 2021 had shown some leveling off.

I put out a thought piece which said, I don't think this is the last time we'll see that type of headline. I expect the numbers to go down, and my reason for this was several fold. One. We're now three years, hence, people making these ill faded decisions and using an ill faded capital stack to do so.

Chances are they've already had to deal with a capital call by an interest rate cap. They've seen their debt service coverage ratio erased by higher costs, but the day of reckoning has come. They've reached their maturity date. That was my thesis, so I put this out there. It really. Connected with the audience.

Of all the people that came back to me with dms, the ratio was about seven to two of people saying I was very early, right? We talked about David Goldfish two weeks ago. He said we were in the early innings of multifamily distress. I said, I thought we were gonna be leveling off here. I'd say by a ratio of about seven to two seven saying we have so many more issues.

You're not seeing yet that have yet to bubble up to the surface. You're way too early on your call. So I like to be honest. If I say something I, I do like to give the other side of the coin. I did have a few people come back and say, amen. Thank God somebody saying that these problems are now being resolved.

I had one person say, I'm now playing offense, not defense, but by and large people said this remains a problem and will will remain a problem for another couple years. 

Dianne Crocker: So, man, it's, I'll say, you know, one person that that took that position was Cindy Cook at Collier. I thought she was spot on. You know, she talked about loans that were placed in 20 21, 20 22.

They're just not penciling out with today's higher rates, you know? So what does that mean? It means there's a good chance that lenders will eventually own those properties, or someone will be forced to take a loss, and that it's. It's just a matter of time. And the question is really how widespread does that become?

Is it, you know, to use a word that Ryan Severino used on this podcast in, in February, you know, will the, will there be this, this dramatic wave? You know, he, he tended to say that forecasts on distress tend to be more hyperbolic. Then they really kind of play out in reality, you know, or will they kind of trickle through more slowly?

But I think you could agree or disagree on, on how the timing, um, will play out. But I, I think it's unavoidable just given the, the huge volume of multifamily loans that are maturing this year and next year and the ones that already matured that haven't really been dealt with yet. 

Manus Clancy: Well, to our audience out there, I think about 80% of the people that had DM me, I have gotten back to.

Thank them for their responses and chatted with them here and there. I have a few people I still need to get back to that phone call, text or email is coming. Don't worry, I haven't forgotten about you. 

Martha Coacher: And staying on Multifamily, we have a segment here on Affordable Housing. The first covering a story on Canberra Property Group that bought a multifamily property in Brooklyn.

Manus Clancy: Yes, Camra property acquiring a newly constructed property at 28 86 Atlantic Avenue. The seller there, the J Group, the purchase price, 72 million. Uh, commercial observer with the reporting there, property was delivered, vacant, so I guess they're starting lease up right there. 173 residential units, a little bit of commercial space, 5,000 square feet, uh, camera Plans to use it to.

Create affordable housing with that initiative. So affordable housing in New York. When you talk about that, you can't not talk about the 800 pound gorilla, which is rent stabilization and rent control. Those markets have been really decimated over the last couple years, decimated by limits to how much they can spend or how much they can increase rents and decimated by rising costs.

That they have to endure without raising rents and to any meaningful degree. So we've seen loans and properties in those markets sell for 40% off, 45, 50% off. It's a tough market and it would be great to see some of those regulations altered to help that market out to see more supply created. 

Dianne Crocker: Yeah, I think, you know, in multifamily.

What jumped out at me about this story is that the acquisition really reflects camera's ongoing strategy. They wanna expand into affordable housing options in New York City. Clearly there's a need for it, and while other markets may be struggling, there's a shift toward affordable housing, and it's a perfect example of that.

But not all affordable housing is rents. Stabilized and not all rent stabilized housing is affordable in practice. So I mean, I think it's safe to assume that Camra will likely enter some form of, of regulatory agreement with the city where maybe rents are set or they're capped by the agreement. So we'll see what happens there.

Manus Clancy: But as we talk about pain in those segments, it takes us to another headline, uh, related. Had one of the bigger sales this week. Selling a $193 million affordable housing portfolio in the Bronx, PGM there, providing $141 million acquisition loan to Longacre. Who was the buyer? I. But it is evidence of some of the pain that I referred to before this particular property or portfolio of properties sold, if I remember correctly, for 253 million, not that long ago, less than 10 years ago.

So this is about a 24, 20 5% discount to where this portfolio was not that long ago. And that's representative of a market that's. Taken its lumps. 

Dianne Crocker: I think these news headlines really kind of highlight that managing and and maintaining affordable housing projects in New York City is not for the faint of heart.

You know, you're dealing with the constraints of rent stabilization laws. You're dealing with rising operational costs. I mean, costs for insurance alone are skyrocketing, as we've talked about on the podcast before. You know, so we're, what we're seeing is, is kind of this broader trend where institutional investors are reassessing their positions in the affordable housing market and you know, they are creating opportunities for some firms to step in and push revitalization plans forward.

But there are a lot of considerations, 

Martha Coacher: and this has been in the news recently regarding rent stabilization, the New York City rent. Guidelines Board held a rare revote to adjust The proposed rent increases for nearly 1 million rent stabilized apartments. For the two year leases, the board revised the rent increase range to 3.75% to 7.75, down from a previous minimum of 4.75.

And for one year leases, they remained unchanged coming in at 1.75% to 4.75. So landlords of these buildings are facing. Some financial challenges and you've seen a number of stories where they highlight how some of these buildings are in disrepair. They have rising insurance costs and other costs that they're just not able to cover.

Manus Clancy: It's lose lose really when you get to it, when you have that kind of low single digit rent increase because. The owner of the property loses because they can't keep up with their costs, but so do the tenants, right? When you talk about disrepair, that's really where the rubber meets the road here, that a landlord is not gonna come out of their pocket by more than their rent.

Increased growth for the good of their health. They are gonna take it out in terms of. Not fixing elevators, not repainting hallways, not refurbishing carpeting, and the physical plan gets worse and worse and worse. It would be great if New York City legislators would take this head on and, and, and cure this.

We heard Bob Knackle talk about this endlessly over the last couple years, that Right. These are self-inflicted wounds. The city can solve the affordable housing problem if it chooses to. It chooses not to, but I will ask you two a quick question 'cause I don't know what the impact of this will be, but this is something that kicks in next week or the week after that.

I think it's June 11th. Landlords can no longer have tenants pay finders, finder's fees for rental apartments any longer. That has been outlawed. It was something that passed in November and now. I don't know how this will work. So are all leasing brokers out now? Who is finding the tenant? Is this endured by the landlord?

Is this another form of landlord expense where they take it on? They have to hire somebody in-house to market these things? I don't really know. I think for young people, the fact that they don't have to pay 15% finder's fee is wonderful. But what the carry on effects are? I, I really don't know.

Dianne Crocker: Maybe there's an AI application that can replace that function.

Martha Coacher: You know, that reminds me of the, when Harry met Sally, quote, where you had, maybe we could, Bo could combine obituaries with, you know, so and so passed away and he leaves a wife in a three bedroom apartment overlooking the skyline. 

Manus Clancy: Wouldn't that be something where instead of paying a publication to post an obituary.

They use it as an opportunity to get more readers, right? They say, we need more guys like this, putting this out there. It's like its own little CRE, or I should say real estate classified section. 

Martha Coacher: Let's turn to a story we don't see too often in the hotel sector. I. 

Manus Clancy: We certainly don't. While most of the CRE market has rebounded in terms of sales velocity since the doldrums of 2023 and 2024, we really haven't seen that in the hotel segment at all.

It seems like every week hotel is bringing up the rear when it comes to the number of transactions and certainly bringing up the rear in terms of transactions of size. But we saw a great one this week. Trinity Investments sold a Phoenix Hotel to Ryman REIT for $865 million. This is a nice return for Sean Hay's Trinity investment.

They bought the property in 2019 for 600 million, pumped in a hundred million dollars, so a total investment of just over 700 million. They turn around and sell. The JV Marriott in Phoenix for 160, for $865 million. So this is the Desert Ridge. JW Marriott, which terrific sale of one of the biggest hotel sales I could think of in the last two or three years.

Dianne Crocker: Yeah, it's great to see. And I mean, it's a sign that that convention business is starting to rebound, especially in those nice warm weather markets like Arizona, like Florida, like parts of Texas, and even the Carolinas. So, you know, it's interesting, I think investors. Hospitality are starting to look at these high-end amenity rich properties for their business meetings, for weddings, for other large scale events and institutional buyers like Ryman.

You know, they're ready to to jump in. And it's a sign, I think, of the way that the hotel sector is evolving. You have this capital that's chasing, um, certainly fewer higher quality assets, but they're jumping in when they have confidence. That's it. It's in a good market that it offers amenities that will be appealing, especially to business travelers.

Manus Clancy: It'll be interesting to see if we see a bifurcation in the hotel market over the next year or two. We've spoken about this before you and I, Dianne, about the risks of trade wars impacting high-end hotels that rely on foreign visitors. We've talked about Canadian travel flowing downward. After all the heightened rhetoric between the White House and Canada?

Well, the unnecessary rhetoric, I would say over the last couple months, we have similar economic saber rattling going on between us and the EU with the far east, and it'll be interesting to see if we see a bifurcation between high-end hotels that rely on that international travel. High-end hotels that are more business-centric in the us.

I wouldn't expect that JW Marriott in Arizona to be heavily trafficked by people from Europe, the far East, et cetera. So whether or not we see these two markets diverge, will we? We'll see over time. I think it could. 

Dianne Crocker: And what does it mean for your favorite hotel chain? 

Manus Clancy: It's no different for me than what I was saying with the retail earlier than what other people consider.

You know, low cost, I consider high end. I'm a little bit in that way with the, the hotel, much to my wife's, uh, disappointment that what I deem acceptable and what she does are two different categories. 

Martha Coacher: Let's turn to the office space. And we saw a nice green shoot in a data point from s 

Manus Clancy: Yeah, this was great.

They came up with a research piece that said in Q1 law firm leasing. Saw a big uptick in square footage over the prior year, and very meaningful uptick. We know how much law firm tenancy means to office landlords, especially at the a, a minus and high B categories. Law firms take up a lot of space in central business districts, often high quality space.

Seeing this rebound is a. Nice, nice green shoot for those markets. 

Dianne Crocker: Agreed and, and it seems like this isn't the first example that we've talked about recently where it's a big law firm that's really kind of driving a trend, and I think part of it is a lot of law firms are implementing policies that require attorneys to work in the office at least.

Three days a week. So that's obviously driving demand for more dedicated office space. And these are law firms that are seeking, you know, what are they gonna want? They'll want their people in newer, high quality office spaces. So usually it's class A buildings with modern amenities that are close to transportation.

And I think with construction costs rising with tenant improvement allowances that aren't keeping pace, it's the law firms that are securing these. Longer lease terms because they're looking to lock in favorable conditions and ensure stability. 

Martha Coacher: Our did you know, for the week takes us to some of the LightBox Scorekeeper reports.

Dianne Crocker: I was inspired by Cindy Cook. She talked a fair amount about the multifamily sector and the Sunbelt, and if you've been a listener on the podcast, you know, we talk about phase one environmental site assessments as an early sign of where investors are focused. Geographically, because phase ones are typically conducted before big loan originations or before big property deals.

So in previous cycles when investors fled big cities for ROI into smaller markets, we saw that early in our phase one metrics. So after listening to Cindy yesterday, talk about Sunbelt multifamily, I ran our scorekeeper data on phase one trends for hotspots by metro year to date versus last. Dear, and sure enough of the 10 fastest growing metros we saw Houston, Raleigh, Atlanta, and Phoenix, that were all outperforming the average.

Manus Clancy: One more word for the webinar yesterday, a data point that you brought up, Dianne as well, which I thought really underscored under how strong the CRE market is right now, was the growing number of people that are kicking the tires. On deals that are coming through our listing services. I think the number you threw out there was something like 133 NDAs per sale or something like that.

Yep. We're seeing this in our sales transaction data that the diversity of the sellers and the diversity of the buyers is very extreme. The fact that you highlighted more than 130 firms kicking the tires on average per deal. Tells me that this is a market that is deep, liquid, and eager to deploy capital.

Martha Coacher: We were talking about retail earlier and in a, who would've guessed segment, the category disruption. One out of every eight clothing items bought in America comes from guests 

Manus Clancy: Dollar General, 

Martha Coacher: Amazon. They sold more than double the amount of apparel of any other retailer in 2023 and made more than double the revenue of retail giant Walmart.

Manus Clancy: So Dianne, what is your method of choice for apparel shopping? Are you an etailer or a bricks and mortar? 

Dianne Crocker: It depends on something like a suit that's important for my son. You gotta try it on. But if it's a shirt that nobody sees and quality doesn't matter, Amazon is the go-to for sure. 

Manus Clancy: All I know about Amazon, my, my kids are pretty much all outta the house at this point, but.

I used to say, just based on the sheer number of things that were coming to our house from Amazon on a regular basis during COVID and when our kids were in high school, that a meteor could be heading towards earth and humanity could be wiped out in four days and there would still be 11 packages on our doorstep.

Even though the world was ending, like there was just an insatiable appetite to order things online that. I don't miss, I gotta say 

Martha Coacher: We still get those. 

Manus Clancy: At least it's not coming to my doorstep anymore. 

Dianne Crocker: Side note, whatever happened to that idea of having drones deliver Amazon packages? I couldn't wait for like a little drone to come and drop a package on my front porch and it never happened.

Manus Clancy: How about this, uh, did we talk about this before that Barron's had an article where people were gonna start delivering hot coffee through a drone? 

Martha Coacher: I think we did talk about that. 

Manus Clancy: That's insane. 

Martha Coacher: I see a lot of liability there.

Manus Clancy: My goodness. Yeah, that's a lawsuit waiting to happen. 

Martha Coacher: On that note, 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 and have a great week. 

Manus Clancy: Let's go.