Markets Dodge DC Drama – Inflation Muted, Bank Earnings Strong, and Industrial Bets Rise

This week’s slate of economic data left pundits divided even as investors cheered on rising markets. Retail sales surprised to the upside, inflation was muted, and bank earnings beat forecasts. However, deeper trends raise caution: tariff receipts are surging, homebuilders are cutting prices, and the Trump–Powell standoff briefly rattled equity and bond markets.

Manus remains bullish yet uneasy, warning that someone is absorbing billions in monthly tariff costs, and the bill may soon come due. Dianne points to the mixed results of the LightBox sentiment survey and leans on Jamie Dimon’s line this quarter: “forecasting is a waste of time.”

The LightBox Appraisal Index rose in Q2 on retail and industrial demand, but cost uncertainty still looms. Industrial sector activity continued with big bets from Brookfield, Prologis, and Blackstone. Office continues to struggle evidenced by a round of transactions with Portland’s “Big Pink” tower selling at an 88% haircut. And outside the CRE market, the team weighs in on reports of Delta's AI-powered ticket pricing. What are your thoughts?

We want your take. LightBox is about to close the Midyear 2025 CRE Market Survey and we want to hear from experts like you across valuation, due diligence, lending, investment, and brokerage. We’re exploring your reflections on the first half of 2025 and your outlook for the months ahead. Click here to take the survey >

The survey closes EOD Friday, July 18th, and we’ll be sharing the results shortly thereafter.

02:51 Tariffs and Inflation Impact

09:01 Trump-Powell Tensions

12:00 LightBox Lender Appraisal Insights

14:59 Big Transactions in Industrial Real Estate

18:02 Office Market Challenges

20:46 Infrastructure Plays for Data Centers

24:01 Retail to Industrial Transformations

26:49 The AI Price is Right?

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

www.lightboxre.com

Transcript

The CRE Weekly Digest by LightBox

 Episode 55: Markets Dodge DC Drama – Inflation Muted, Bank Earnings Strong, and Industrial Bets Rise

July 18, 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 July 14th to the 18th, investors sifted through a full slate of economic data and earnings reports to get a read on overall consumer and corporate health.

Martha Coacher: Retail sales surprise to the upside. Inflation was muted but did show that tariffs are starting to bite and big banks delivered strong performance. But the news cycle was dominated by the Trump and Powell standoff over interest rates. Manus. The data released this week seemed like a Rorschach test with analysts and pundits seeing what they seem to want to see.

Martha Coacher: Where did you land? 

Manus Clancy: I thought the data was puzzling and the reactions remain puzzling when you take them in totality. When you look at the market sentiment right now, whether it's in the debt markets or the equity markets, we are certainly in a risk on period right now. The Nasdaq hit another all time high on Wednesday.

Manus Clancy: It seems poised to hit another all time high on Thursday, so certainly there's no tapping of the brakes. On the equity side in terms of taking money off the table, reducing risk. When you look at the fixed income side, yes, treasury rates remain naggingly high, but when you look at risk premiums, for example, in the CMBS market.

Manus Clancy: They are quite muted right now. They remain very range bound and narrow compared to other periods of volatility, whether that be the oil bust of 2015 early COVI or the period after Silicon Valley Bank failing. So you question yourself and you say, why is the market so complacent? Why? Our stocks sitting all times highs.

Manus Clancy: Why aren't bond buyers a little bit more discriminating? And I don't really have a good answer for that at this point. When you look at CNBC today, one of their headlines was the fact that home builders are cutting prices at the fastest rate in three years. We also know that higher tariffs are likely to come, even if.

Manus Clancy: The administration settles on only a 10% for everybody, or a 20% for everybody. That is substantially higher than where we were a year ago. We already know that treasury receipts are quite high on a month over month basis and a quarter over quarter basis in terms of what they're collecting on tariffs. So at some point.

Manus Clancy: One would think there has to be a nasty surprise coming yet for right now. The markets continue to just soldier on. 

Dianne Crocker: I'll harken back to the point you just made, Manis, which is you said the data is puzzling and I think that's true and especially in the past week. You know, you pick what store you wanna believe.

Dianne Crocker: Some was glass half full, some was glass half empty. I'm here writing. A market update that I'm delivering at the Environmental Bankers Association conference on Tuesday, and I mean, characteristic of our, our fast moving news cycle. Now I'm changing slides every day, you know, whether it's a slide about the likelihood of a June interest rate cut.

Dianne Crocker: I mean that essentially went to zero. After this week's news, the bank earnings came out, and I'll quote something that jumped out at me from Jamie Diamond's comments at JP Morgan is. He said forecasting, forecasting is a complete waste of time, exclamation point, you know, and, and, uh, inflection points are only visible in hindsight, and he's not wrong.

Dianne Crocker: I'll make a shameless plug here too for the LightBox mid-year sentiment survey, which is closing at the end of this week. And I took a preliminary look at the results and I, I think they also reflect that people are confused. You know, I think sentiment is mixed between folks who want to be hopeful, those who are pessimistic, those who recognize that we have a tough road ahead, you know, as the impact of tariffs, which still remains to be seen, really start hitting the hard data.

Dianne Crocker: On inflation and commercial real estate, especially on the side of of appraisers, is very much waiting and hopeful that interest rates will come down. 

Manus Clancy: Starting about a month ago, I started putting out my thoughts for the week. It talks about what we saw on a micro basis, what we saw on spreads, what we saw on economic velocity, and thank you by the way to all those have written into me off of that, and I have taken the time to read.

Manus Clancy: I said last week, one of the things that really stuck out at me is that we are on pace for 400 billion in tariff collections this year. Something like $30 billion a month is the going rate right now, and that may increase, right? That may go to 600 billion if the administration plays hardball with some of these countries.

Manus Clancy: Now that's real money that's being sucked out of. Importers, yet we have not seen a meaningful uptick yet in CPI or PPI. So what does that tell you? We know that costs have gone up at a rate of about $30 billion a month. We know that somebody has to be bearing this cost, and from that, the logical conclusion is that either.

Manus Clancy: Inflation is poised to go higher in the second half of the year because these costs will be passed on, or the importer is going to eat these costs or the exporter as the case may be. Somebody on either side of the ocean will eat these costs. If that's the case, we should see some disappointing corporate earnings from those that rely heavily on foreign goods, and it could of course be a combination of the two.

Manus Clancy: We see a modest uptick in inflation and some disappointing corporate earnings, but none of that has been discounted yet. Nobody, it doesn't appear on either the equity markets or the bond markets is preparing for that moment where, for example, best Buy says. Sales were down 20% in the quarter because we had to push the prices of computers and Airbus and everything else up, and therefore we didn't make our numbers.

Manus Clancy: I don't think anybody is positioning themselves right now for that eventuality, and I don't think that's, that's a one in four possibility. I think it's like a five and a half or six out of 10. That we see something like that in the second half of the year, 

Dianne Crocker: probably right around holiday season when we're all shopping for consumer electronics.

Dianne Crocker: That will be, who knows, you know, 20% higher, 30% higher. We'll see, it's a good point. I mean, I do think that retailers are paying attention to the likelihood, but you know, I don't know how seriously they're taking it. To your point, you know, maybe it's too far down the road to be real. It's certainly a concern.

Manus Clancy: Listeners must be falling off their chairs right now because I think I'm known very much as a glass half full guy, and I've been very forthcoming on Twitter or in LinkedIn that the fact that risk spreads on CMBS have not blown out in the last three months since April 2nd. The fact that the CMBS market is on pace for a 15 year issuance high.

Manus Clancy: The fact that lenders have not turtled and pulled back after the tariffs were announced. The fact that the LightBox activity index continues to trend up even now, two months after the tars were announced, all of those are signs of a very confident market, and that has made me very confident. It has made me very bullish.

Manus Clancy: You heard me say two or three weeks ago that I thought the second half would be great for CRE. Yet more and more. I get this nagging feeling when I see these tariff receipts and I see what I would call overt enthusiasm for the markets, that there will be a moment of reckoning sometime in the second half where there'll be a better.

Manus Clancy: Time to enter the market. 

Martha Coacher: Manis. Let's talk a little bit about the Trump Powell standoff and Trump waived a draft of a letter, supposedly the New York Times said that there was a draft of Trump firing Jerome Powell at a meeting in his Oval office, and he was gathering and polling Republicans to ask whether he should use it.

Martha Coacher: And then about an hour later. Announced that he wasn't actually planning to fire him. So that fueled a little bit of drama in the markets, but it wasn't long lasting 

Manus Clancy: in the hour or two when it was out there. Certainly it was not beneficial for interest rates. We saw the 10 year spike, six or seven basis points in short order once this was out there.

Manus Clancy: I do have this image in my head. I'm not sure if this will resonate with our listeners, but. I have this image of the president running around saying, where is my stamp book? I need a stamp. I need to fire the, the fed chair. Where is that stamp? Right? And then just by the, the grace of not finding the stamp book, we have, uh, Jerome Powell still in the fed chair position.

Manus Clancy: I don't know. The whole thing is just unfortunate. I think it's, it's a case of the administration creating its own. Drama and its own distraction. There are some things out there that are very important right now, and there are some successes that the White House can point to. They could point to the fact that they got their bill over the finish line.

Manus Clancy: They could point to the fact that one of their goals of reducing the flow of immigration has been met. I think when you get to this three o'clock high, right, meet me on the playground at three o'clock so we can. You know, Russell, I, I, I don't think that's as, as dignified or necessary. 

Dianne Crocker: Yeah. And it, it definitely distracted from the inflation news this week.

Dianne Crocker: You know? I mean, imagine doing your job and finding out the president wrote a letter that your termination was. Imminent, you know, and I think it's more than political theater. It's kind of a test of the Fed's independence. And we saw with the market reaction how the rats really, you know, alone, the threats rattled markets.

Dianne Crocker: They highlighted how fragile trust is in, in central banking. And Trump just keeps rattling that cage, you know? And I kind of wondered, man, it's like, who would even want that job? I mean, what if we are heading into kind of seventies era inflation? I mean, who would wanna be fed chair? And now to your point, what happens?

Dianne Crocker: He thinks, okay, I can only let him go if there's fraud involved. So now he's shifting the, the conversation to talking about, uh, $2.5 billion renovation on, on the Fed's building. You know, saying, I don't. Rule out anything, but he said, I think it's, it's unlikely that he has to leave unless he leaves for fraud.

Dianne Crocker: So it's maybe a red herring that will shift attention away from other more material issues. As you mentioned, 

Manus Clancy: I do think that the president actually is in control of his own destiny, not in terms of firing the Fed chair. I think most people are in unanimity when they think the president doesn't have that right.

Manus Clancy: But he does have the ability to cut deals faster on tariffs. To take the tariff risk off the table. And I think that that tariff risk, that inflation driven by tariff spike is what's keeping the Fed from cutting rates right now. So in some ways, the president does have his own destiny in his hands. If he can cut deals with China and India and Japan and other places very quickly and say, here's the finite number, it's done.

Manus Clancy: The Fed can go back to their job of saying, okay, that risk is off the table. Let's now start talking about the right level of interest rates going forward. So it, it's kind of unfortunate that we've gotten into this level, but you do have to ask yourself right at, at some point, does the president become, you know, the case of the, the tail wagging the dog, right?

Manus Clancy: There's two scenarios here. One is you bully. The Fed chair into cutting rates. We saw when we saw a hundred basis point rate cut last year, the financial markets didn't respond positively. We saw the 10 year treasury rate spike a hundred basis points, right? That was not favorable to long-term interest rates, and there's no guarantee that if we pick a new Fed chair that that new fed share cutting rates wouldn't have the exact same impact.

Manus Clancy: It's quite possible that that could happen. By the same token, we could really use lower rates in terms of refinancing our government debt. We have a lot of maturing debt coming up, so again, a more dignified and more. Constructive conversation between the two, where you talk about where tariffs might ultimately come up and talk about trying to save Americans some money by cutting interest rates on the short end that would be productive.

Dianne Crocker: That kind of brings up a point related to. Your previous kind of thought with tariffs, you know, and whether the market is, is really being honest with itself about where that could lead in terms of pricing, in terms of the impact on retailers. You know, maybe the, the collective response to call it, you know, the tariff ping pong that we've seen back and forth is just folks watching and thinking, well, you know, there's still a chance that we could strike a deal.

Dianne Crocker: With China that, you know, we could strike a deal with other importers so that tariffs don't seem real yet. And I think the copper news maybe hit hard, especially on the construction side as something real as, okay, these rates could go up by X percent. So we have to get serious about what that does to our numbers, the calculus behind development projects.

Dianne Crocker: You know, so I think it's, it's a process of folks watching and waiting until things kind of shift from the abstract to the real. 

Martha Coacher: Let's turn to our LightBox data dive. Our lender appraisal market snapshot is about to be released. Dianne, what did it show? 

Dianne Crocker: So the report looked at second quarter numbers from lenders who are using LightBox's collateral 360 and RIMS platforms.

Dianne Crocker: So in the second quarter, commercial real estate lenders put 18,114 appraisal assignments totaling $62 million out to bid on our platforms. That was a 6% increase from the first quarter. It was 14% up year over year. I will say that the month to month flow was a bit uneven, and I think that's really a sign of the growing caution in the market as they react to the.

Dianne Crocker: The volatility that we saw, especially in April, may and June by asset class, we saw strong activity in retail and industrial. Collectively, those two categories made up 42% of the quarter's appraisal volume, so that was a sign that lenders are chasing deals in asset classes that they perceive as lower risk.

Dianne Crocker: Industrial certainly is at the top of that list. Average fee per lender project climbed for the third straight quarter. That was up 7% year over year to $3,437. Turnaround time improved to 14.1 business days. So that was a little bit faster and it's well below the 18 day average, which is what it was in early 2022 when there was a lot more projects happening at the, the markets heyday.

Dianne Crocker: And then last, I'll say, um, preliminary results from. The appraisers who responded to the mid-year market sentiment survey that I mentioned earlier. Showed that 39% of appraisers are somewhat more optimistic about the outlook than they were at the start of the year, and 29% are slightly more pessimistic.

Dianne Crocker: So glass half full, glass, half empty. They're leaning a little bit more toward the the optimistic side. So I think second half of the year we'll be telling if lending demand holds, then I think appraisers can relax a little bit and expect a steady stream of orders. If volatility spooks the market, I think the, the pipeline could be a little lighter.

Dianne Crocker: I'll note, um, just in closing, one appraiser I talked to recently said, look, you know, our market hates unknowns and it's so hard to act with certainty when we're operating under conditions of such uncertainty. So the quarterly report is coming out next week, and it'll have more details on all of those numbers.

Manus Clancy: I wouldn't want to be an appraisal right now that has to kind of put a number on what he or she expects expenses to be. In the future with this kind of uncertainty, you know, what supply costs, janitorial costs will be. And when you get into that construction side of the business, when somebody's buying land with the idea of developing something, I wouldn't wanna be the guy trying to make something pencil with such an opaque market right now when it comes to how much things are gonna cost and how long this inflation may last for supplies.

Manus Clancy: It, it's, it's challenging. 

Martha Coacher: Or did you know for the week Dianne takes us to our June deals? 

Dianne Crocker: Yes. Our blog just came out analyzing big deals in June. We have a six month trend in 2025 of pretty steady growth in major transactions. So we look at deals that are over nine figures, and then we also look at deals in the 50 to $100 million bucket.

Dianne Crocker: And it was in that middle bucket where we saw a 46% jump. In June from 37 deals in May to 58, 9 figure deals ticked up two, but not at that, that high of a percentage, but I, I feel like that kind of rebound really set a lot. You know, investors, they're finding pricing clarity when they can. Confidence is, is cautiously returning even with all of the macro noise.

Dianne Crocker: And uncertainty that we've been talking about here today. And multifamily continued to dominate. That accounted for 18 of the nine figure deals in June and 15 of the mid-size. So that makes multifamily the top performing asset class for four months running. The June deals analysis just went live. So if you wanna break from the, the drama in dc, take a look.

Martha Coacher: Let's shift into some big transactions. Firms are doubling down on warehousing in the industrial space, and let's start with Brookfield. Despite a cooling warehouse market, they've acquired a $428 million portfolio. 

Manus Clancy: That was one of several really big industrial sales that have taken place over the last two weeks.

Manus Clancy: We haven't talked about transactions a lot. In the last couple weeks because we've had some really terrific guests on the podcast, so we'll go through some of that today. But the Brookfield deal you're talking about is a $428 million portfolio of 53 smaller format industrial buildings. This covers the Dallas, Houston, Atlanta, Nashville markets.

Manus Clancy: The portfolio spans 3.6 million square feet is 96% leased, but it is only one of. Uh, as I said, many industrial sales that took place since July 1st. So we talked about that first one, Brookfield Asset Management. Buying the prop, the portfolio from Stone Lake Capital, another big one earlier in the month, a 2.7 million square foot portfolio in Raleigh Durham that was acquired by Town Lane from Corbridge there, 261 million was the price for 2.7 million square feet.

Manus Clancy: So in the case of Brookfield, 119 bucks a square foot in the case of town Lane, 97 bucks a square foot. You also had a six property. Ohio Industrial portfolio. This was in the Cincinnati area, 193 million that was done at $99 a square foot. Plymouth Industrial reit, buying that from Dolphin in New Jersey.

Manus Clancy: We had a pair of properties sell in Avondale, uh, New Jersey for 140 million, and in Manteca, California. Industrial property for 106 million. So lots going on in the industrial space, and maybe Dianne next month will be industrial's time to knock off multifamily as the leading grower in terms of big sales numbers.

Dianne Crocker: It could be. I mean, a lot of the metros that you mentioned, those are Sunbelt industrial markets. There's a real boom down there now, there's a flight to quality. Um, and there's definitely a, a narrative kind of taking shape in institutional, commercial real estate activity. I mean, Brookfield has 106.

Dianne Crocker: Billion in dry powder that they're ready to deploy. And over 75 million square feet that's now under management across North America. So they're definitely emerging as a major player. And I think for other industrial investors, they're watching to see where folks are investing and they're gonna be out there looking for similar deals while the, while the getting's good.

Dianne Crocker: So we'll see if industrial knocks multifamily out of the top seat. 

Manus Clancy: I have to say, I'm surprised. I'm a little surprised. At how buoyant industrial remains. Really, this has been a seven or eight year rally for industrial, starting with the e-commerce wave that started 2015 or so. A lot of retailers moving their businesses like Macy's out of bricks and mortar into a more e-commerce centric.

Manus Clancy: We certainly saw the transition go into steroid mode. During early COVID, right when people just wanted to e-commerce everything. The uptick in value per square foot of industrial really took off. But I have to say that for the last 18 months I've been thinking to myself, eventually this market has to be saturated.

Manus Clancy: There has been so much new product put on the market over the last five years that at some point it has to run outta steam, but yet it never seems to, it's the. The big engine that could, so to speak, to paraphrase the children's book. 

Dianne Crocker: One thing to think about Manus is if folks are listening to you and they're starting to get nervous about prices going up, what does that mean for industrial?

Dianne Crocker: What does it mean for warehousing? What does it mean for self storage? You know, what if people start to stockpile goods in advance of prices going up? I say that flippantly, but I wanna highlight two other stories that I think speak to the point that you were just making. That Warehouse is becoming a hotspot.

Dianne Crocker: One was, um, Ford City Mall. Flipped from shoppers to Shippers Bridge Industrial pitched a $150 million mall to warehouse property. Ford City Mall was once the largest suburban mall in Chicago, and it's slated for a pretty dramatic transformation. Bridge industrial entered into a contract to buy the retail complex.

Dianne Crocker: Its 900. 60,000 square feet and they are buying it from Namdar Realty, and they're not planning a refresh of the mall space. They're planning a full tear down. They're demolishing this mall and they're redeveloping it into a $150 million four building industrial campus, 92 loading docks, a thousand parking spaces, and it's infrastructure that's optimized for last mile logistics.

Dianne Crocker: So there's an adaptive reuse story that really, you know, speaks to the demand for industrial space. 

Manus Clancy: That's an interesting one on several levels. The first one is Namdar has been a very active buyer of distressed malls, usually with the idea of buying them, running them until the tank is empty, right? Just taking whatever profits are out of there, not investing in it at all.

Manus Clancy: Often there has been a wave of optimism when namdar comes in. People thinking, oh, this old depressed mall is gonna get revitalized, but then it never does. So that's one part of this story I find interesting. I'm sure Chicago is thrilled that they're replacing namdar with somebody who's gonna put some money into this, this project that that's great news there.

Manus Clancy: The other thing I was thinking about with this is. Martha and I used to do podcasts periodically with a gent called Darren King years ago, and he would say The mall to warehouse transformation is the dog that never hunts. People always talk about it, but it never really comes to reality. So Darren, if you're out there, if you're listening today, here's a.

Manus Clancy: Dog that is hunting. We have a mall in Chicago that's gonna go from depressed retail to warehouse, so we'd love to get your thoughts on that. If you happen to listen. 

Dianne Crocker: There was another warehouse headline this week too that I wanted to mention is, uh, Prologis was in the news. They're the world's leading industrial reit and they are sprinting out of the blocks.

Dianne Crocker: In the second quarter, they launched over 900 million in new warehouse projects that was nearly triple last year's pace, and 65% are already pre-leased before they even lay down a single brick. So Prologis, I would say is extremely. Bullish on the warehouse market and their founder and CEO. He didn't mince words.

Dianne Crocker: He called it the strongest demand that he's ever seen in his career. 

Manus Clancy: So a note to our listeners, ignore my skepticism. Listen to the guys at Prologis. They are the ones who are beating the pavement every day. They know this market a hundred times better than I do, and I would find them a much more trustworthy source for where the market is going.

Manus Clancy: A couple of other points on their earnings, which were released this week, funds from operation FFO up 9% from the same quarter in 2024, so a nice 9% uptick there. Overall occupancy, 95.1%. That's nothing to sneeze at as of the end of the second quarter and their leasing pipeline hit a record of 130 million square feet over the last couple weeks, so.

Manus Clancy: Everything seems to be going in the right direction for Prologis, which is a very, very good sign. For the health of the industrial space. 

Dianne Crocker: You know, man, it's another huge headline this week that got me raising my eyebrows was Blackstone announced an investment of $25 billion in developing not just data centers, but data centers and power plans in Pennsylvania.

Dianne Crocker: So they're looking at co-located projects across the state. The idea that you can co-locate a data center directly next to the. The source of power. So that's what their CEO called the special sauce. Being able to put those two things together.

Manus Clancy: Well, that's the value of working with a state that is open-minded about doing new things, right.

Manus Clancy: Pennsylvania, one of the first states to embrace fracking right next door. New York State has resisted fracking for a long time, so really no surprise that when it came time to plan these new developments that. Blackstone opted to go to Pennsylvania, right? You have a favorable political climate and an area where oil extraction has taken place before. So. Makes sense. 

Dianne Crocker: You know, and locating these huge data centers, I mean, from a zoning standpoint, from a planning standpoint, it gets very complicated in, in finding cities and locations where there is available infrastructure for the electricity inputs that they need. You know, so Blackstone here isn't just financing ai, they're building the backbone that they need to support it.

Dianne Crocker: It's, you know, it's infrastructure. As a service and it could serve as a global model for scalable AI infrastructure deployment. 

Martha Coacher: Let's talk about office Last week, Dianne, you talked about the big pink office tower and the story of its purchase hit the wires in the last couple weeks. Let's talk about that one.

Dianne Crocker: Yeah, that one caught my eye. I like this story because I got to visit Big Pink in Portland for a conference last month. This is a headline about an iconic building. It's called Big Pink because it's got rosy siding. It is the second tallest. Building not just in Portland, but in the entire state of Oregon and US.

Dianne Crocker: Bankcorp left it as the major tenant to move their headquarters to the suburbs. So vacancy spiked, and it just sold in an all cash deal for $45 million. That's an 88% markdown from its 2015 sale of 372 million. Buyer, Jeff Scorecard. He owns an auto dealership chain in Vegas. He's spending another $150 million in renovation.

Dianne Crocker: He's talking about multi-floor experiences, fitness centers, restaurants. I did learn that he cannot open a Las Vegas casino there because casinos in Oregon can only be run on tribal lands. But what I liked about this story was that. The buyer went to college in Oregon and he's on a mission to bring people back downtown, so I wish him well.

Dianne Crocker: I think Portland's a gorgeous city. It's got a lot to offer. This building is, it's really beautiful and I think if he succeeds, it will be good for other office buildings in Portland as well. 

Manus Clancy: Two big headlines out of the big pink story. One is the very positive one that you mentioned, Dianne, which is that $150 million investment.

Manus Clancy: Anytime somebody is. Going to lean in on a distressed office property in any city. It's a positive headline. We love that. We love when people are putting money to work and trying to lead cities out of office distress, which is really the name of the game in many major US cities. So that's one headline.

Manus Clancy: The negative headline is, sadly, it's of a piece. We don't see too many that have 88%. Discounts, but we see plenty that are still 40, 50, 60%. Just last week, here are a couple that we saw in Washington DC 1625 I street sold for $60 million. That was down from 260 million. In 2019, a 77% discount in Houston, broad Hollow Central, sold for 58 million.

Manus Clancy: That was a 17% discount from a 2018 purchase. Phoenix, the Camelback Collective sold for 48 million, a 27% discount to the 2022 price. So only three years, hence a 27% loss. And in Atlanta, the Palisades office park sold for 47 million. That's a 61% discount to the 2018 price. So if there's one commonality to all these sales that I highlighted, it is that.

Manus Clancy: We're seeing still big discounts to the prices for offices from just 5, 6, 7 years ago. 

Dianne Crocker: There's still room to run in, in terms of office finding its bottom. And for the appraisers that we talked about out there, each of these deals, you gets them a little bit closer maybe to comps that they can hang their hat on.

Dianne Crocker: But if you look collectively, man, it's a, at the stories that you're uncovering, there's a lot of. Divergence in terms of, um, the comparison between the prior sale price and what it's going for now. So it, it certainly I think, makes appraisers jobs harder when things are all over the board and at the same time, waves of transactions help sectors find their floor.

Dianne Crocker: But office still has, has some ways to go on that front clearly. 

Manus Clancy: When we talk about wagering, you were talking about turning big pink into a casino, which is a no-go. There was one happy headline in Denver, Colorado. One plat, which is a 249,000 square foot. Office in Denver sold for 135 million, almost 550 bucks a square foot acquired by one of those online gambling companies, BET 365.

Manus Clancy: So, uh, those companies seem to be minting money right now and BET 365 putting their chips on the big office tower in Denver. 

Martha Coacher: Well, Manus, speaking of bets, Delta had their earnings and they're saying that by the end of the year, 20% of their ticket prices are gonna be individually determined using ai, so they'll have a price that's available on that flight, on that time to you.

Martha Coacher: The individual. Some say they're kind of seeing into our heads about how much you're willing to pay. Right now, only about 3% of fares use AI pricing. So Manus, knowing that you liked shopping at Kohl's, what's that say about what you're willing to pay for a flight? 

Manus Clancy: Here's where I see this going for years. I've always said, and this is not a tinfoil hat remark, this is real, that I'll be talking to my wife about hockey, for example, and then 20 minutes on my phone ads for tickets for a hockey game will start popping up. So there is this knowledge out there that what I'm doing and what I'm looking at, what websites I'm surfing. Are being known, are being trafficked somehow. And I can only imagine that someday, I'll say to myself, wow, I want to go see the Giants out in Las Vegas. I'll call my brother. We'll get tickets. And somehow every airline will know that I've already spent $300 on football tickets. And they will say, there's the guy that we gotta hit for $700 a seat because he's not gonna forfeit these tickets. Right? He's not. Not gonna go. 

Dianne Crocker: I have had those same experiences where I feel like my phone is, is reading my mind, and when they put those deals in front of me, I'm mostly grateful 'cause it saves me the trouble of Googling. But this makes me a little nervous.

Martha Coacher: We'll see how it goes.

Martha Coacher: Thanks to our producer, Josh Bruyning. Please join us every week as our LightBox team shares CRE News and Data in context. If you like what you hear, subscribe and rate this podcast and send your comments or questions to podcast@lightboxre.com. Thank you for listening and have a great week. 

Manus Clancy: Let's go.