Index Shows Momentum is Building for CRE

The CRE market appears to be moving forward “slowly and cautiously,” according to the LightBox Monthly CRE Activity Index, which rose in June for the fourth consecutive month.

The index is intended to help participants identify inflection points in the market on the aggregate through data on property listings, due diligence and valuation activity. In June it reached 93.9, up from 87.2 in May, after hitting a three-year low of 48.2 in December 2023. The hike occurred even though lower interest rates have not materialized and inflation remains uncertain.

“It’s worth noting that despite any change in monetary policy, slow momentum is building in commercial property investment, lending, loan divestitures, and distressed asset deals,” the report commented.

“With every passing month, we’re seeing evidence that intrepid CRE professionals are wading into the waters of dealmaking. These recent signs are encouraging as the industry readies itself for the transfer of assets that typically happens after an economic downturn,” said Manus Clancy, LightBox head of Data Strategy.

Clancy cited as evidence an increase in big portfolio sales. He noted there have been multiple bidders for many distressed office properties, and that all segments of the market have experienced more sales.

“Buyers are no longer waiting for another leg down in property values. They are putting cash to work, which is a great sign,” Clancy said. He cautioned, however, that if normal patterns hold, the index could fall slightly in July.