According to LightBox, a provider of commercial real estate (CRE) information and technology, there was a modest increase in CRE transaction activity in September. This was driven by the Federal Reserve’s first cut to the federal funds rate since 2020, which had a positive impact on both CRE lending and investment markets.
After August’s Index of 89.9 broke a five-month streak of growth, the September CRE Activity Index rebounded to 98.2 – an increase of 8.3 points from the previous month and 10.3 points from last year. The rise can be attributed to an uptick in commercial property listings that typically occurs after Labor Day.
Manus Clancy, LightBox’s head of data strategy stated that “the unexpected but welcome surprise”of a 50-basis-point cut has provided psychological boost for CRE markets.” He also mentioned that even if it had been just a smaller reduction at only25 basis points,it would still have signaled “a new era” for capital deployment.
However,the recovery may face challenges due recent macro events such as Hurricane Helene,Middle East conflicts,and upcoming November elections.Clancy warnedthat these factors could potentially dampen positive momentum for CRE activity during Octoberand throughoutthe fourth quarter.
LightBox recently reported that there was an uptick in commercial real estate (CRE) transaction velocity during September according their Monthly CRE Activity Index.The driving force behind this growth was attributedto the Federal Reserve cutting its federal funds rateforthe first time since2020.This move eliciteda strong responsefrom both lendersand investorsinthemarketplace.
Following August’s index scoreof89.9which endedfive consecutive months offavorable results,theSeptemberCREActivityIndexreboundedto98/2.This representsanincreaseof8/3pointscomparedtomonthly figures,and10/3pointswhen comparedyear-over-year.Theboostwaslargelydue tonewcommercial property listings,which is a common trend after Labor Day.
Manus Clancy,the head of data strategy at LightBox,stated that the 50-basis-point cut came as an unexpected but welcome surprise for CRE markets.This has provideda psychological boost to the industry and signals the beginning of a new era for capital deployment.He also notedthat even if it had been onlya 25-bps reduction,it would still have sent a strong message to themarket.
However,Clancy cautioned that there are some macro events such as Hurricane Helene,Middle East conflicts,andthe upcoming November electionsthat could potentially impactthe recoveryofCRE activity in Octoberand throughoutthefourth quarter.
