July 28th, 2025
📊 CRE Sentiment Rebounds Sharply in Q2 as Tariff, Rate Fears Ease
🔹 From Gloom to Guarded Optimism
In Q1, industry sentiment plunged—eight out of nine indicators were negative. But in Q2, respondents reversed course, expressing positive views on six of nine measures, with many citing improving capital markets and fewer fears around federal policy or tariffs.
🔹 Big Shift on Policy Concerns
Only 16% of board members now view federal policy as a negative factor—down dramatically from 59% in Q1. That’s a strong signal that earlier concerns around regulation and legislative interference have faded.
🔹 Sales & Lending Outlook Brightens
As the market confronts a massive wave of loan maturities, respondents are preparing for increased borrower demand and activity.
59% believe that tighter CMBS and CRE CLO spreads will benefit their businesses.
🔹 Macro View: Still Cautious
Despite the turnaround in sentiment, economic optimism remains muted:
20% expect the economy to improve
54% say it will stay the same
27% foresee further deterioration
🔹 Interest Rate Expectations Stabilizing
CRE leaders appear more confident in rate predictability:
50% expect a 25-bp Fed rate cut by year-end
22% anticipate a 50-bp cut
75% see the 10-year Treasury finishing between 4.0% and 4.5%
🔹 Regulatory Clarity Still Needed
While sentiment is more positive, respondents flagged ongoing issues around loan servicing and regulatory ambiguity. With loan modifications on the rise, many emphasized the need for clearer guidelines—especially as servicers face more complex workouts.
Investor Takeaway:
CRE pros are regaining confidence in market fundamentals and capital markets. While macro risks and regulatory uncertainty persist, most see the refinancing wave ahead as a catalyst for new opportunities. Lenders and investors should prepare for increased deal flow—and a more stable rate environment—in the back half of 2025.
Blackstone, the world’s largest commercial property owner, is signaling a turning point for the real estate market as capital flows increase, supply declines, and investor confidence rebounds.
💰 Capital Inflows Pick Up
Blackstone raised $7.2 billion in new capital for real estate strategies in Q2 — up $1 billion from Q1. Highlights include:
$2.4B into real estate debt strategies
$1.1B into Blackstone Real Estate Income Trust (BREIT)
$1B into Blackstone Americas Logistics
President Jon Gray pointed to rising investor confidence, saying, “The dealmaking pause is behind us.”
📉 Interest Rate Relief in Sight
The Federal Reserve’s expected rate cuts are another catalyst. As borrowing costs ease, Blackstone sees increased activity in refinancing, acquisitions, and development — particularly in logistics and income-producing sectors.
🏗️ Real Estate Investment Activity Accelerating
$6.2B in Q2 real estate investments, up $1B from Q1
Focused on CRE loan portfolios and Texas industrial properties
Total firmwide investment: $33.1B in Q2, with $145.1B deployed over the past 12 months
Focus areas: digital infrastructure, AI-related real estate, private credit, and life sciences
🧭 Investor Takeaway
Blackstone’s activity signals renewed confidence in the CRE cycle recovery. With decelerating supply, rising transaction activity, and interest rate relief ahead, institutional players like Blackstone are positioning for the next phase of growth.
Key areas to watch:
Logistics and data infrastructure
Real estate debt strategies
Undervalued CRE loans and high-growth regional markets
🏙️ Multifamily Market Stabilizes in Q2 as Supply Eases, Demand Holds Firm
The U.S. multifamily sector showed solid signs of stabilization in Q2 2025, driven by strong renter demand and a pullback in new supply. With fundamentals balancing out, investors are seeing more clarity on where opportunities — and risks — are headed next.
📈 Net Absorption Strong, Supply Slows
268,000 units were absorbed in H1 2025 — the third-best start to a year on record.
Completions dropped to 270,000 units, down 25% year-over-year, helping reduce the gap between supply and demand.
🏢 Vacancy Rate Holds Steady
National vacancy settled at 8.1% in Q2, flat but stabilizing for the first time in three years.
While still elevated vs. pre-COVID levels, this signals a turning point for the sector.
💸 Rent Growth Sluggish, Concessions Common
Asking rents rose just 0.9% year-over-year, down from 1.2% in Q1.
Nearly 1 in 3 apartment properties are offering concessions, particularly in lease-ups and high-construction markets.
🏗️ Asset Class Performance Diverging
Luxury (4 & 5-star) assets: Rent growth of just 0.5% YoY.
Workforce housing (1 & 2-star): Stronger growth at 1.7% YoY.
Mid-tier (3-star): Steady at 1%, in line with national averages.
🌎 Sun Belt Struggles While Legacy Markets Shine
13 of 15 highest-vacancy markets are in the Sun Belt, led by Austin (15.1%).
Sun Belt rents fell 1% YoY, continuing two+ years of negative rent growth.
Gateway markets with limited new supply — New York, Chicago, San Francisco — are holding up better on both rent and occupancy.
🔮 Outlook: Supply Tapers, Modest Gains Expected
Completions forecast to drop to 492,000 units in 2025 (from 700,000 in 2024).
If demand remains firm, vacancy could dip below 8% by year-end.
Rent growth forecast: modest rebound to 1.8% annual by late 2025.
🧭 Investor Takeaway
With development cooling and demand staying resilient, the multifamily sector is entering a more balanced phase. Investors insights.
Workforce and mid-tier housing where rent growth is more durable.
Be cautious in oversupplied Sun Belt metros, especially in luxury segments.
Look for stabilizing opportunities in Midwest and Northeast markets where fundamentals are firmer and supply is more controlled.
🏦 Pensions Keep Pouring Into CRE Debt Vehicles – 2025 on Track to Nearly Match Record Year
Despite a slight dip in total commitments, U.S. public pension funds are continuing to back debt-focused commercial real estate (CRE) strategies with strength and consistency, signaling a structural shift in portfolio allocations.
🔹 Debt Vehicles Gain Ground Again
In Q2 2025, debt-focused funds and separate accounts—those that originate or acquire CRE loans—secured $1.91 billion in new commitments from U.S. public pensions, according to Ferguson Partners. This brought the H1 total to $3.30 billion, up 9% year-over-year.
Debt strategies accounted for 21% of all CRE pledges in the first half—just behind last year’s record 22%, suggesting these strategies are now a core allocation for institutional investors.
🔹 A New Baseline for CRE Debt
“It’s incredibly consistent,” said Scott McIntosh, director at Ferguson. “One out of every five dollars is going into these strategies.”
McIntosh added that the floor for debt’s share in real estate portfolios has clearly risen: “It may not be 20% permanently, but 15% seems like a realistic baseline.”
🔹 What Qualifies as a Debt Vehicle?
Ferguson defines debt-focused vehicles strictly as those that originate or purchase loans. More opportunistic “loan-to-own” or distressed strategies fall into a separate category and aren't counted in this data.
🔹 Big Picture: Total CRE Allocations
Overall, U.S. public pensions committed $16.29 billion to CRE vehicles in H1 2025—a 5% dip from last year, but still in line with the ~$32 billion annual average seen over the past two years.
Ferguson Partners’ data covers 318 public pension plans managing over $6 trillion in assets, making it a strong barometer for institutional sentiment in the CRE space.
Investor Takeaway:
Debt strategies continue to secure a steady and growing share of institutional real estate capital. With pensions treating these vehicles as long-term anchors in their portfolios, private lenders and debt fund managers should see sustained interest—especially in today's high-rate, risk-sensitive market environment.
📉 Greystone Under Pressure: Layoffs, Loan Troubles, and Market Repositioning
Greystone, once a heavyweight in the agency lending space, is navigating choppy waters amid growing loan delinquencies and agency restrictions—prompting its third round of layoffs this year.
🔹 Another Wave of Cuts
Last week, the New York-based lender trimmed more staff, particularly on the West Coast and in the Midwest. These layoffs impact originators and loan placement professionals, bringing Greystone’s production team headcount down by over 25% since January.
🔹 Agency Lending Woes
Fannie Mae has placed restrictions on Greystone’s ability to originate loans, reportedly due to a high volume of underperforming deals. Notably, Greystone accounted for 27% of Fannie’s $696M in multifamily loans that were 60+ days delinquent last month—more than any other lender.
34% of loans 90+ days late
56% of loans 120+ days delinquent
This performance led to Greystone being placed on Fannie’s “pre-review” list, meaning all loans must now go through direct agency underwriting. Early rate locks—a key competitive offering—are also off the table for them.
🔹 Capital Infusion on the Horizon?
Insiders suggest that Greystone has begun exploring capital-raising options, though no official advisor has been retained. The firm’s joint venture with Cushman & Wakefield, which holds a 40% stake in its agency and servicing units, adds complexity to the internal allocation of business and strategy moving forward.
🔹 Strategic Refocus
The firm appears to be consolidating operations to its New York HQ while winding down efforts to scale its CMBS conduit platform. Greystone contributed just $125M to conduits in H1 2025—landing it at No. 20 in the sector, despite earlier ambitions.
Investor Takeaway:
Greystone’s situation is a cautionary tale for lenders heavily reliant on agency execution. With performance issues prompting regulatory friction and internal instability, market participants should keep a close eye on further restructurings—and potential opportunities as top talent exits.
