July 2025 Market Update
Economic Climate:
The latest U.S. inflation data, released on July 15, 2025, indicates that the Consumer Price Index (CPI) rose 2.7% year-over-year in June, following a 2.4% increase in May, according to the Bureau of Labor Statistics (BLS). Core inflation, which excludes volatile food and energy prices, rose 2.9% over the past year.
Declining consumer sentiment was a concerning trend through the first five months of the year. In May, the University of Michigan’s Index of Consumer Sentiment reached its second-lowest point in history. However, sentiment moved significantly higher in June, rising close to 20% above May’s level. Still, it is 11% below the year-earlier measure, and far below sentiment levels in prior years.
The number of Americans filing new applications for jobless benefits fell last week, pointing to steady job growth in July, though some laid off workers are experiencing long spells of unemployment because of a moderation in hiring, this according to Reuters.
Commercial Real Estate Market Overview:
- The national office vacancy rate was 19.4% in June, up 130 basis points year-over-year, with occupancy unlikely to rise in near future.
- As per CBRE, the US commercial real estate market in 2025 is expected to see a gradual recovery, with a focus on multifamily and industrial sectors, while the office market stabilizes after a period of high vacancies. Economic resilience and a positive investor sentiment are driving this recovery, although interest rates remain a key factor influencing the pace and extent of the rebound.
- The multifamily market is stabilizing, with annual net absorption up 22% to over 544,000 units. Although construction is down 30% from last year, new supply continues to outpace demand by 16%. Vacancy remains steady at 8.0%, while rent growth is modest at 1.1%. This according to JLL.
- The defeasance market continues to see moderate activity with a balance of sales and refinancing, as owners look to lock in profits, trade up and / or lock in rates.
- The asset classes seeing the most activity includes; Self Storage, Multifamily, Retail, Hospitality, NNN, Industrial as well as some smaller balance notes (i.e. less than 5 million).
- Recently there has also been an interest in defeasing large balance notes, especially refinances.
