LightBox, a leading provider of commercial real estate (CRE) data and technology, today released findings from its Mid-Year 2025 CRE Market Sentiment Survey, revealing that despite ongoing uncertainty, most industry professionals anticipate a busier second half.
Based on responses from 237 professionals across investment, brokerage, appraisal, and environmental due diligence, the survey found that 76% expect deal activity to either increase (42%) or hold steady (34%) through the remainder of the year. Interest rates remain the top concern, followed by economic volatility and emerging tariff risks.
“Despite a first half that didn’t quite play out as expected with growing uncertainty around interest rates and tariffs, our survey shows that the CRE market is gearing up for a more active second half,” said Dianne Crocker, research director at LightBox.
The survey, conducted in mid-July, captured sentiment on pricing, capital availability, distress, and investment opportunities. Respondents highlighted a mix of resilience and caution as defining characteristics of today’s market. Sentiment hovered in neutral territory, with an average score of 48 on a scale from 1 (worsening) to 100 (improving) at midyear. When asked about expectations for second-half CRE activity, most respondents avoided the extremes, neither strongly optimistic nor deeply pessimistic. Instead, responses clustered in the middle, anticipating modest gains, slight declines, or stability, reflecting the high level of uncertainty.
Key survey signals include:
- Guarded optimism amid pricing pressure: While 40% believe values have stabilized, 60% see more room for prices to fall. Still, narrowing bid-ask spreads and higher transaction volume in multifamily and industrial sectors suggest that pricing clarity is improving.
- Distress remains localized but could grow: 40% report rising signs of distress, particularly in urban office. Loan extensions have delayed widespread workouts, but a backlog of maturing loans may drive more distressed asset opportunities by year-end.
- Rate stagnation is holding up deal flow: A majority cited the lack of movement in interest rates as the most significant factor slowing transaction activity as well as delaying improvement in pricing clarity.
- Market resilience rooted in underwriting: Nearly 70% of respondents agreed with a statement that the market will “soldier on” through the second half, as long as deals pencil out. This is a strong sign from an industry bracing for ongoing uncertainty but still hopeful about pricing clarity, modest rate relief, and renewed lending momentum.
“Even in a volatile environment, the market continues to soldier on. Not because conditions are ideal, but because participants are staying disciplined,” said Manus Clancy, head of Data Strategy at LightBox. “As long as assets can be underwritten with confidence, activity will push through the noise. This is a market driven by math, not mood.”
Investor appetite remains strongest in the multifamily, industrial, and retail sectors, according to the report. Outside of the major asset classes, 56% of brokers and investors identified niche asset classes like data centers and life sciences as strong investment opportunities. While CRE capital is still constrained, expectations for modest rate cuts and improving pricing clarity could support increased lending and investment activity heading into Q4.
Download the Mid-Year 2025 CRE Market Sentiment Survey report
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