Subscribe to TRD Data to unlock this content
Commercial real estate activity hit a four-year high last month. Whether it signals a comeback or another false start is far less clear.
In February, CRE activity rose 7 percent month over month, according to an index from LightBox, a real estate data firm that tracks listings, environmental due diligence and lender-driven appraisals — a mix of signals that typically precede transactions.
The increase builds on a sharp rebound at the start of the year; activity jumped 28 percent in January and continued its rise in February. But more listings don’t necessarily mean more deals and transaction volume across property types remains below normal.
Investors are putting more properties on the market, betting that improving buyer demand can outweigh lingering uncertainty around interest rates and private credit. That optimism is being tested. In the two weeks since the U.S. went to war with Iran, the S&P 500 has fallen more than 2 percent, and yields on the 10-year Treasury also have wavered.
New commercial real estate listings rose 9 percent month over month and 28 percent year over year in February. But whether those deals actually happen may not be clear until March’s data is finalized. Borrowing costs also are still elevated.
Additionally, environmental site assessments bolstered the wave of CRE activity in February, an early-stage step that suggests buyers and lenders are actively underwriting deals, not just testing the market. Such assessments grew 14 percent month over month and 11 percent year over year.
One weak spot was lender appraisals, which were down 10 percent month over month, according to LightBox, a sign that financing pipelines remain uneven. That’s a contrast with the end of last year, when commercial loan originations soared by 30 percent year over year, according to data from the Mortgage Bankers Association. The growth in originations was led by the office sector, which has been on the rebound of late.