IRVINE, Calif., Oct. 7, 2024 - LightBox, a leading provider of commercial real estate (CRE) information and technology, released its Monthly CRE Activity Index for September, showing a modest increase in transaction velocity.
This aggregate measure of activity in commercial property listings, environmental due diligence, and appraisals collectively tracks shifts in the velocity of key functions that support CRE transactions. After August's Index of 89.9 ended a five-month streak of increases that took root in March, the September CRE Activity Index rebounded sharply, rising to 98.2. This is 8.3 points higher than August, and a notable 10.3 points above the 87.9 recorded one year ago, when the dearth of properties listed for sale and the bid-ask gap between buyers and sellers hindered transaction volume.
The increase was fueled by an uptick in commercial property listings, which typically happens after Labor Day as the market settles into the final months of the year. September's biggest development was the Federal Reserve's first interest rate cut since 2020, which spurred a positive reaction from the CRE lending and investment markets. "The 50-bps cut was an unexpected but welcome surprise for CRE, providing a psychological boost," said Manus Clancy, LightBox head of Data Strategy. "Even a 25-bps cut would have signaled to the market that a new era of capital deployment has finally begun," Clancy said.
Declining rates will lower costs for borrowers with maturing loans, many of which were extended in hopes of refinancing under better conditions. As debt costs fall and buyer interest grows, CRE activity is expected to gain momentum, leading to more property sales—both traditional and forced.
However, the young recovery could be impacted by recent macro events like the devastation from Hurricane Helene, the escalating conflict in the Middle East, and the upcoming November election. "All of these pose the risk of dampening positive momentum for CRE activity in October and the rest of the 4th quarter," Clancy noted.
Despite the market's challenges and risks, the rate cut triggers the start of a new growth cycle for CRE. According to the report commentary, as clarity on future interest rates improves, the market should expect stronger transaction and lending velocity, lower cap rates, and rising property valuations—bringing a resurgence of market enthusiasm that has been largely absent for several years.
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At LightBox, we are at the forefront of delivering advanced and precise solutions for commercial real estate intelligence. Our dedication to innovation propels real estate professionals forward by providing them with the essential tools required to navigate complex decisions, minimize risk, and boost productivity across the spectrum of real estate operations. LightBox is renowned for its commitment to promoting excellence and fostering connections in the industry, serving an extensive clientele of over 30,000 customers. Our diverse client base spans commercial and government sectors, including but not limited to brokers, developers, investors, lenders, insurers, technologists, environmental advisors, appraisers, and other businesses that depend on geospatial information. To discover more about how LightBox can illuminate the path to informed real estate solutions, visit us at: www.LightBoxRE.com
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