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- Fed Holds Rates Steady, But September Cut Still on the Table
Fed Holds Rates Steady, But September Cut Still on the Table
The Fed hit pause on rates once again, but CRE is already looking ahead to September.
Jordan B.
August 01, 2025
Together with
Good morning. The Fed kept interest rates steady in July, but all eyes are now on September for a potential cut. With uncertainty swirling around trade, inflation, and construction costs, CRE is bracing for what’s next.
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Market Snapshot
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Rate Watch
Fed Holds Rates Steady, But September Cut Still on the Table
The Fed is playing the waiting game as real estate leaders look ahead to what could be a pivotal September.
Steady for now: The Fed held rates at 4.25%–4.5%, citing ongoing economic uncertainty. While expected, attention now turns to September, with markets betting on two cuts by year-end, despite Powell saying no decisions are set.
Internal Fed dissent: For the first time since 1993, two members of the Fed’s policy committee dissented on the decision to hold rates steady. The Fed’s own forecast still points to two quarter-point cuts by year-end. Meanwhile, some analysts believe inflation trends and labor market shifts could justify those cuts.
Hoping for relief: Industry leaders believe a September rate cut could help revive segments of the real estate market, particularly residential. Elevated mortgage rates have slowed housing activity, though transaction volume remains strong.
Trade uncertainty lingers: Trade policy uncertainty under the Trump administration is clouding the Fed’s path. While tariff impacts aren’t fully reflected in data yet, businesses are already absorbing costs or cutting production—moves economists say aren’t sustainable.
CRE holding steady: Powell noted in a recent report that nonresidential real estate activity remains “mostly steady,” with positive signals from cities like Boston and Chicago. Experts caution that uncertainty around tariffs and construction costs may suppress future development if clarity doesn’t emerge soon.
➥ THE TAKEAWAY
Countdown to September: With two rounds of inflation and employment data due before the next FOMC meeting, the Fed will have a clearer picture soon—but for CRE, the hope is that lower rates arrive before the uncertainty starts to bite.
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✍️ Editor’s Picks
Hybrid deals: Explore how hybrid multifamily deals are reshaping real estate investing by combining institutional capital with retail syndication to offer broader access to high-quality assets. (sponsored)
Shrinking universe: The professionally managed global real estate market contracted by 4.1% in 2024 to $12.5T, marking the third consecutive year of decline.
Green lending: Nuveen has secured $785M for its third C-PACE lending fund, expanding its push to finance sustainable upgrades in CRE.
Debt dumping: Banks are offloading distressed loans as private credit funds move quickly to seize undervalued assets.
GSA shakeup: Two top GSA officials have stepped down amid efforts to slash the federal government’s vast office footprint.
Sentiment shift: CREFC’s sentiment index surged in Q225, reflecting renewed confidence amid rate stability and rising investor demand.
Pay gap: The median CEO-to-employee pay ratio across US equity REITs dipped slightly to 54x in 2024.
Photo feud: CoStar has filed a federal lawsuit against Zillow, accusing it of illegally using nearly 47K copyrighted real estate images to grow its rental business.
🏘️ MULTIFAMILY
Suburban shift: Semi-urban areas—those between city cores and suburbs—have emerged as multifamily housing’s growth leaders, now housing 43.4% of the sector.
Premium strength: Despite record new supply, Austin’s Class A apartments hit 95.1% occupancy in Q225.
Leasing lead: Preleasing for student housing hit 85.3% in June—outpacing prior years—though rent growth slowed to just 1.3% annually.
Urban premium: Tech-heavy cities like New York and San Francisco lead the nation in rising rents, driven by AI hiring and RTO trends.
Sublet scams: Subletting fraud is rising fast, forcing property managers to adopt layered ID and tech-based verification to stay ahead.
🏭 Industrial
Logistics lift: Prologis warehouses moved $3.2T in goods and supported 3.6M jobs globally in 2024, with the US driving $230B in GDP impact.
Rail merger: Union Pacific’s $85B bid for Norfolk Southern could reshape US logistics and spur demand for rail-linked industrial real estate.
Cost pressures: New US tariffs pose the greatest risk to manufacturing, with rising costs threatening jobs, housing construction, and Midwest economies.
IOS acquisition: JP Morgan Real Estate Income Trust acquired a $95.2M industrial outdoor storage portfolio across seven states.
Prime development: A six-building, 473K SF business park has broken ground in Fremont, CA, targeting advanced manufacturing and tech tenants.
🏬 RETAIL
Vacancy rise: Retail vacancies in South Florida inched up in Q225 as move-outs outpaced move-ins, nudging vacancy rates above 4% across the tri-county region.
Yield leaders: Retail-focused NAV REITs led recent performance, with Cohen & Steers posting a 12.7% one-year return.
Soft demand: Retail leasing slowed in H125 as tenant caution, rising costs, and trade uncertainty drove negative absorption.
🏢 OFFICE
Office split: National office demand stayed flat in Q225, but major markets showed sharp splits, with some surging on sector strength and others sharply declining.
Crisis fallout: The deadly shooting at 345 Park Ave. has rocked the Rudin family and reignited security concerns.
Tech tailwinds: San Francisco’s office market is gaining traction with a 61% leasing surge in H125.
🏨 HOSPITALITY
Project pushback: A $1.6B Austin Convention Center expansion faces delay as a PAC pushes for a public vote.
Foreclosure lift: California hotel sales fell 7.4% in H125, but foreclosure auctions propped up dollar volume, masking declining values.
Summer slump: Miami’s summer slowdown is forcing a wave of high-profile restaurant shutdowns.
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📈 CHART OF THE DAY
Asset selection, more than sector or geographic allocation, has been the primary factor behind performance differences in real estate portfolios over time.
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