Fed’s Beige Book Hints at Modest CRE Momentum

While some commercial real estate sectors showed faint signs of life, the Fed's latest Beige Book warns that growing trade policy uncertainty could stall progress.

Jordan B.
April 24, 2025

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Good morning. The Fed’s latest Beige Book shows slight gains in commercial real estate—but rising trade tensions threaten to stall momentum.

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FED OUTLOOK

CRE Edges Forward, But Trade Policy Turbulence Rattles Confidence

The Fed’s latest Beige Book shows slight gains in commercial real estate—but rising trade tensions threaten to stall momentum.

A cautious uptick: Across most Federal Reserve districts, commercial real estate activity ticked up slightly, driven in part by stable or improving multifamily performance. Office and industrial sectors remained mixed, though some regions saw mild gains in leasing and transaction volumes. Loan demand also saw modest improvement, suggesting tentative optimism among investors.

Holding strong: Multifamily real estate continued to be the steadiest performer, with stable rents and demand in many regions. Notably, New York City and Dallas reported strong multifamily demand despite flat rent growth. Even in Kansas City and San Francisco, where rent growth softened, multifamily remained a focal point for activity.

Mixed bag: The office market showed small signs of improvement in areas like Manhattan and Richmond, while demand for industrial space slowed in places like Northern New Jersey and Atlanta, with uncertainty about tariffs and energy costs affecting decision-making. High vacancy persisted in places like Minneapolis.

Zoom in: Construction activity either slowed or plateaued in nearly every district, as inflationary pressures and material cost increases, largely tied to tariff concerns, took their toll. The effects were especially pronounced in Chicago, St. Louis, and Philadelphia, where projects in early phases were paused or re-evaluated.

➥ THE TAKEAWAY

Risky road ahead: Multifamily may be keeping CRE afloat, but the growing drag of trade-related uncertainty is making developers, tenants, and lenders alike rethink their next deal. Without clarity on tariffs, even modest momentum could be short-lived.

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✍️ Editor’s Picks

Supercharge your prospecting: Enaia brings powerful data and insights to CRE Broker's workflow, letting you reach more decision-makers and close more deals. (sponsored)
Affordable accelerator: A $20M fund from VOA-GNY will cover early costs in affordable housing projects, helping nonprofits compete and build faster.
Condo crunch: Skyrocketing insurance, surprise assessments, and tighter lending are forcing many Florida condo owners to sell, flooding the market and dragging down prices
Pharma surge: Roche and Regeneron are planning $56B in US expansions, ramping up manufacturing ahead of potential drug tariffs.

🏘️ MULTIFAMILY

Rent rebound: NYC rents rose 5.6% in Q125, led by Manhattan and Brooklyn, as limited supply and rising construction costs keep pressure on prices.
Fraud fallout: Over 6,000 apartment units tied to convicted developer Moshe Silber are heading to auction as creditors seek to recover losses from a $119M mortgage fraud scheme.
Junk fees: Colorado has banned apartment landlords from charging hidden fees, requiring full rent pricing transparency starting in 2026.
Natural neighborhood: Agrihoods are attracting wellness-minded renters by combining sustainable farming, community connection, and nature-centric living.
Billing battle: Tenants at Brookfield’s DC apartments have gained ground in a class-action suit alleging deceptive utility charges, bolstered by a leaked email admitting overbilling.

🏭 Industrial

Cargo rebound: Air cargo markets are bouncing back in 2024, but rising tariffs, shifting trade routes, and softening demand may temper momentum near major US airports.
Onshoring adjustment: Tariffs and shifting trade flows are reshaping North America's industrial market, fueling US onshoring while boosting demand in Mexico and Canada.
Dairy deal: Chobani has broken ground on a $1.2B dairy megaplant in Rome, NY, the largest natural food manufacturing investment in US history.
Capital commitment: Nuveen has closed a $166M fund to invest in self-storage, targeting underserved US markets as institutional interest grows.
Keep it cold: Rising demand and outdated stock are pushing the cold storage sector into a new development phase focused on automation and efficiency.

🏬 RETAIL

Crafting collapse: JOANN’s downfall followed post-pandemic foot traffic declines and mounting competition from superstores and craft chains like Michaels and Hobby Lobby.
Brand premium: Consumers are willing to pay up to 25% more for their favorite brands, especially in categories like fitness, gaming, and jewelry.
Furry focus: Tractor Supply has launched a new animal and pet pharmacy service built on its Allivet acquisition, expanding in-store and online access to pet meds.

🏢 OFFICE

Harvard fallout: Amid a federal funding freeze and political pressure, Harvard’s public health school is exiting two Boston leases and bracing for layoffs.
Landmark lease: The DOJ signed a $243M lease renewal in DC's NoMa district, marking the Trump administration’s largest lease yet.
Office freeze: Miami-Dade office construction has plunged to a nine-year low as high costs, tariffs, and weak preleasing kill projects.
Distress deepens: Distressed office transactions surged in 2024 as vacancy climbed and large urban properties faced mounting pressure amid stagnant demand.

🏨 HOSPITALITY

Lambeau leap: Green Bay’s 2025 NFL Draft is spiking hotel demand and rates, with limited room supply driving a major hospitality boost.
Horror hospitality: The Stanley Hotel, inspiration for The Shining, is planning a $300M horror-themed expansion tied to Sundance’s move to Boulder.
Tourism trouble: Chicago’s hotel recovery is being undercut by new tariffs and travel restrictions, dampening international tourism and clouding 2025 outlooks.

📈 CHART OF THE DAY

Data from John Burns Research highlights where renters face the greatest housing affordability challenges, revealing stark regional divides. While renters in metros like Pittsburgh and Indianapolis spend around 43–46% of their income on a typical home, those in coastal hubs like San Jose and Los Angeles must shell out over 100%, making ownership far out of reach for many.