Monday Market Moves | Week of 26 May 2025
Welcome to Monday Market Moves, the weekly series from Essex Capital Markets briefing you on Chicago commercial real estate capital markets. We cover key trends in CRE debt, refinancing, and capital structures to help investors, borrowers, and lenders navigate today’s evolving environment.
This Week: CRE Lending Outlook Amid Rate Volatility
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At Essex Capital Markets, we navigate the complexities of today’s economic landscape to identify strategic opportunities for real estate investors. Recent developments underscore the importance of agility and informed decision-making in capital markets.
April’s Consumer Price Index (CPI) shows inflation slowing, with headline CPI up just 0.2% month-over-month and 2.3% year-over-year — the lowest since February 2021. Core CPI (excluding food and energy) also rose 0.2% in April and 2.8% over the past year, strengthening the case for Fed rate cuts later this year.
Source: Bureau of Labor Statistics – April CPI Report
Yet despite falling inflation, bond markets focused on fiscal risk. The 10-year Treasury yield spiked to 4.58% on May 21 before retreating slightly to 4.54% by May 22. The sell-off followed a weak 20-year Treasury auction and rising concern over a new tax proposal that could add $3–4 trillion to the national debt.
Source: FRED – 10-Year Treasury Yield
Source: Business Insider – Bond Market Reacts to Debt Fears
The average 30-year fixed mortgage rate jumped to 6.86% last week — its highest since early March — in direct response to the surge in Treasury yields. This spike is eroding affordability for buyers and raising development hurdles.
Source: Freddie Mac – Weekly Mortgage Rate Survey
New construction gained modest ground in April, with housing starts rising 1.6% month-over-month to a seasonally adjusted annual rate of 1.361 million units. But building permits dropped 4.7%, signaling future construction may slow amid financing headwinds.
Source: U.S. Census Bureau – April Housing Starts & Permits
Q1 2025 saw a 13% quarter-over-quarter and 90% year-over-year increase in CBRE’s Lending Momentum Index. Banks accounted for 34% of non-agency closings — up from 22% in Q4 2024 — signaling stronger balance sheets and favorable capital access.
Source: CBRE – Q1 2025 Lending Report
Challenge: Higher rates are compressing deal margins, slowing starts, and increasing cap rate pressure.
Opportunity: Dislocation creates compelling entry points for long-term capital — particularly in resilient sectors like industrial, multifamily, and necessity retail.
Action: Now is the time for strong underwriting, disciplined acquisition, and opportunistic capital deployment.
Final Take
Inflation is easing — but fiscal policy volatility and rising yields are reshaping the investment landscape. For investors, the message is clear: wait-and-see won’t cut it. This is a moment for decisive, strategic action.
At Essex Capital Markets, we’re helping clients navigate this environment by structuring smart, strategic capital solutions that align with both current realities and long-term goals—across acquisitions, refinances, and recapitalizations.
From rate volatility to opportunity in dislocation, now is the time to explore tailored CRE lending strategies. Fill out the form below to connect with us.