Monday Market Moves | Week of 05 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: Multifamily Financing Trends & CRE Capital Insights
At Essex Capital Markets, we are in tune with the ever-evolving CRE market — pricing recalibration, rising distress, and creative capital stack structuring are dominating the conversation across asset classes. Amid uncertainty, savvy investors are staying active, not sidelined.
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Here’s what we’re tracking this week:
Distress is no longer resulting in a frozen market—there is real movement coming into play as the office sector finds its new equilibrium. In Chicago, Q1 2025 saw $561M in office trades—already one-third of last year’s total. Notable transactions include:
200 S. Wacker sold for $68M (down ~48% from 2013)
600 W. Chicago traded for $88.7M (vs. $510M in 2018)
Average pricing has dropped to ~$67/SF, prompting opportunistic capital to step in. Adaptive reuse is part of the strategy: the LaSalle Reimagined initiative is converting vintage office towers into hundreds of downtown apartments.
Source: CoStar News
Multifamily’s future is being shaped by a dramatic pipeline slowdown. Starts are down 35% YoY nationally, dramatically tightening future supply. In oversupplied Sun Belt metros, concessions exceed 14% of asking rent. Meanwhile, cities like Chicago—with controlled new deliveries and steady absorption—are showing greater stability. Investors are shifting toward operational value creation and tenant retention strategies.
Source: U.S. Census Bureau
The industrial market is stabilizing after years of outsized growth. U.S. industrial vacancy ticked up to ~7% in Q1, the result of years of record deliveries finally catching up with demand. But leasing volume remains strong: Chicago’s 12-month move-in rate hit 8.5M Sq. Ft. thus far in Q1 2025, keeping it among the top 10 U.S. markets for demand. Rent growth has eased to ~4% YoY, while new construction is slowing by ~30%—a welcome cooling that should keep the market balanced. Core locations and infill logistics assets continue to attract investor interest.
Source: Cawley Commercial Real Estate
Retail continues to defy the narrative. National vacancy sits at just 4.1%, with general retail at 2.5%. With construction at historic lows, tenants are competing for quality space. In Chicago, demand remains strong for street retail and neighborhood corridors. For example, Sephora signed a 5,000 SF lease at 917 W. North Ave. in Lincoln Park, replacing a former Bed Bath & Beyond space and reinforcing the strength of high-traffic urban retail.
Source: CBRE
Lenders are cautious, and the refinancing terms being offered to borrowers as loans mature require significant paydowns. The need for reserve capital—whether for interest carry, rate buydowns, or equity shortfalls—has never been more important. Underwriting standards continue to tighten, pushing borrowers toward fresh capital in the form of cash in, pref equity, mezz debt, or structured JV equity to get deals closed. Distressed debt funds are actively raising capital, anticipating broader repricing across asset classes.
Source: MBA
What We’re Seeing
Market momentum is in a flux, but strategic activity is rising. The best-positioned sponsors are adapting—shoring up balance sheets, recapitalizing assets, and sourcing discounted deals where fundamentals support long-term value.
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.
To speak with our Capital Markets team about strategic multifamily financing and capital solutions, please fill out the form below.