August 2025 Commercial Real Estate Update: Mixed Signals in a Cooling Market

As we move through the second half of 2025, the commercial real estate (CRE) market continues to reflect broader shifts in the U.S. economy. With interest rates holding steady and signs of economic cooling, each major property sector is experiencing its own version of transition.

Economic Backdrop: Rate Cuts on the Horizon?

In July, the Federal Reserve kept its benchmark rate at 4.5% for the fifth consecutive meeting. Inflation remains slightly elevated at 2.7%, while job growth has slowed and unemployment inched up to 4.2%. Despite softer labor data, the economy showed resilience with 3% GDP growth in Q2, thanks to stronger consumer spending. With market conditions moderating, many analysts expect the Fed to cut rates as soon as September — a potential tailwind for commercial lending and investment activity.