LightBox Monthly CRE Activity Index Reveals Modest May Improvement
LightBox, a leading provider of commercial real estate (CRE) information and technology, released its Monthly CRE Activity Index, reflecting a modest rise in May deal activity from the previous month.
The LightBox Monthly CRE Activity Index provides an aggregate view of the market with information on property listings, due diligence and valuation activity enabling market participants to identify inflection points in CRE activity. The May LightBox CRE Activity Index now stands at 91.1, a slight increase over April’s 89.5 level.
According to the report commentary, the latest improvements in the CRE Activity Index mirror the sentiment of market participants who are experiencing recent boosts in business activity across a broad range of CRE sectors. In the past, market analysts have used public records and Fed Flow of Funds (reported quarterly) to measure CRE velocity. The Lightbox Monthly CRE Activity Index captures data months ahead of public records filings and Federal Reserve data.
Notably, May’s CRE Activity Index was the highest level reached since June 2023, when the market was digesting news of several bank failures. Although the May 2024 Index is slightly below May 2023’s 93.2 reading, the current level is 14% higher than the 12-month moving average of 79.6.
“The latest data is an encouraging sign that the CRE market is emerging from the doldrums that characterized nearly the past two years when the Fed first started raising interest rates. I expect that once lower interest rates arrive, the CRE transactions market could open wide as investors deploy amassed capital,” said Manus Clancy, LightBox head of Data Strategy.
Although reports of distressed asset transactions are largely limited to the troubled downtown office sector, the stronger Index report in May likely reflects a growing impatience by the market to place capital even in the absence of interest rate cuts.
“More and more, CRE professionals appear to have come to grips with higher interest and cap rates. While still nowhere close to the desired pace, sales activity is picking up; transparency is increasing; and buyers and sellers are coalescing around fair value. That even extends to the office space where transaction activity continues to increase—albeit at prices that often mean big losses for sellers,” Clancy said.
The role that expectations play in turning points is critical, and the latest May CRE Activity Index provides data-based evidence that the slow start to 2024 could well be starting to slowly reverse itself.
