The data shows that since peaking in 2022, prices in the commercial real estate market have fallen by 19%. According to media analysts, buyers and sellers of commercial real estate in the US are increasingly convinced that the troubled market is nearing the bottom.

The media said that now the commercial real estate market is starting to become active. This is partly because lenders and landlords want to reduce losses and make new investments, especially since the Federal Reserve's first rate cut in four years provided more clarity in market valuations.

David Aviram, co-founder of Maverick Real Estate Partners, said that many deals will be driven by struggling real estate with excessive borrowing and low interest rates.

“There will definitely be more trading activity in 2025, and this will be driven by multiple factors, which will cause some to fall into great instability, but also present huge opportunities for others.”

Commercial real estate bottoming out? Capitol Hill: All the gods have taken action

The real estate market has basically been frozen since 2022, when the Federal Reserve began raising the benchmark interest rate to the highest level in more than 20 years. Rising borrowing costs have caused real estate valuations to plummet, and many buyers and sellers disagree about the actual value of many properties.

Sellers have had to sell properties at huge discounts in recent months. Earlier this year, investors agreed to buy an office building in New York City for 67% less than the 2018 purchase price. The price of the former Cboe Global Markets headquarters in Chicago this summer was only half of what it was before the pandemic.

And the data up to July further shows how difficult the market is. According to MSCI data, trading volume decreased by 5% compared to the same period last year, totaling 203.8 billion US dollars.

However, recent reports indicate that trading volume has shown a “steady” improvement. Some analysts believe that there is still a certain degree of uncertainty in the industry, causing some investors to be wary of entering the market too early. Due to the impact of remote work, property types such as old downtown office buildings have been particularly hard hit. It will take time for the buyer and seller to agree on the actual value of each property.

However, the interest rate cut announced by the Federal Reserve on Wednesday provided investors with more clarity on future interest rate trends. Richard Barkham, chief global economist and head of American research at CBRE Group Inc., said that the Federal Reserve may cut interest rates by at least 50 basis points for the rest of the year.

Currently, there are signs that more and more buyers are watching the sale of properties and loans. Recently, lender Parkview Financial promoted approximately $0.3 billion in loans related to condos and offices in New York, New Jersey, and Connecticut. According to CEO Paul Rahimian, each loan received multiple bids, with an average offer of around 95% of face value.

Furthermore, the Wall Street News article stated that former US Speaker Pelosi, known as the “Capitol Hill Stock God,” also believes that now is a good time to enter commercial real estate. On September 11, Pelosi and his wife's financial disclosure revealed that Pelosi's husband invested 0.25-0.5 million dollars in REOF XXVI LLC on August 13. The company bought and managed the commercial office building at 631 Howard Street south of San Francisco for 36.4 million dollars, which is about 42% lower than the price paid when the investment management company Invesco purchased it in 2014.

Is the market picking up? Liquidity is recovering

According to media reports, more companies are now willing to provide loans for the purchase of commercial real estate. Michael Gigliotti, senior managing director of Jones Lang LaSalle Inc., said that an investor seeking 0.12 billion dollars of financing to acquire a Florida warehouse real estate portfolio has received 12 bids from major banks and insurance companies. Three months ago, such deals only received four to five bids, he said.

Gigliotti stated:

“Market recovery requires a combination of three factors: participants, prices, and indices. It felt like a switch was turned on, and everyone seemed so excited, we called it the beginning of a new liquidity cycle.”

The report said that investment giants are preparing to provide certain loans, and interest rates are higher than a few years ago. Fortress Investment Group and Goldman Sachs Group Inc. are seeking to raise capital from investors for a new commercial real estate loan real estate investment trust. According to CEO Robert Wasmund, Elliott Investment Management-backed lender Ascent Developer Solutions said loan demand was double what it was two to three months ago.

Currently, liquidity is being restored in various ways. Madison Realty Capital has secured an equity commitment of $2.04 billion for the real estate debt fund. The data shows that since this year, the commercial mortgage-backed securities market has recovered. As of July, the new issuance volume reached 92.5 billion US dollars, an increase of 57% over the same period in 2023.

Recently, many borrowers are seeking to extend the term of maturing loans because of the high cost of borrowing and the reluctance of lenders to provide new financing. Parkview CEO Rahimian said a recent sign that more refinancing funds are already available, and Parkview's four borrowers repaid loans totaling $52 million in the 30 days prior to September 15, a significant increase compared to the past year.

Lenders have been able to begin cleaning up old loans and issuing new ones. Rahimian said Parkview is negotiating a $0.3 billion loan sale. Once the deal is completed, it means that the company will re-enter the commercial real estate market and will earn 10% to 12% of revenue from issuance fees and interest over the next 12 months.