Thanksgiving Week Signals—Rates, Risk, and Resets

In a short holiday week packed with headlines, markets saw a rare “melt-up” as long-term Treasury yields dipped below 4.01%, inflation data cooled, and odds of a December Fed rate cut jumped to 70%. Beneath the optimism, however, the affordability narrative out of Washington, softening job growth, and private-equity debt risks are raising new questions. Manus Clancy and Dianne Crocker dial into what it all means for CRE lending, liquidity, and spreads—and whether widening risk premiums could ripple through commercial real estate. The discussion also spotlights LightBox Q3 data showing lender-driven appraisal activity at a three-year high, solid bank profits, and bullish CMBS forecasts heading into 2026. Plus, the team weighs in on New York City’s controversial COPA proposal, Google’s big bet on the Lone Star state, and a pair of office-to-resi conversions set to reshape multifamily markets in Manhattan and Chicago.

00:38 Market Highlights and Economic Indicators
04:09 Affordability and Economic Concerns
07:26 Private Equity and CRE Lending Insights
13:20 CRE Lending and Market Dynamics
17:57 Policy and Legislation Impacting CRE
23:25 Data Centers and Tech Investments
24:48 Office Conversions and Market Trends

Have questions for the pod team? Send them to Podcast@LightBoxRE.com.

www.lightboxre.com

Transcript

The CRE Weekly Digest by LightBox
Episode 74: Thanksgiving Week Signals—Rates, Risk, and Resets
November 26, 2025

Alyssa Lewis: This is the CRE Weekly Digest by LightBox, a firm transforming the commercial real estate landscape by connecting every step of the CRE process with comprehensive tools and data. I'm Alyssa Lewis with our experts Manus Clancy and Dianne Crocker. In the news during the short holiday week, US manufacturing slows in November as high prices curb demand. The 10 year US Treasury yield dipped to 4.01%, marking its largest weekly decline in weeks as traders increased odds of a Fed rate cut in December. And TJ Maxx increased its full year outlook after 5% sales boost in Q3 after Home Depot and Target lowered thirds last week. Manus, what's your take? 

Manus Clancy: It's a funny week. You would think holiday weeks are light on data that nobody's checking in, that people have already made their way to where they're gonna be going, that they've turned off their computers, but it was a very busy couple of days for the markets. Yesterday we saw a real stock melt up. We saw the reversal of a lot of those losses coming from the unwinding of the AI trade. The Nasdaq up about 2% on Monday, and then today we saw three data points that were all somewhat noteworthy. The first one we saw, September PPI come in. That was cooler than expected. That contributed today to what Alyssa was saying about yields on long dated treasuries dropping. We were at 4.10, about a week ago, threatening to go below 4% as of this morning. So PPI cooler than expected, and that continues to defy the tariff narrative. Where is that inflation that was so heavily expected as far back as April? We saw retail sales come in. They were a little disappointing, not terrible, in line to slightly below expectations. We'll keep an eye on that as the holiday season kicks off in a couple of days. And the third piece of data we saw, the ADP weekly jobs number was negative, again, the fourth straight week of a negative print there. And it's the other side of the coin. Two happy headlines, right? The stock market rallying on Monday and PPI being cooler than expected. The negative headline being all eyes are on jobs right now and with four straight weeks of negative prints for ADP, it makes you wonder what the next jobs report from the Labor Bureau will show us. And that's where people are really concerned right now, as are Dianne and I. So your thoughts, Dianne? 

Dianne Crocker: A hundred percent Manus. And you hit on a lot of the big headlines this week in terms of manufacturing slowing, the 10 year treasury falling, on the retail side you know, you might remember last week, Home Depot and Target pulled back on their outlook, and this week TJ Maxx is raising its outlook because they had a strong Q3. So, you know, and then today the cool PPI data that, that you mentioned. I'm very curious about how the expectations for December rate cut are changing. Last week when we talked about it, the expectation was basically a coin toss. 50% expecting a cut, 50% thinking that Powell was gonna tap the brakes a bit and and pause until January. But the dramas getting interesting. The odds have jumped from 50% to about 70 this week. I think the New York Fed President, John Williams and San Francisco's Mary Daly, both came out and signaled support for a cut. But I think the committee is still pretty divided, and now we've got recent data showing softening job growth. Tariffs are nudging up prices, even if they're not going up maybe quite as quickly as some expected, but we're missing a lot of data from the shutdown too, so I think there's been a shift with the markets betting more on a cut now rather than the Fed waiting until January, but we'll know soon enough. The meeting's December 9th. Black Friday is just a few days away and I think what's gonna happen there is we'll see that narrative shift in the market commentary to retail and expectations coming out of the early read on holiday spending.

Manus Clancy: So I thought it was an interesting week. This is another point I'd love to get your thoughts on. The word of the week affordability. The President, the White House, his staff all out there talking about affordability, and there's several ways you could take this way. Number one is the Democratic narrative that prices are remaining naggingly high is leaving a mark, but is really a narrative and not the truth. Or prices are really higher than the inflation numbers are showing us, and Americans are really starting to grumble about it. So two thoughts here. Thought number one, or questions I should say. What do you think about the affordability narrative coming out of the White House and will it make any difference? And do you think it's just posturing or do you think that the White House really is seeing things differently than the numbers are showing us? 

Dianne Crocker: I'm getting a little cynical, I will say Manus, about not believing everything that comes out in the news, but one headline on the affordability topic that really kind of made me raise my eyebrows this week was that the average price of a Thanksgiving dinner has gone down and I think it was like to $55. And just based on what we're hearing about prices going up, I was very surprised to hear that, and I am remiss in kind of looking back behind the data, but I wonder how true that is. Does that surprise you? 

Manus Clancy: It does seem like things are high and sticky, so I think this is not just a narrative that the Democratics or a card that the Democrats are playing. I do think that people saw prices run up over the last four years, and even though we keep hearing that inflation is slowing and so forth, I think in most Americans minds, a slowing rate of inflation should mean price declines, which it doesn't, we know that, we know the math doesn't add up that way. But I think people are disappointed that when you go into five guys and you get a hamburger, fries and a large Coke, it's 22 bucks. And I think that the White House is concerned about this. The other side of the coin is I don't think there's much in the short term the White House can do. There are certainly levers when it comes to improving the stock or increasing the stock of affordable housing, that should lower prices. There are things like turning off tariffs or urging companies to increase production of things for which there are shortages, but none of that is light bulb like in its immediacy, right? All of these things take time. So I guess I give the White House points for addressing it and admitting that affordability is still an issue. I'm not sure that there's much they could do short of perhaps lowering tariffs in the near term. 

Dianne Crocker: Right. And I think that's why the retail spending numbers will be very, very telling. You know, let's see how the holiday spending shakes out. I don't think it's going out on a limb to say that discount retailers will probably have a better season than others. And I'll follow up on the Thanksgiving dinner price because I just relied on my Chat GBT assistant. That a Thanksgiving dinner for 10 people this year is $55, and that's 5% lower than last year, but it's because the centerpiece Turkey price dropped by about 16% and side items are more expensive.

Manus Clancy: I wanted to touch upon something this week that we haven't really touched upon, and I wanted to give people food for thought. Over the last, let's call it a month, there's been a lot of pearl clutching, fingernail biting about private equity and private equity debt, and are there cockroaches, are there bad debts hiding in the portfolios of the big PE firms that are going to rattle the market, lead to losses among PE firms and shock the markets. So I wanted to do a little bit of an educational segment here, or at least a historical segment here to talk about what everybody is talking about. When you're talking about PE firms, people that make loans to creditors that are not rated right? If you're Apple, you tap the capital markets. If you're General Electric, you tap the capital markets. But there's this wide swath of firms rated BB, BB+, CCC+ that can't tap the capital markets in a rated fashion, and they go to PE firms to take out loans. And the question is, are these loans bad? And will they lead to problems? Will they lead to a great financial crisis like moment for this market? And I wanna give a couple of thoughts here. Number one, that part of the market has been incredibly resilient. Even in the great financial crisis, we saw losses of under 2%. It was really unaffected by the problems in residential and commercial real estate. If you fast forward to 2015, when we saw the oil bust, oil prices went from $120 a barrel down to $26 a barrel. People were really concerned that because this part of the market, PE firms had been lending to oil and gas companies and putting these debts into collateralized loan obligations, that losses would become epidemic in size. Didn't really happen. And so all of this gives me some level of confidence that what we're seeing now will not result in something that's systemic. Let's really hope so. But I do wanna tie this back to CRE. In 2015 when we saw the real concern that failure of oil and gas companies would lead to losses on loans, we saw a complete blowout of spreads in the bond market. Things shot up by hundreds of basis points. And you say that part of the market should be detached from the CRE market and in theory they are. But there is gravitational pull when one part of the market widens, when risk premiums shoot up, the gravitational pull tends to pull everything with it. So even though loans and CRE loans are different things, what we saw in 2015 and 2016 was a dramatic widening in risk premiums in CRE. And that is really the risk for CRE right now, that people become hyper concerned about these loans that are going into traditional CLOs and they say if that's widening, everything should widen, right? There should be a parallelism between the markets, and if that happens, the cost of capital goes up and if the cost of capital goes up, the economy of CRE slows down. And that's what we're concerned about right now. I've been meaning to articulate that for a while. I didn't think it would take so many words, but, uh, I just wanted to give that, that history lesson. If we see CLO losses and spreads widen considerably, it'll be hard not to see CRE loan spreads widening as well. What are your thoughts, Dianne? 

Dianne Crocker: You're right. I mean, private lenders, they play a huge role in the, the universe of lending in both corporate and commercial real estate, because a lot of times they're making loans that banks won't. I do remember seeing in the MBA's latest Q3 report that private equity lending was up 14% in Q3 over Q2, and that wasn't quite as high as the increases in CMBS and the GSEs and banks. Those were in the higher, kind of 30% quarter on quarter growth tier. So I'll offer that first. You know, maybe that's a good thing that they're not rise rising quite as high. But you're right. You know, even during downturns, like the great financial crisis losses in PE lending were surprisingly low. So what do we do? You know, we watched to see, like you said, if the risk premiums keep climbing, if investors pull back, could see the cost of capital jump very quickly, and that would tighten liquidity in a market that right now is very, very fluid. So, you know, maybe not panic time, but I think it's definitely something to watch. 

Manus Clancy: Yeah, I think savvy money managers will be watching this. If you go back to early 2016, people may forget this, it was almost 10 years ago, but the CRE lending market really shut down certainly on the CMBS side. We saw two quarters of no lending because spreads were so volatile, lenders could not be assured that by making CMBS loans they'd be able to exit in a securitization at a profit. And when that happens you really see the door slammed on liquidity and economic velocity. I'm not saying that's gonna happen. In fact, I don't believe it will happen. I think the cockroaches are limited, but it is something that people should watch as we head into year end and early 2016. 

Dianne Crocker: Yeah, and it's a valuable historical perspective too, Manus, so thanks for raising that. 

Manus Clancy: I wanna end this segment when we're talking about CRE risk premiums, the liquidity, and so forth. I saw a LinkedIn post from Benqing Shen of Financialyst and he and I used to work together, he puts out data on banks. And I saw this, I'm gonna read it more or less word for word. US banks just printed their best quarter in years. 80 billion in profits, up 13%, quarter over quarter, return on assets back about up to 1.25%. Provision noise from Q2 acquisition is gone. Underlying earning trend is strong. No deposit runoff. CRE office delinquency still elevated but stable. And I tie that in because you talk about liquidity and the market's really functioning on all eight cylinders right now, Dianne. I think that's the evidence, right? We're seeing the banks really post strong numbers and their loan growth is up. They're very confident putting CRE debt out there, and we're hoping that the rug doesn't get pulled out from us over the next six months. 

Dianne Crocker: And that Manus is a very perfect segue to this week's LightBox data. That the last of our Q3 market snapshots came out last week, and this last one focused on lender driven appraisal activity. So the good news was that appraisal demand remained remarkably steady. In Q3, the appraisal index rose 3% to 64.6. That was its highest level in three years. It was the third consecutive quarterly gain and it rose on what you just talked about Manus, the strength of CRE lending, supported by two rate cuts. Lending hit the fifth straight quarter of growth in originations and banks as a whole share of the CRE lending universe is up to 31% of the total, and that's up from 18% a year ago. So you know, that's because of the things you just talked about. Stronger balance sheets, rising profits, a more confident borrower base, and certainly a surge of refis. I will close on this, that looking ahead historically between Q3 and Q4, commercial appraisal volume declines by about 13% as the year end approaches. And that's, you know, really the market kind of pausing maybe for year end accounting, maybe pulling back and positioning for new year activity. That seasonal slowdown is already visible with October's appraisal volume down just a little bit, 4% from September. So there are more details in our just out Q3 snapshot report. 

Manus Clancy: We're starting to see the beginning of people making their predictions for 2026 and we will certainly make ours before year end. But I saw one from KBRA just last night, KBRA, being the rating agency once known as as Kroll. They said they expect CMBS lending next year to hit almost $200 billion, which would be within a hair's breath of the all time record of about $210 billion in 2007. So some bullish signs already coming out. The market is liquid right now and people I guess are expecting it to remain that way, and that's a good thing. 

Dianne Crocker: That's incredible. I hadn't seen that forecast yet. I love when the forecasts start coming out.

Alyssa Lewis: Dianne, what do you have for, or did you know for this week?

Dianne Crocker: Well the last business day of this month, Alyssa, is Friday, so that means the CRE activity index for November will be out next week. And that is our measure of the average daily volume across appraisals, across due diligence, across commercial property listings. And in the last three years after a moderate October dip, the index declined by an average of 15% into November. Now, this year's been anything but typical, but we did see a modest October dip. It still kept the index in strong three digits, so we'll know by Monday if that seasonal trend for another modest November drop shows up in the numbers. Next week. 

Manus Clancy: I'm running out of time. You might recall, I said the index was gonna hit 125 by year end. I think we were 106, down from 116 when the numbers came out last month. If seasonality says we should see a decline in November and December, I might be eating crow come New Year's Day. We'll see. I'm still optimistic that we will see a strong end to the year, but you got me a little nervous here, Dianne.

Dianne Crocker: Yeah, we'll see. I do think it will stay in the three digits, and like I said before, Manus 2025 has been anything but typical, so anything can happen. 

Alyssa Lewis: Okay. This week we're switching things up a bit, instead of jumping straight into property, let's start with policy. Manus, what's making headlines? 

Manus Clancy: So I thought this one was interesting and not in a good way. Reporting here comes from Kathryn Brenzel of Commercial Observer. They call it COPA panic. That was in the headline. Brokers and property owners sound the alarm on City Council bill. The city council being that in New York. COPA stands for the Community Opportunity to Purchase Act. It's a New York City bill that's being proposed that would grant City approved nonprofits the right of first refusal to buy buildings with three or more residential units. And Dianne coming from a city which has really led the nation in bad ideas when it's come to multifamily housing over the last hundred years, this might take the cake, right? We're talking about a situation where if it's me and I'm thinking about investing in multifamily, and all of a sudden there's this curve ball, which says at the end of this, when you wanna exit, you have to afford a nonprofit the opportunity to buy this before you put it out there for bid, this seems like a recipe for price declines, illiquidity, owners not putting any money into their property, and more downward pressure on the housing stock for affordable housing in the Big Apple. What are your thoughts? 

Dianne Crocker: A lot of downsides to this, I think for any folks in commercial real estate, but it's, you know, on the surface it's a fascinating standoff because COPA is bringing the affordable housing crisis that pretty much every big city across the country is grappling with, and it's bringing it right to the forefront. In New York, it's especially charged because housing reform was so central to the new mayor's agenda. And so here we are. You know, it's boiling down to a battle between advocates for affordable housing, back to your kind of theme word earlier in the pod, a battle between affordability advocates and deal makers. And it's raising huge questions about how far the city should go to keep housing affordable without freezing the flow of private capital that actually makes these projects happen. 

Manus Clancy: I would argue that the flow has already been shut off by 90%. If you look at what these affordable housing, rent controlled, rent stabilized properties go for now versus five or 10 years ago, they're selling at 40% discounts. And that's common in offices. It's uncommon in multifamily housing. And the reason this is happening is, number one, the city, New York City has been very aggressive in capping rent increases that property owners can pass through. Capping those rent increases at a time when inflation has been problematic. Insurance costs are higher. That's problem number one. Problem number two is the stock of the housing continues to spiral to the worst because people say, I own this property if you're gonna limit me to 3% rent increases, I'm certainly not gonna paint the hallways, I'm not gonna replace the boiler, I'm not gonna go do a new roof. And so the stock itself gets worse. And when you try to sell it, you're selling something with enormous amounts of deferred maintenance. It all adds up to me. This is just another problem waiting to happen, right? You're removing the pool of possible buyers who say, who wants the hassle of having to wait for a nonprofit to make a decision if they're gonna pay for my property, and if so, are they gonna pay market price? So it's a bad idea. The best idea I ever saw came from Bob Knackle about two or three years ago, and he pointed out that in New York City, there's an incredible amount of 1940s, fifties, and sixties, low income stock. And you know what these buildings look like, Dianne, they're brick buildings. They run somewhere between six stories and 12 stories. They sit on a nice plot of land, but they're an incredibly inefficient use of the space. And he said, go to the developers, give them the right to turn a six story building into a 30 story building. Share the profits with the city, put some limits on what the rents can be, but explode the amount of stock that you have in the city, that is the best way to solve the affordability issue. 

Dianne Crocker: I love that. We need Bob Knackle to go down and lobby for that and lobby against this bill. Do you think it'll pass? 

Manus Clancy: Well, it's New York City and New York City is really a city dominated on all of the city councils and the mayor's office by progressives, and I'd be shocked if it didn't pass, honestly. Going back to your Bob Knackle remark, I'd be the first to draft him for a run for office. The guy's levelheaded. He would fix the housing problem in short order. He knows the importance of quality of life issues to maintaining real estate values. I'm for Bob, right? I'm gonna get those t-shirts made. I'm with Bob. Sorry, Bob, I didn't mean to ruin your Thanksgiving, but let me be the first to try to lure you in to the next Mayor's race. 

Alyssa Lewis: Okay. Transitioning over to data centers. We've talked about land grabs in Northern Virginia and Arizona, but now it's Texas making headlines. 

Dianne Crocker: That's right. Alyssa Google just announced plans to go big in Texas. They are planning a $40 billion investment through 2027 to expand their cloud and AI infrastructure across Texas, and this is their largest ever US commitment. They're building three new data centers. One of them will be tied to a solar and battery plant under a massive clean energy partnership. And you know, it's interesting, Manus, these kinds of major investments by huge corporations aren't just about the investment itself. You know, they can also trigger a halo effect. So this isn't just data centers, it sparks the need for a new employee base, that means new housing, maybe new retail, infrastructure development, all to support this workforce and surrounding communities. So we've already seen it around other hyperscale data campuses in places like Arizona and Northern Virginia as you just mentioned, Alyssa. But the Texas governor, Greg Abbott is pretty psyched about this. He said the investment could help make the lone star state a national hub for AI and cloud technology because they have abundant land, they have energy capacity. And they have a very pro-business climate.

Alyssa Lewis: Dianne, jumping to New York City, an interesting story on an office conversion. What do you have for us? 

Dianne Crocker: Yeah, this was an interesting one from The Real Deal, Elizabeth Cryan. Abramson Brothers is converting its 90,000 square foot office building at 333 West 52nd Street, that's in Hell's Kitchen. They're converting that office building into a 108 unit residential property. It's the first that this longtime office landlord is doing an office to resi conversion and he's planning to use the 467-m tax incentive program for property tax break. So it's, you know, Manus, I think it's part of that growing trend that we keep talking about, office to resi conversions. This particular one is in the Hell's Kitchen area, but it's joining similar developments by firms like Yellowstone Real Estate Investments and Madigan development.

Manus Clancy: I'll be watching these ones closely because I always think of conversions as really benefiting from economies of scale, that you want to have that 40 story building where you're doing all your work at once, but you benefit at the end from having 400 or 600 units to turn over. These are smaller. These are a hundred units, and it'll be interesting to see how this turns out if these guys make money and if it leads to more and more of these. Let's hope so, because all it does is increase the housing stock in Manhattan. That's something we're all rooting for. 

Alyssa Lewis: Sticking to office. We have another one out of Chicago. What's your story there, Manus? 

Manus Clancy: Yes. This comes from Danny Ecker of Cranes who's been following the Chicago CRE market for more than a decade. He does great reporting there. This is kind of a follow on on our story last week. We talked about Worldwide Plaza last week, the fact that its loan had gone into default. The Mez lender, in this case, Gary Barnett, had jumped in hoping to take over the property by virtue of his being the Mez lender on a defaulted loan. Here, this is kind of an adjacent story. What we're talking about is a $270 million distressed loan that's tied to 500 West Monroe Street in the West Loop in Chicago. JP Morgan has listed this loan for sale. The property's owner is Spear Street. They failed to pay off the mortgage in January and they purchased a property for over 400 million in late 2019. Occupancy at the property down to 75%, having dropped from 99% a couple years ago. And Terrace Capital, Motorola Solutions both left, so why bring up this story? I bring it up just as a reminder that not all transfers of properties come via the foreclosure process. In this case, JP Morgan hones the debt. They can foreclose on the property, take it over, and then sell the asset to maximize their return, to minimize their loss. Or in this case, they're offering the loan to somebody else. They're trying to make it somebody else's problem. And so an analyst at JP Morgan said, let's do the math. We can foreclose, we can hire lawyers, we can perhaps refurbish the property. We could try to sell it for the top dollar through auction and recover as much money on our loan as we can. Or maybe a more efficient way is taking the loan. Selling it to somebody that already wants to own the property, foregoing the foreclosure process ourselves, and letting the next owner deal with this. And it's just to underscore for people that are new to the market, that every distressed asset has its own story. And in this case, for somebody who likes that property, who wants to buy it at a discount, this is an opportunity to buy the loan, work out a deal with the owner of the property, probably to have a non-judicial foreclosure, some kind of cooperative foreclosure, and own the property without going through a formal auction process. So I just found this one interesting today. And of course as always, ping Dianne and I if you have any questions about these stories. 

Dianne Crocker: Hey Manus, I have a deal for you for Thanksgiving if you wanna watch the Macy's Day parade from a hotel room along the parade route. The New York Hilton Midtown is advertising its ultimate corner view room. Starts at $3,250 a night with a four night minimum stay, and you could watch Snoopy go by right outside your window. 

Manus Clancy: It's funny you should say that because about 20 years ago. I have two brother-in-laws that are New York City firemen. Both retired now, but one was in Midtown Manhattan. And one of the nicest things one of the property owners in Manhattan would do is they would tell the firemen in the area, you could take over our office floors on Thanksgiving Day, which were on about the fifth floor, bring your own breakfast, take over the floor, and bring all your families and watch the parade from right outside the window. So for us, it felt like we could touch Snoopy on the snout. I wish I could remember who the owner of the building was because, a real attaboy for that owner who so nicely thought to reward first responders by giving up the space on Thanksgiving Day. It was a real fond memory for me and my kids.

Dianne Crocker: I love that. That sounds incredible and cheaper than the 13,000 fee that you would pay a hotel like the Hilton for a four night stay. 

Manus Clancy: I wanna pivot before we leave, I just wanted to thank our listeners for joining us during the 18 months that we've been doing this, for your questions, for your thoughtful banter back and forth via LinkedIn, email, and all the other social media out there. We enjoy having these dialogues and having these conversations and the thoughtful give and take about the commercial real estate market. So for me, I'm really thankful that we have this opportunity every week. 

Dianne Crocker: I'll second that Manus, you know, and it is very enjoyable to hear from clients or industry friends who actually tune in every single week. So I'll mention in particular, the latest is Lizz Barringer Lagomarsino, she is an environmental risk manager at JP Morgan Chase, and Liz listens every week and reached out to me this week specifically to say how much she enjoyed the oil wells data that we shared last week. So thanks Liz, for your continued loyalty and to everybody else who tunes in every week. We really appreciate it and Happy Thanksgiving. 

Alyssa Lewis: Thank you to our producer Josh Bruyning. Please join the LightBox team every week as they share CRE news and data in context. You can listen on any of your favorite podcast channels and send your comments or questions to podcast@LightBoxre.com. As always, thank you for listening and have a Happy Thanksgiving.

Manus Clancy: Let's go.