The Fed Holds Rates Steady — What It Means for Commercial Real Estate

The Fed Holds Rates Steady — What It Means for Commercial Real Estate

June 18, 2025

The Federal Reserve left its benchmark interest rate unchanged at 4.25–4.50%. This marks the fourth straight meeting with no movement, signaling a cautious approach as inflation remains sticky and geopolitical risks continue to rise.

While the Fed hinted at potential cuts later this year, commercial real estate (CRE) professionals are left navigating a high-rate environment that continues to challenge debt servicing, refinancing, and deal flow.

A Market in “Purgatory”

As described by some in the industry, the current landscape feels like a form of purgatory. CRE borrowers are caught between maturing debt and higher rates, with no near-term relief. Roughly $2 trillion in CRE loans are scheduled to mature by the end of 2025, many of which were originated at significantly lower interest rates. The refinance gap remains wide.

Extensions Are the New Norm

Lenders are increasingly offering short-term extensions or interest-only periods to well-performing properties. Borrowers with weaker assets — particularly in the office and lodging sectors — are finding fewer options.

Transactions Inch Forward, Slowly

Despite the uncertainty, there’s been a modest uptick in underwriting and deal flow. Investors and debt funds are actively exploring opportunities, but deal velocity is still constrained by capital costs and underwriting caution.

What to Watch

• Rate Cuts Likely in Q4: The Fed has suggested two cuts are still on the table before year-end, most likely starting in September.

• Inflation Remains the Wild Card: With tariffs and energy costs still pressuring prices, the Fed’s ability to pivot may depend on more than just jobs or growth.

• CRE Outlook Mixed by Sector: Industrial and multifamily remain comparatively resilient; office, Class B/C retail, and hospitality continue to struggle.

Bottom Line

The Fed’s decision to hold rates steady extends the pressure on commercial real estate—particularly on properties facing refinancing. The remainder of 2025 will likely hinge on inflation data and whether the long-awaited rate relief actually materializes.

Weitz - Everyone needing to rework loans (banks and borrowers) is praying for a 'hail mary' in which prices stay high and rates are lowered. I don't see it coming. More likely, we are kicking the can down the road to deal with these issues in the coming months/ years. Time will tell. 

For more information on Selling Snohomish County Commercial Real Estate, contact me anytime. 

Scott Weitz

Scott@WeitzCommercial.com

t: (206) 306-4034 

Perkins Coie renews lease - does this give a hint as to commercial real estate?

Seattle’s Largest Law Firm Shrinks Footprint, Upgrades Office: What the Perkins Coie Move Says About CRE Trends

Seattle-based law firm Perkins Coie, one of the region’s legal heavyweights, has officially announced a major change to its office strategy: downsizing its physical footprint by nearly half while upgrading to a premium space in the Russell Investments Center. This decision reflects broader trends in the commercial real estate (CRE) landscape and highlights how leading professional service firms are adapting to the post-pandemic workplace.

A Strategic Shift in Space

After decades headquartered at 1201 Third Avenue in the heart of downtown Seattle, Perkins Coie has signed a lease to occupy approximately 150,000 square feet at the Russell Investments Center on Second Avenue. That’s roughly 50% less than its prior footprint. Despite the reduction, the firm sees this as a forward-looking investment, aligning with its adoption of a long-term hybrid work model that emphasizes flexibility, collaboration, and employee wellness.

The Russell Investments Center—one of Seattle’s premier LEED-Platinum certified buildings—offers sweeping waterfront views, modern collaborative workspaces, on-site wellness amenities, and high-end conferencing capabilities. These features were likely key factors in the firm’s decision to relocate its more than 800 attorneys and staff.

Law Firms and the New Office Normal

Perkins Coie’s move is part of a growing trend among law firms across the country. The sector has embraced hybrid work policies and reduced space needs while remaining committed to physical office environments that offer prestige and productivity. Rather than abandoning downtown altogether, these firms are choosing to “right-size” and focus on quality over quantity.

By opting for a high-end but smaller space, Perkins Coie reinforces the emerging CRE principle that Class A office properties in prime locations will continue to perform—even as older or less desirable inventory faces prolonged vacancy. In fact, Seattle’s downtown office vacancy rate remains near 19%, but demand for trophy assets remains resilient.

Implications for the Seattle Office Market

The Perkins Coie lease signals cautious optimism for downtown landlords and investors. It shows that institutional tenants are willing to make long-term commitments—so long as the offering aligns with modern workforce expectations. For brokers and developers, this reinforces the value of investing in amenities, sustainability, and location quality.

It also raises an important question for owners of legacy buildings: how will they compete in a market increasingly driven by hybrid work models and tenant experience?

Final Thoughts

The law firm’s new lease isn’t just a relocation—it’s a statement on where the Seattle market is headed. Office space is no longer just about square footage; it’s about flexibility, employee satisfaction, and strategic alignment with how teams operate today.

As companies rethink their real estate decisions post-COVID, Perkins Coie’s move offers a valuable case study in how to adapt—and thrive—in the evolving CRE landscape.

Weitz - I've thought since the start of COVID that this would be a SLOW transition for many businesses and office space landscape. In the commercial world, many of the leases are 5-10 years or even more. COVID purely changed the way we work. No longer are the days of individual offices. Today's environment is far more about hybrid models, collaborative spaces and amenities. Of all the businesses that I would expect to not go to this model, it would be the legal world given the sensitive nature of many conversations held at firms. To see Perkins go toward this model is very telling. In my eyes, it shows that the big downtown office environment is a slowly moving but moving dramatically. 

I believe the best way to invest in commercial is out in the suburbs and more collaborative environments in areas that don't currently have Class A space. 

For more information on Investing in Snohomish County Commercial Real Estate, we're here to help: 

Scott Weitz

Scott@WeitzCommercial.com

T: 206.306.4034

Snohomish County Commercial Real Estate C-Pacer Program

Understanding the C‑PACER Program in Snohomish County: A Powerful Tool for Commercial Property Upgrades

Snohomish County’s C‑PACER Program—short for Commercial Property Assessed Clean Energy and Resiliency—is an innovative financing tool designed to help commercial property owners make energy-efficient and resilient upgrades without upfront costs. This voluntary program is gaining momentum throughout Washington, offering substantial financial and environmental benefits.

What Is C‑PACER?

The C‑PACER program allows private commercial, industrial, agricultural, and multifamily (5+ unit) property owners to obtain long-term, fixed-rate financing for improvements that enhance:

• Energy efficiency

• Water conservation

• Renewable energy generation

• Natural disaster resiliency (e.g., seismic, wildfire, flood upgrades)

Rather than traditional loans, C‑PACER financing is repaid via a voluntary tax assessment recorded against the property—not the individual borrower. The assessment stays with the property if it is sold or transferred.

Eligible Properties

The program applies to most privately owned commercial properties, including:

• Office and industrial buildings

• Retail centers and warehouses

• Agricultural and mixed-use structures

• Multifamily buildings (5+ units)

Eligible Improvements

The scope of eligible upgrades is broad and includes:

• High-efficiency HVAC and insulation systems

• Solar panels and EV charging stations

• LED lighting, energy storage, and water-saving systems

• Seismic retrofits, flood barriers, wildfire hardening

• Fire suppression systems and stormwater control

Key Benefits of C‑PACER

• No upfront capital required

• Fixed, long-term repayment terms (up to 30 years)

• Repayment is tied to the property, not the borrower

• May improve net operating income (NOI)

• Can be cash-flow positive from day one

• Improves property value and marketability

C‑PACER is especially attractive for building owners facing capital expenditure constraints, those looking to meet ESG targets, or investors in aging buildings requiring modernization.

Program Process & Costs

1. Apply through the County with a project scope and private lender identified

2. Obtain mortgage holder consent

3. Receive approval and record the C‑PACER assessment lien

4. Close financing with a qualified lender

5. Begin improvements

Cost: A $3,400 administrative fee is collected at closing to support program administration and compliance monitoring.

Local Impact in Snohomish County

Since launching in late 2021, the C‑PACER program has already helped fund projects such as:

• Commercial car wash systems with water recycling

• Solar panel installations on industrial buildings

• Seismic retrofits in older office assets

This program supports Snohomish County’s broader goal of achieving 100% clean energy by 2045 and strengthening local infrastructure resilience.

Weitz - I love this; for the right project, it can be a great tool. 

For more information on investing in Snohomish County Commercial Real Estate, contact me below: 

Scott Weitz

Scott@Weitzcommercial.com

T: 206.306.4034

Brookfield Asset MGT invests heavily into private schools.

Brookfield Backs Private School Expansion with $825 Million Investment

Brookfield Asset Management has made a bold move into the private education sector with an $825 million structured debt investment in Spring Education Group, one of the largest private school operators in the United States. Spring manages more than 100 institutions across early childhood education, K–12 schools, and online learning platforms. This deal signals Brookfield’s growing commitment to alternative asset classes that combine stable cash flows with scalable real estate infrastructure.

This investment follows Brookfield’s earlier entry into the education sector with its stake in Dubai-based GEMS Education. Together, these moves reflect a strategic pivot by Brookfield toward sectors with long-term global demand and defensible business models. Managing partner Frank Yu highlighted that the firm sees strong potential in the global private education market, driven by rising affluence, dissatisfaction with public education in some regions, and increased interest in personalized learning options.

Brookfield’s approach is more than just capital deployment. The firm intends to leverage its broader $1 trillion real estate and infrastructure platform to support Spring’s operational growth. This includes helping with property acquisition, expansion planning, and financing efficiencies—areas where Brookfield brings substantial expertise. By providing structured debt rather than equity, Brookfield maintains flexibility and downside protection while supporting Spring’s ambitions for growth.

From a strategic standpoint, this investment underscores Brookfield’s broader trend of allocating capital toward specialized operating platforms in sectors like education, healthcare, and logistics. As demand for high-quality private education accelerates globally, Brookfield appears well-positioned to benefit from long-term demographic and economic tailwinds.

This move may also signal broader investor interest in education-related real estate as a resilient, recession-resistant asset class. With more families seeking alternatives to public education and the sector ripe for consolidation, Brookfield’s backing of Spring Education Group represents a notable development in the future of privately funded schooling.

Weitz - Savvy move. This take will show you exactly how my twisted brain works. Lol..... I absolutely love this play. They get what is likely a solid return on their money in the form of debt payments with what I would guess converts to equity if they wanted...but the real genius is that if Spring Education defaults, Brookfield will get the land which is presumably in well positioned areas for dirt cheap with no governmental restriction on re-development (as you would with public schools). Win win win."Help the kids", but completely protected in a downfall.  Absolutely brilliant. 

For information on investing in Snohomish County Commercial Real Estate, contact me at Scott@Weitzcommercial.com. 

Jamie Dimon Issues Caution on Economic Outlook Amid Fading Stimulus

 

Jamie Dimon Issues Caution on Economic Outlook Amid Fading Stimulus

At a recent appearance during the Morgan Stanley conference on June 11, 2025, JPMorgan Chase CEO Jamie Dimon offered a measured but cautionary perspective on the state of the U.S. economy. While he did not predict an imminent collapse, Dimon warned that key indicators suggest the economy may soon begin to deteriorate, especially as the effects of pandemic-era stimulus continue to wane.

Dimon noted that fiscal and monetary support, which had bolstered the economy through COVID-19 and its aftermath, is largely behind us. Without these tailwinds, both business activity and consumer confidence could soften. Though headline employment numbers remain relatively strong and consumer spending has not yet stalled, Dimon emphasized that survey-based indicators are showing weakening sentiment. He also cautioned that such surveys often miss the precise moment when economic conditions begin to turn.

While the Federal Reserve and many economists have maintained that a "soft landing" is possible, Dimon warned that even under such a scenario, the economy could still experience a modest uptick in inflation, a slight drop in employment, and continued labor market pressure stemming from reduced immigration levels. He highlighted the risk this poses to wage stability and hiring in key sectors.

Of particular concern was Dimon’s view of the private credit market. He warned that the rapid growth of non-bank lending structures, where banks originate deals but pass risk to investors, may leave many market participants vulnerable if the economy sours. He described the potential scenario as one where investors, not banks, may be “holding the bag” should defaults begin to rise.

Despite these concerns, Dimon did not strike an alarmist tone. He described the current environment as one showing “soft cracks” rather than a structural collapse. His outlook reflects a growing sense of caution among financial leaders who see rising interest rates, global trade instability, and policy uncertainty as mounting headwinds for the second half of 2025.

This warning from one of Wall Street’s most influential voices may be a signal for businesses and investors to prepare for a more volatile economic climate ahead. As always, prudent risk management and careful market observation will be critical.

Weitz - First off, I have the utmost respect for Mr. Dimon. For 20+ years, he's led one of the most powerful banks in the world through major ups and down like a master chess player..... so when he talks, I listen. 

Having been a fan of his for years, I will say he almost always paints a rosy picture in interviews but will give little hints here and there of his actual feelings. For him to come and say this openly is a BIG deal in my opinion.  It shows he's very concerned about where things are headed. I wouldn't be surprised if we see him stepping down from his CEO role shortly as he won't want his name on a potential downturn. We shall see. 

If you read this blog at all, you know that I completely agree with his sentiments and would add in that AI will/ is change the work force dramatically and it's coming incredibly quickly. I see tectonic shifts in the way the economy operates and how we even function as a society and that doesn't come without significant challenges especially in an already hostile and contentious political country. Half the country sees the world completely different than the other half. I try to stay outside of politics and be just an observer, but it's clear that since COVID our worlds simply have different lenses on them. If you want a great read on this, I highly suggest reading a book (or audio) by Ray Dalio called "The Challenging World Order:  Why countries succeed and fail". It's both fascinating a little scary. 

Given these major issues brewing, I think the smart money is sitting back and waiting for what's to come with a cautious eye. If you have a lot of property and are leveraged in a significant way, I'd highly suggest taking some profits and diversifying. 

For more information on Investing in Snohomish County Commercial Real, contact me below. 

Scott Weitz

Weitz Commercial

t: 206.306.4034 (text first to arrange a call)

Scott@Weitzcommercial.com

Snohomish County Commercial Real Estate Market Update – June 2025

The Snohomish County commercial real estate market is showing signs of stabilization and selective growth as we head into the second half of 2025. While national trends are still facing headwinds, Snohomish County remains resilient across several sectors.

Office Market

The office sector continues its gradual adjustment. As of the end of Q1 2025, the vacancy rate stood at 13.2%. While this reflects a modest increase from prior years, there has been steady leasing activity, particularly in suburban locations offering flexible layouts. Average asking rents have remained stable, though concessions and tenant improvement allowances are playing a larger role in negotiations.

Industrial Market

Snohomish County remains a bright spot in the regional industrial sector. The current vacancy rate is 7.2%, up slightly but still historically low for this market. New developments are underway, focusing primarily on logistics and distribution centers driven by sustained e-commerce demand. Investor interest remains strong, particularly for well-located assets with stable long-term leases.

Retail Market

Retail continues its slow transformation. Centers are focusing on blending traditional retail with food, services, and experiential offerings to attract foot traffic. Alderwood Mall remains the county’s flagship redevelopment story, as it evolves into a mixed-use, lifestyle destination. Retailers are heavily emphasizing omnichannel strategies to align with changing consumer behavior.

Multifamily Housing

The multifamily sector remains healthy with strong occupancy levels. Snohomish County continues to see demand for rental housing across price points, supported by consistent population growth. Several new apartment developments are in the pipeline, designed to meet both workforce and luxury rental demand. Investment activity remains steady, with investors seeking stable returns in this supply-constrained market.

Infrastructure and Transportation

The Lynnwood Link light rail extension, which opened in August 2024, has already started to reshape transit-oriented development opportunities throughout southern Snohomish County. Mixed-use projects near light rail stations are attracting new attention from both developers and investors, who are targeting the region’s long-term growth.

Summary

While the market is not without its challenges—particularly in office space—Snohomish County commercial real estate remains on solid footing across industrial, multifamily, and key retail locations. Investors, landlords, and tenants who are prepared to navigate this evolving environment can still find meaningful opportunities in the months ahead.

BOTTOM LINE TAKE: While anyone that reads this blog knows that I'm generally pessimistic about residential and a lot of commercial real estate, I think Snohomish has as strong as prospects as any. The zoning changes are a huge deal, and I believe Everett and Snohomish are ripe for a strong decade or two. I often say that a single strong Tech company making Everett a HQ or large satellite office will ignite the timbers of a historically under served and under-utilized area. With the airport, Everett Port and zoning that seems unfathomable given the current city scape, I think Snohomish County will withstand any headwinds we face better than most. 

For information on our Snohomish County Investment Fund, or Snohomish County Commercial Real Estate investing, you can reach me directly below. Email or text preferred and we can set a time to discuss your needs. 

Scott Weitz

Scott@WeitzCommercial.com

T: 206.306.4034. 

More office space being 'demo' than created.

CNBC Office Update: 

 

The basics: 

CNBC indicates that 23.3 is slated for demolition or conversion to other uses while only 12.7 M SF of office space is projected to be completed. 

Office vacancies currently at a record high of about 19%. 

Markets starting to recover with 'back to work orders'. 

Weitz - This is such a tough one. Classic example of how to turn bad news (offices are so worthless that they are being converted) into a 'good news' supply/ demand argument. At the end of the day, the best spaces will be taken and utilize. I love areas that are not within the large cities as those on the outskirts no long desire the commute to head into the big city. I think the B-C level office spaces (especially in big cities) face significant head winds. While the back to work orders are helpful, the reality is that we have changed the way we work and operate. Communal work spaces are now favored by many and part time office usage makes the 'footprint' businesses need shrink in terms of SF usage. Overall, I'm not sold that this supply/ demand shift will send the market soaring, but I do believe the shared work spaces will make a big comeback. Think a more reasonable 'WeWork' in the suburbs. 

If you are looking at investment opportunities in Snohomish County Commercial Real Estate, feel free to reach out anytime. 

Scott Weitz

Scott@WeitzCommercial.com

t: 206.306.4034. 

U.S. Housing Inventory Surges: New Listings Reach Highest Level in Nearly 3 Years

Here we go...

Recent article from Redfin on increased national residential  listings. See original article HERE.

The Summary. 

The housing market is experiencing a notable shift. According to a new Redfin report published on May 22, 2025, new listings of U.S. homes for sale have climbed 8.4% year over year for the four-week period ending May 18, 2025. This marks the highest number of new listings since mid-2022, signaling growing inventory levels across the country.

Despite the increase in listings, buyer demand remains soft. Pending sales have declined 2.2% year over year, making it the lowest level of pending sales for this time of year going back at least a decade. The mismatch between new supply and buyer activity is pushing total active inventory higher, with total homes for sale now up 14.3% year over year. This is the highest level of active listings in nearly five years.

The increase in listings appears to be driven by a combination of economic and personal factors. Some homeowners are opting to list now due to concerns that home prices may soften in the near future. Others are selling due to life events such as job relocations, downsizing, or changes in family circumstances.

Affordability challenges continue to weigh heavily on buyers. The median monthly mortgage payment has reached an all-time high of $2,882, a result of elevated home prices combined with high mortgage rates. This financial strain has sidelined many would-be buyers, contributing to slower sales activity even as inventory rises.

The market now faces an unusual dynamic: increasing inventory paired with tepid buyer demand. While more listings offer greater choices for buyers, the affordability crunch and economic uncertainty are keeping many on the sidelines for now.

WEITZ - As I've been saying for some time in this blog (See March, 2025 post), INVENTORY will dictate this market. This isn't a huge surprise and I expect inventory to elevate as people start to see weakness in the market and will seek to lock in some long standing "profits". 

For information on Investing in Snohomish County Commercial Real Estate, feel free to reach out anytime.  

Scott Weitz

Weitz Commercial

Scott@Weitzcommercial.com

C: 206.306.4034

Washington House Bill 2049: What It Means for Schools and Local Communities

Washington House Bill 2049: What It Means for Schools and Local Communities

Washington House Bill 2049 (HB 2049), passed during the 2025 legislative session, brings major changes to K–12 education funding across the state. Here's what you need to know about this significant legislation and how it may affect your school district and property taxes.

Purpose of HB 2049

HB 2049 is designed to enhance public school funding while offering additional support to communities with lower property tax bases. It aims to address both equity and inflation in the state's school funding model.

Key Provisions of the Bill

1. Revised Enrichment Levy Limits
   School districts can now levy up to $2.50 per $1,000 of assessed property value for enrichment purposes.

2. Inflation Adjustments
   The bill includes a new “inflation enhancement,” starting with an additional $500 in 2026 and increasing adjustments through 2030.

3. Per-Pupil Funding Tiers
   Per-student funding caps will rise annually, reaching $5,035 per pupil by 2031, with tiers based on district size.

4. Updated Local Effort Assistance (LEA)
   LEA calculations have been modified to provide more support to districts with low property values and tax bases.

5. New K–12 Funding Equity Work Group
   A legislative work group will study funding formula changes and explore equity-based solutions, reporting annually through 2027.

Legislative Journey

• Introduced: March 24, 2025

• Passed House: April 22, 2025 (50–48 vote)

• Passed Senate: April 26, 2025 (28–20 vote)

• Delivered to Governor: April 27, 2025

What Was Removed

Earlier versions of HB 2049 included a property tax cap increase from 1% to 3% for local governments. However, this provision was dropped after facing political and public pushback.

Weitz Take: Enjoy your tax hikes. I think charter schools should be strongly explored. 

Moody's is a rag...public service announcement.

 Moody’s Just Downgraded the U.S. Credit Outlook.

But Let’s Not Forget...

Back in the mid-2000s, Moody’s and other major credit rating agencies gave AAA ratings to mortgage-backed securities that were anything but safe...that were the catalyst of the late 2000s market crash.

If you want to make the argument the US will lose our reserve currency status, that's a relevant conversation, but as of today, the US still has a Federal Reserve system that will 'fund' whatever US Treasuries or debt needed to fund government operations...bottom line, for better or worse, we have a fiat currency and have zero risk of default.

Just a little reminder as the world freaks out about this US Credit downgrade.... don't forget the messenger.

Commercial Real Estate Loan Maturities Create Growing Pressure on Borrowers and Lenders

 

2025 Commercial Real Estate Loan Maturities Create Growing Pressure on Borrowers and Lenders

The commercial real estate market is facing a critical juncture as a significant volume of loans come due in 2025, potentially triggering a wave of financial strain for borrowers holding distressed properties.

According to a February survey by the Mortgage Bankers Association, roughly 20% of the $4.8 trillion in outstanding commercial mortgages—about $957 billion—is scheduled to mature this year. This marks an increase from the $929 billion that matured in 2024. The rise in maturing debt is largely attributed to the numerous short-term extensions granted during the Covid-19 pandemic and the period of rapidly rising interest rates that followed.

Compounding the issue is the growing share of loans that are delinquent or at risk of delinquency. Moody's Ratings reports that its CMBS Conduit/Fusion Delinquency Tracker climbed to 7.87% in March, nearing the pandemic peak of 7.95% seen in June 2020. In March alone, $2.76 billion in loans became delinquent, with office properties representing nearly 29% of that figure, followed by retail at 26.7% and hotel loans at 9.6%.

Borrowers are facing tough negotiations, especially those with legacy loans carrying interest rates of around 3%, now confronting potential refinancing rates closer to 7%. This challenge is compounded by declining property values—particularly in the U.S. office market, where values have dropped by more than 20% in some segments.

Interest rates remain a key variable. Despite three rate cuts by the Federal Reserve in 2024, the Fed has so far held rates steady in 2025. Chairman Jerome Powell recently noted that the Fed is closely watching developments in tariff negotiations with key trading partners. The Mortgage Bankers Association highlighted that many commercial property owners hoping to benefit from lower rates after last year’s Fed cuts were disappointed, as longer-term rates simultaneously rose by an equivalent margin. This has resulted in further loan extensions into 2025. The association forecasts that long-term rates will stay rangebound for now, making the refinancing landscape even more challenging.

"I suspect that this time around, despite the looming maturity wall, lenders will continue to work with borrowers as best they can to slow play through this situation," Krawitz said. "Everyone benefits immensely by not unnecessarily forcing someone’s hand."

WEITZ- This has been an ongoing issue for the last few years and the market keeps 'kicking the can down the road'. None of this surprises us, but the depth and degree of the distress is staggering. As we have said for months (if not years), the intermediate term future of the market will certainly be interesting....especially if we start to see some bank failures/ distress....which frankly we expect. 

If you are interested in joining our newsletter, please email me at Scott@WeitzCommercial.com, or if you are looking to invest or divest in Snohomish County Commercial Real, contact me below. 

Weitz Commercial

Scott Weitz

Scott@WeitzCommercial.com

T: 206.306.4034 (text first please). 

Martin Selig Challenges Seattle

 

Martin Selig Real Estate Faces Unprecedented Financial Challenges in Seattle

Martin Selig Real Estate (MSRE), once a dominant and iconic player in Seattle's commercial property landscape, is currently facing its most significant financial crisis to date. The firm, long recognized for shaping the city's skyline, has defaulted on more than $800 million in loans tied to 18 office buildings.

 This crisis has been driven largely by the steep downturn in the office market, which continues to suffer from persistently high vacancy rates and a post-pandemic shift in office demand.

In April 2025, MSRE made the difficult decision to relinquish ownership of two major properties—400 Westlake, a recently completed, eco-friendly office building, and the historic Federal Reserve Building. Both buildings were handed over to the lender, Acore Capital, following defaults on a $240 million loan. These properties were particularly hard hit, with reported vacancy rates of 94 percent and 82 percent, respectively.

The financial strain has also led to court-ordered receiverships involving seven additional properties, which together account for approximately 1.1 million square feet of office space in Seattle. In conjunction with these developments, the company initiated significant workforce reductions, laying off 86 employees as it attempts to stabilize its operations.

Further compounding its financial woes, MSRE also defaulted on another $135 million in debt secured by a cluster of buildings located near the iconic Space Needle. These latest defaults further underscore the depth of the firm's financial distress as the Seattle office market continues to deteriorate.

These developments are emblematic of the broader struggles facing Seattle's commercial real estate sector. The city’s central business district has seen vacancy rates soar to unprecedented levels, reaching an estimated 30 percent as of early 2025. The ripple effects of this market disruption have placed immense pressure on even the most established landlords.

While Martin Selig Real Estate has weathered past downturns, including the Great Recession, the scale and severity of the current crisis raise serious questions about the company’s future. The firm’s challenges reflect both the seismic shifts in the office leasing market and the broader uncertainty surrounding urban commercial real estate in a post-pandemic world.

Weitz Take: 

If you read this blog, this is no surprise at all. I expect more of this type of pain. Unwinding of real estate debt is simply never a slow process. Sincere thanks to Mr. Selig for all he has done for the Seattle market. It's a sham to see it ending in such a fashion.  Despite what you may know, debt isn't always the best way to grow. 

For more information on Puget Sound Commercial Real Estate, shoot me a call or text today. Info below. 

Weitz Commercial

Scott Weitz, Attorney and President

Scott@Weitzcommercial.com

Washington enacts statewide rent cap on residential rentals

 

Washington Enacts Statewide Rent Cap on Residential Rentals

Washington state has officially implemented a statewide rent control law with the passage of House Bill 1217, signed by Governor Bob Ferguson on May 7, 2025. This landmark legislation introduces rent stabilization measures aimed at providing stronger housing security for tenants across the state.

Below is a summary of the laws. Frankly, while there is a lot of talk on this, I don't think the caps are absurd. 

Under the new law, annual rent increases for most residential properties are capped at the lesser of 7 percent plus inflation or a hard cap of 10 percent. 

Manufactured and mobile home rents are subject to a lower annual cap of 5 percent, with this provision having no expiration date. The statewide rent cap takes effect immediately and is scheduled to remain in place for 15 years.

Additionally, the law prohibits landlords from raising rents during the first 12 months of a new tenancy. 

EXEMPTIONS: 

Certain property types are exempt from the new law, including 

a. newly constructed properties for the first 12 years after completion, 

b. owner-occupied duplexes, triplexes, and fourplexes, as well as 

c. public housing authorities and designated low-income housing developments.

and more importantly, COMMERCIAL REAL ESTATE. 

NEW NOTICE REQUIREMENTS

The law also tightens notice requirements, mandating landlords provide at least 90 days' written notice before any rent increase, an increase from the prior 60-day rule.

TENANT RIGHTS UPON DEFAULT

If a landlord imposes an unlawful rent increase beyond the allowed cap and the property does not qualify for an exemption, tenants have the right to provide notice of the violation. 

They may also terminate the lease with 20 days' written notice without penalty and may pursue legal action, including damages of up to $7,500 per violation recoverable by the Attorney General.

Supporters of the legislation argue that these measures are necessary to prevent excessive rent hikes and protect tenants from housing instability, especially amid ongoing affordability challenges. Critics, however, contend that the rent cap could discourage new housing development and may reduce investment in property maintenance.

Washington now joins Oregon and California as one of only three U.S. states with statewide rent control measures, signaling a growing legislative trend to address housing affordability concerns.

BOTTOM LINE: This will be interesting to see if it effects development. I don't think a 10% max increase is that absurd (especially with all these ADUs coming into play that will increase inventory). 

I'd say there will be some sort term hit on overall demand for multi-family, but in the long term, I don't see this as that big of an issue. If you told LLs now that they could buy a place and increase rents 10% a year, most would be thrilled. 

For more information on Washington Commercial Real Estate Investing, considering contacting a Snohomish County Commercial Real Estate Broker or contact me at information below. 

Scott Weitz

Weitz Commercial

Scott@weitzcommercial.com

Text: 206-306-4034

April 2025 National Commercial Real Estate Market Update

As of April 2025, the U.S. commercial real estate (CRE) market continues to show a mixed performance across property sectors, with some areas stabilizing while others remain under pressure. Our comments within. 

Office Sector: Challenges Continue

The national office vacancy rate climbed to 19.9% in March 2025, up 170 basis points from the previous year. Tech-heavy markets such as San Francisco (28.6%), Seattle (27.5%), and Austin (28.5%) are experiencing heightened vacancies due to sustained remote and hybrid work trends. Distressed sales continue to play a role, with 10.8% of 2024 office transactions involving distressed assets. However, demand for premium office space remains in select cases, such as Deloitte’s recent 800,000-square-foot lease at 70 Hudson Yards in Manhattan.

Weitz - Not surprising at all. I don't see this changing soon. We still have leases turning over that were set before COVID and the 

Industrial Sector: Slowing Momentum

The industrial sector has cooled after a pandemic-driven boom. Net absorption dropped 42% year-over-year to 114 million square feet. Rising supply has driven vacancy rates to 7.0%, while rent growth slowed to 2.0%. Logistics facilities remain the top performer in absorption, but flex spaces are now seeing more vacancies than gains.

Weitz - this is a curious one as every assumed industrial would be the "Belle of the Ball", but I'm not shocked. I see most sectors struggling in the coming years. 

Retail Sector: Stability Holds

Retail remains the most stable commercial property type. General retail vacancy rates remain low at 2.6%, despite a 77% drop in net absorption year-over-year. Rents continue to rise modestly, with a 1.9% increase, while vacancy rates inched up by just 0.1 percentage points.

Weitz- People still need goods and services; this doesn't shock me. 

Multifamily Sector: Signs of Recovery

The multifamily sector showed strong performance, with net absorption rising 46% to nearly 551,000 units. Vacancy rates held steady at 8%, and rent growth was modest at 1.1%, indicating a balanced environment between supply and demand.

Weitz - Love multi-family especially in the outskirts. People need homes, can't afford to buy in many instances, and can work further from work typically. 

Investment Trends: Capital Eyes Distress

Investor interest in distressed assets continues to grow. Brookfield Asset Management raised nearly $6 billion in Q1 2025 to invest in undervalued commercial properties. Meanwhile, the Green Street Commercial Property Price Index dipped slightly by 0.5% in April but is up 4.3% over the past 12 months, showing long-term optimism.

Weitz - Not surprised at all. We are doing the same (on a much smaller scale albeit). 

Conclusion

Overall, April 2025 paints a cautiously optimistic picture. While office markets continue to lag, other sectors—particularly multifamily and retail—show signs of resilience. Investors are increasingly positioning themselves to capitalize on distress, suggesting potential opportunities in the months ahead.

For more help with Snohomish Commercial Real Estate, please feel free to reach out to me below. We can help with purchasing, leasing and/or investment. 

Sincerely, 

Scott Weitz

Scott@WeitzCommercial.com

The Benefits of Investing in an Opportunity Zone – Everett, Washington

The Benefits of Investing in an Opportunity Zone – Everett, Washington

Investing in Opportunity Zones (OZs) offers a compelling path for investors seeking both tax advantages and the ability to contribute to the economic revitalization of underserved communities. In Everett, Washington, designated OZs provide unique opportunities for strategic real estate and business investments.

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What Are Opportunity Zones?

Opportunity Zones are low-income census tracts nominated by state governors and certified by the U.S. Department of the Treasury. Created under the 2017 Tax Cuts and Jobs Act, the program encourages long-term private investments in economically distressed areas by offering federal tax incentives.

Where are they in Everett? Glad you asked...see link below!

Everett Opportunity Zones

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Everett's Opportunity Zones: A Strategic Location

Several areas in Everett have been designated as Opportunity Zones, including parts of Downtown Everett and neighborhoods near Paine Field. These locations are well-suited for:

• Urban revitalization projects

• Workforce and affordable housing

• Mixed-use and commercial real estate

• Startup and small business growth

Everett’s focus on infrastructure investment, economic development, and population growth makes it a strong candidate for OZ investment.

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Top Tax Benefits for Investors

1. Capital Gains Deferral
   Reinvest capital gains into a Qualified Opportunity Fund (QOF) and defer federal taxes until the earlier of:

   • The date you sell the QOF investment

   • December 31, 2026

2. Basis Step-Up for Long-Term Holding

   • Hold for 5 years: receive a 10% exclusion of the deferred gain

   • Hold for 7 years: receive an additional 5% exclusion (15% total)
     (Note: Due to the timing, the 7-year benefit expired after 2019, but the 5-year benefit may still apply.)

3. Tax-Free Gains on QOF Investment

   • If the QOF is held for 10+ years, investors can exclude any additional gains from the QOF from taxation altogether.

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What Types of Projects Work Well in Everett?

• Multi-Family Housing: Take advantage of rising demand and local rezoning efforts.

• Retail & Industrial Redevelopment: Revitalize underused commercial corridors.

• Office to Residential Conversions: Tap into zoning changes and adaptive reuse incentives.

• Local Business Expansion: Partner with or invest in businesses that create local jobs and qualify under OZ guidelines.

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Tips for Investing in Everett’s Opportunity Zones

• Work with a Local Broker: A commercial real estate professional with Everett experience can help identify viable properties and off-market deals.

• Join or Create a Qualified Opportunity Fund (QOF): This is the legal entity through which OZ investments must be made to access tax benefits.

• Consult a Tax Professional: OZ investments have specific rules—proper legal and tax advice is critical.

• Review City Incentives: Everett and Snohomish County may offer additional local grants, permitting fast-tracks, or tax abatements.

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Final Thoughts

Everett’s Opportunity Zones represent a chance to grow your wealth tax-efficiently while making a positive impact on the community. Whether you're looking to build, redevelop, or invest in a business, the combination of strong fundamentals and OZ tax incentives makes Everett a compelling place to invest. I WILL POST A LARGE PICTURE IN MY NEXT POST OF AVAILABLE OPPORTUNITY ZONE LOCATIONS. 

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Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or investment advice. Consult with your CPA, attorney, or investment advisor before acting on any investment opportunity.

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For more information Snohomish County Commercial Real Estate, reach out anytime. 

Scott Weitz

Weitz Commercial

T: 206-306-4034 (please text on initial communication). 

Scott@Weitzcommercial.com 

Snohomish County Q1 Market Update

 

Snohomish County Commercial Real Estate Market Update – Q1 2025

Published by Weitz Commercial | May 2025

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Market Overview

Snohomish County’s commercial real estate (CRE) market continued to navigate a shifting landscape in Q1 2025. Despite challenges like high interest rates and cautious lending, both the multi-family and office sectors remained active, especially in high-demand suburban areas such as Everett, Lynnwood, and Bothell.

Multi-Family Snapshot

• Vacancy Rate: ~4.8%

• Rent Growth: +1.2% quarter-over-quarter

• New Starts: 312 units (↓40% vs. Q1 2024)

• Investor Focus: Value-add Class B/C deals near transit lines

Office Sector Update

• Vacancy: 18.6%

• Leasing Activity: Modest rebound, led by medical and professional services

• Conversions: Aging suburban offices are being eyed for residential or mixed-use redevelopment

Bothell and Lynnwood are gaining traction from smaller tenants needing flexibility outside of Seattle.

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Investment & Sales Trends

• Transaction Volume: Low, with selective private and 1031 exchange buyers dominating

• Cap Rates: ~6.1% (multi-family), ~7.3% (office)

• Buyer Sentiment: Conservative but opportunistic, especially near transit expansion areas

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Development Drivers

• Lynnwood Link Extension (Sound Transit) is boosting TOD interest

• Zoning changes in Lake Stevens and Everett are enabling denser multi-family development

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 Notable Q1 Transactions

Property	Submarket	Type	Price	Buyer
The Willows Apartments	Everett	Multi-Family	$18.2M	Private Equity
Pacific Office Plaza	Lynnwood	Office	$12.5M	1031 Buyer
Lakeview Medical Complex	Bothell	Medical Office	$7.1M	Owner-User

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Looking to buy, sell, or reposition a commercial asset in Snohomish County?

Scott@Weitzcommercial.com

T: 206-306-4034

China threats to Housing Market with MBS holdings

 Happy Spring!

With Spring Break and busy workload, I've neglected posting for a while, but nice to be back on a normal schedule and having time to write a bit. 

Every once in a while, I learn things that absolutely blow my mind (for better or worse). A recent article on CNBC certainly got my attention to that end. 

Below is a link to the Article related to Chinese owned mortgage-backed securities and the potential risks they pose to the US Mortgage and housing markets. 

CNBC Article

As usual, I'm provide what I see as the important highlights and give my overall take at the conclusion: 

1) At the end of January, Foreign Countries owned 15% of all Mortgage-Backed Securities in the US according to Ginnie Mae;

2) If China were to sell, it would likely spook the market and send mortgage rates higher; 

3) The Fed Reserve is currently letting the MBS foll off of its portfolio in an effort to shrink its balance sheet. 

Weitz - Call me ignorant, but I had no idea foreign countries owned such a large share of our MBS market. Furthermore, I can't fathom why the fed would be reducing its portfolio with obvious weakness in the market at the moment. This is just more fuel to the fire that i) rates will likely remain high for the indefinite future; 2) this coupled with increasing inventory poses trouble for many areas of the country. 

It sure feels like a house of cards to me at the moment. Time will certainly tell. 

For information related to Snohomish County Commercial Real Estate or Snohomish County Real Estate Investments, feel free to reach out any time. 

Scott Weitz

Scott@WeitzCommercial.com

T: 206-306-4034

108 Union St

Snohomish, WA 98258

FHA delinquencies rise dramatically and inventory increasing across the nation

 

Recent CNBC updates on national housing statistics and delinquency levels. 

First off, we have big news on FHA delinquencies which rose to 11.3% of ALL LOAN ARE IN DEFAULT. To be fair, the total mortgage delinquency rate is 3.98%. That said, the FHA rate in my eyes is clearly a leading indicator and will obviously be a higher number as the down payment requirement is only 3.5%. If/ when  those properties go into foreclosure, that will lead to more distressed sales....more price cuts and the negative cycle continues from there. 

Another video on pending home sales which fell to the LOWEST LEVEL EVER (since they starting tracking the stats at least in 2001.  

That said, inventory levels up 27.38% YOY from last year. It doesn't take a Ivy League economist to see that supply/ demand 101 would indicate that we have some troubles ahead. As I've been saying for months, this market simply doesn't pencil with interest rates at current levels especially if you look at the layoffs we are seeing in various industries. 

NWMLS February Market Stats

 

Below are the recent stats of the NWMLS for February 2025 ...

Active Listings

• The number of homes for sale increased 39.4% year-over-year throughout the NWMLS service area. There were 10,448 active listings on the market at the end of February 2025, with 24 out of 26 counties seeing a double-digit increase compared to February 2024. When compared to the previous month, active inventory increased by 207 listings (+2%), up from 10,241 in January 2025.
• The six counties with the highest increases in active inventory were Kittitas (+76.7%), Snohomish (+65.3%), Grant (+54.2%), King (+52%), Whatcom (+48.2%) and Chelan (+42.7%).

Closed Sales

• There were 4,268 closed sales of residential homes and condominium units in February 2025, an increase of 1.9% when compared to February 2024 (4,189). When compared to the previous month, the number of closed sales increased by 14.5%, up from 3,727 sales in January 2025.
• The total dollar value of closed sales in February 2025 for residential homes was $2,856,599,410 and $463,877,754 for condominiums ($3,320,477,164 in total), an increase of 5% when compared to February 2024.

Median Sales Price

• Overall, the median price for residential homes and condominiums sold in February 2025 was $630,000, an increase of 3.6% when compared to February 2024 ($608,111).
• The three counties with the highest median sale prices were San Juan ($880,000), King ($820,000) and Snohomish ($734,975), and the three counties with the lowest median sale prices were Columbia ($224,000), Pacific $292,500) and Okanogan ($322,500).

New Construction

• NWMLS brokers reported 745 closed sales of new construction units in February 2025. This was a year-over-year decrease of 12.1% when compared to February 2024 (848 units).
• The median sales price for new construction units sold in February 2025 was $773,420, an increase of 5.9% from the February 2024 price of $730,000.

Weitz Take: 

YOY price increase of 3.6% would seemingly be good thing (and unto itself it is), but the real takeaway here for me are the massive inventory hikes..... Supply and Demand 101 would say that we will likely start to see some price drops in the near future. Interest rates are falling but will that be enough to buoy the market?...I question it. As I've said for a long time, INVENTORY is the key as to where we predict the market to go. 

For more information, consider contacting a Snohomish County Commercial Real Estate Broker. 

Scott Weitz

t: 206-306-4034

Scott@weitzcommercial.com

FHA Delinquency Report

Below numbers from FHA.... this is direct cut and paste from the report I read. As I've been saying for months.... buckle up. 

FHA Report on Delinquencies

The FHA’s latest report showed that 30-day mortgage delinquencies rose to 6.0% in November 2024, which is up 2.1% from the beginning of 2022.

Serious delinquencies, or those 90+ days delinquent, have also begun to rise. Within the report consumers shared the reason for not being able to make mortgage payments.

Consumers saying that they cannot make a payment due to being unemployed has risen significantly. The share reporting this back in Q4 2020 was 1.8%, which then rose to 7.7% in Q4 2023, and more recently rose to 12.1% in Q4 2024! That is a huge increase, potentially showing that the labor market may not be as strong as the published figures are showing.

Additionally, those not able to pay because of excessive obligations, or too much debt, has risen from 2.71% in Q4 2020 to 20.1% in Q4 2024.

Another sign that consumers are stretched and overloaded with debt.

Wells Fargo CFO take on CRE

 

A recent article in the Puget Sound Business Journal highlighted the CFO of Wells Fargo. 

Since the article is behind a pay wall, I will outline the highlights/ lowlights and give my take as usual. 

CFO Mike Santomassimo had the following takes on the state of the CRE market: 

"Commercial Real Estate Office fundamentals have not changed and remain weak". 

"We expect CRE office losses to be "lumpy" as we continue to actively work with our clients. We are 18 months into seeing the losses materialize...we have 'quarters' to go. 

Weitz - I'm laughing as I expected this article to be so much more (more terrific journalism these days), but since we've gone this far, I won't waste the quotes as as the premise is still material for our purposes. 

When Bank CFOs are telling listeners on a earnings call where they typically will paint as rosy picture as possible to maintain or boost stock prices, its worth listening. Obviously, all CRE is local and some markets will fair better than others, but this general opinion matches my thoughts in that both owners and lenders and 'kicking the can' and praying for miracle to save them. At some point, they will have to take losses barring a dramatic shift. That could be very, very....very.....ugly. 

As our new President takes office, I commend his pro-business mentality, but I don't see him have the power to turn the ship around for better or worse. 

For more information on Snohomish Commercial Real Estate, follow this blog or shoot me an email. 

Have a great weekend, 

Scott Weitz

Weitz Commercial

www.weitzcommercial.com

t: 206.306.4034

NWMLS Release - 2024 December Stats

 

NWMLS December Release

December 2024 Key Takeaways

Active Listings

• The number of homes for sale increased 25% year-over-year throughout the NWMLS coverage area, with 21 out of 26 counties seeing a double-digit increase compared to December 2023.
• The five counties with the highest increases in active inventory for sale were Snohomish (+46.1%), Douglas (+43.3%), Cowlitz (40.8%), Grant (+39.9%) and Skagit (+38.2%).

Closed Sales

• There were 4,812 closed sales of residential homes and condominium units, an increase of 19.8% when compared to December 2023 (4,018).
• The total dollar value of closed sales in December 2024 for residential homes was $3,284,574,394 and $409,740,278 for condominiums ($3,694,314,671 in total), an increase of 24.8% when compared to December 2023.

 Median Sales Price

• The median price for residential homes and condominiums increased by 4.3% year-over-year from $597,975 in December 2023 to $623,500 in December 2024. Prices decreased month-over-month by 3.33% when compared to November 2024 ($645,000).
• The three counties with the highest median sale prices were San Juan ($849,500), King ($800,000), and Snohomish ($744,995), and the three counties with the lowest median sale prices were Ferry ($125,000), Adams ($292,300) and Pacific ($320,000).

WEITZ - I just posted the national stats and not surprising to see Washington numbers worse. These are NOT good for the market. I'm shocked I'm the only one talking about this right now, but you can't escape reality indefinitely. I will double down on my take that we reached the top of the Washington housing market for the indefinite future, and I predict this unwinding will take years. Stay tuned. 

My Contact: 

Scott Weitz

Scott@dcseattle.com

t: 206.306.4034