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