BREAKPOINT ADVISORS INSIGHTS
Welcome to our quarterly newsletter.
Since quarterly kick-off calls with our clients and appraisal management teams are becoming more prevalent, we figured we would ride the wave and post our thoughts more formally and more broadly. So look for our quarterly insights on a go-forward basis. We honestly love having these conversations, and we hope you find our musings relevant and helpful.
Big theme – markets continue to price and transact through the noise.
Look Back - Q3 2025
Real estate investors appear to be coming off the sidelines as there is growing consensus that we are at – or near – bottom. As noted by Green Street in their August U.S. Commercial Property Outlook, real estate fundamentals are decent, but vary by sector. Senior housing and data center fundamentals are best, while life science and office fundamentals are weakest.
Bolstering Green Street’s research, NCREIF ODCE Valuation Trends on an overall basis turned green in 2Q25. On pure basis, retail was the outperformer with values increasing $35 per square foot since 1Q25 and up $50 per square foot year-over-year. To no one’s real surprise, office continues to struggle, but the downward slide appears to be flattening. For all ODCE office assets that report, the percentage leased ticked up 20 basis points from 1Q25, now averaging 81 percent, which is a modestly heartening sign. That being said, there were absolutely end-of-quarter further write-downs for certain office buildings in certain markets as the abundance of supply and near-absent tenant demand forced us all to face the music. There remains a significant bifurcation in office values, depending on class. Essentially, it’s Trophy office…and everything else. To be fair, there are opportunities to be had for savvy investors with deep local market expertise, such as Synergy in Boston.
Similarly, the NCREIF Property Index recorded its second consecutive quarter of positive appreciation. As a reminder, appreciation turned negative in 3Q22 and emerged into positive territory 10 long quarters later in 1Q25. It’s been a slog, and despite the rockiness in the federal government, markets are generally seeing conditions as favorable for CRE as an asset class and are anticipating future rate cuts.
Look Ahead - Q4 2025
And with that sense of cautious confidence underpinning the commercial real estate market, we are also, honestly, a bit surprised by the apparent nonchalance. Interest rates remaining elevated is typically a good sign for multifamily, for example. But according to a recent report by Pew Research, by June of this year, the country’s foreign-born population had shrunk by more than a million people, marking its first decline since the 1960s. Assuming we stay on this trajectory, that should be a red flag for workforce housing. And unemployment numbers continue to tick up for recent college grads, which means those same 20-somethings that would otherwise be moving into apartments and new cities, are opting to stay home with mom and dad.
Other indicators we’re watching that impact CRE either directly or indirectly:
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Upcoming FOMC October meeting – The Federal Reserve cut its benchmark interest rate 25 bps in September, the first time this year, and the 10-year Treasury yield bounced up, not down. Inflation and unemployment continue to weigh on expectations. At the time of this publication, ADP’s most recent release shows that private sector employment shed 32,000 jobs in September. We’re staying alert since several Federal Reserve officials have signaled a reluctance to cut rates further.
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Consumer Sentiment/Consumer Spending – Despite consumer sentiment slipping, that pessimism hasn’t fully translated into a pullback in spending. As Morningstar notes, the question economists have is whether the spending data will catch up with how consumers are feeling. If spending does retract, retailers will feel the pinch. By extension, will retail values (which have outperformed) begin to see some softening?
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With important data collection and reporting, writ large, now susceptible to political pressure, confidence will erode. Appraisers are data-centric; our clients are data-centric. It certainly feels as if we’re on shaky ground.
And while at times we ask ourselves if we’re looking at conditions as glass half empty vs. glass half full, ultimately our job is to reflect the market, not call the market.
What We’re Up To in Q4
NCREIF Fall Conference
We’re looking forward to hearing Mark Zandi speak and connecting with colleagues in the industry at the upcoming October conference in Hollywood, Florida. Breakpoint will be participating in the Valuation Committee meetings, so look for us there.
Abby’s House 5k – join us!
We are excited to sponsor Abby’s House 16th Annual Run/Walk again this year. All proceeds raised benefit the women and children of Abby's House, a nonprofit organization that provides support services to women and children in need. At Breakpoint Advisors, we believe in giving back and standing behind causes that empower families and strengthen our community. We invite you to join us—whether by running alongside us on race day or running remotely—to help make a lasting difference. Together, every step brings us closer to brighter futures.
You can join our team and run virtually from October 11-18 or join us in person on the 18th. We have a limited number of free registrations on a first come, first served basis! You can register here. Please register via the Sponsor option use the code 25BPA5K at checkout. If the free registrations are no longer available, please select Adult 5K Registration under “choose your event.” Thank you for your support!
Our Neighbors’ Table
Once again, we are sponsoring Our Neighbors’ Table Annual Breakfast, which will be held this year at the Black Swan Country Club in Georgetown, Massachusetts on October 22.
Our Neighbors’ Table is a nonprofit organization working to end hunger across northeastern Massachusetts by providing dignified, barrier-free access to wholesome food. Through its community markets, meal programs, and regional food distribution, ONT serves thousands of neighbors each year—ensuring families can shop for fresh produce, meats, dairy, and pantry staples at no cost. By partnering with local agencies and volunteers, ONT is building a food-secure region where everyone has the resources they need to thrive.
As we wrap 3Q and kick off 4Q, we’re here to serve your needs. We appraise all core property types as well as data centers, cold storage, self-storage, senior living, and more.
This newsletter reflects the personal opinions of the author and is provided for general informational purposes only. It is not intended as legal, financial, or professional advice.
READ MORE INSIGHTS:
Q1 2026 EDITION
Big Theme - Uncertainty exists but it isn’t always a deal breaker.