Inflation Edges Up, Will We Rebound?

In June 2025, the U.S. economic narrative continues to evolve. Headline inflation ticked up slightly to 2.4%, from 2.3% in April, while core inflation (excluding food and energy) remained flat at 2.8%. These modest movements reflect a broader trend of stabilization—but they come against a backdrop of cautious optimism.

In a move widely expected by markets, the Federal Reserve held its benchmark interest rate steady at 4.25% to 4.50% for the fourth consecutive time. While rate hikes are off the table for now, there's still ambiguity around when—and how aggressively—easing might begin.

Consumer Sentiment Sees First Uptick in 6 Months

Possibly the most surprising headline? Consumer sentiment jumped from 52.2 in May to 60.5 in June, marking the first increase in six months. This rebound is likely tied to recent U.S.-China trade negotiations, which have led to a temporary rollback of blanket tariffs—from a steep 145% to a still-elevated 30% through August 11.

This rollback signals progress toward a broader trade framework and may provide short-term relief to import-heavy sectors like retail and construction materials. But it also creates uncertainty beyond Q3, especially for CRE developers relying on predictable material costs.

Implications for CRE Brokers & Capital Markets Professionals

1. Tariff Reductions Offer Temporary Relief

While 30% tariffs are still materially high, the reduction from 145% has improved import conditions for retailers and builders alike. CRE stakeholders—especially those in development-heavy metros like Dallas, Houston, and Atlanta—should watch commodity price movements closely through Q3. Material volatility could impact:

• Construction timelines and budgets

• Capex planning for value-add deals

• Appraisal assumptions tied to replacement cost

  
  

2. Private Credit Demand Remains Strong

With Fed rates holding steady, traditional bank lending remains cautious—particularly in the CRE sector. Non-bank lenders like C2R Capital are continuing to see heightened deal volume, especially in:

• Bridge loans for land and lease-up

• Mezzanine positions in capital stacks

• Note purchases on distressed or maturing debt

We’re seeing strong demand for short-term CRE financing in high-growth corridors like Phoenix, Austin, and Miami, where transaction urgency often trumps traditional underwriting speed.

3. Retail Sales vs. Inflation: The Gap is Closing

Although retail sales are still outpacing inflation, the margin narrowed significantly in May. Many major retailers have either revised FY25 guidance downward or pulled it entirely, citing consumer caution and tariff overhangs.

Brokers operating in mixed-use and retail-heavy corridors should be mindful of shifting tenant demand, especially:

• Foot traffic patterns

• Lease rate renegotiations

• Anchor tenant expansion/contraction behavior

As retail slows slightly, industrial real estate financing and data center development continue to show bullish momentum, especially across Texas markets.

Regional Snapshot: Texas & the Southeast/Southwest Corridor

C2R Capital’s core focus remains on private CRE credit solutions across Texas and the broader Southeast/Southwest region. Despite national uncertainty, these markets remain dynamic:

• Houston: Surge in value-add and flex industrial demand

• Dallas-Fort Worth: Record land transaction volume and development pipelines

• Atlanta: Retail-to-residential conversions on the rise

• Phoenix: Data center expansion and migration-driven growth

These markets continue to outperform national averages in both population and job growth—making them fertile ground for dealmaking.

Final Takeaways for Brokers & Borrowers

1. Now Is the Time to Lock In Short-Term Capital: With rates plateaued and private credit flowing, sponsors with projects in motion should strike while capital access remains frictionless.

2. Monitor Tariff Policy: August could bring renewed headwinds. Leverage current pricing windows for imports where possible.

3. Diversify Deal Structures: Creative structuring—including mezzanine, preferred equity, and note purchases—is on the rise.

4. Use Real-Time Data to Stay Ahead: From construction budgets to retail foot traffic, macro indicators are moving quickly. Stay informed to stay competitive.

About C2R Capital

C2R Capital is a Texas-based private credit firm specializing in non-bank commercial real estate lending. We offer bridge loans, mezzanine debt, and note purchases tailored for speed, complexity, and execution. With $250M+ in capital deployed and a deep bench of operator experience, we fund projects that banks can't—or won’t.