Commercial Real Estate Activity Remained Close to Its Historical Average
The Federal Reserve Bank of Kansas City released its KC Fed Commercial Real Estate (CRE) Index today. The value of the index showed a negligible decrease from 0.40 to 0.13 during the second quarter of 2025. The overall level of regional CRE activity is very close to its historical norm. Moreover, none of the components of the index changed meaningfully during the last quarter, suggesting that activity was mostly steady.
“Most aspects of CRE activity in the region were little changed in recent months. That apparent steadiness was a shift from a dynamic period over the last two years that brought the level of activity up to its historical norm,” according to Nicholas Sly, vice president at the Federal Reserve Bank of Kansas City. “An important thing to monitor going forward is whether the recent steadiness in recent CRE conditions indicates activity is stabilizing near its norm or that conditions are poised to change their trajectory from the last couple of years.”
Chart 1: The KC Fed CRE Index remined near its historical average
Note: An index value of zero corresponds to overall conditions being at their historical average and differences from zero are measured in terms of standard deviations from the historical norm
Table 1: Individual drivers of overall change in the KC Fed CRE Index
Notes: Contributions may not add to the total change in the index due to rounding. The contribution of each metric is calculated as the change in the standardized value of the variable from the previous quarter multiplied by the coefficient of the variable in the index.
Chart 2: Alignment in market participants’ views about CRE conditions continued to trend up
Note: Values correspond to measures of Shannon entropy, with higher numerical values indicating more mixed responses and lower signal quality of the KC Fed CRE Index.