April Horribilus: The Market Jolt that Caused Market Activity to Nosedive

Spoiler alert: In every season of “The White Lotus,” somebody dies. 

Despite the sumptuous hotel settings in idyllic locations, not every guest who checks in checks back out again. Still, up until that fateful moment some poor unsuspecting souls meet their maker, things typically tick along relatively nicely in paradise. 

Such is the case for this season of commercial real estate in 2025, with the crime — or at least market mischief — occurring somewhere around April 2. 

Most on our annual Power Finance list had enjoyed strong fourth quarters in 2024 with momentum that gave the impression that 2025 could be a record transaction volume year, and the first quarter of 2025 seemed to prove that theory. Then, a plot twist. 

Instead of April showers came violent rain with a side of tornadoes. President Donald Trump’s tariffs were announced on “Liberation Day” (two words that more than one honoree could not utter with a straight face) and global capital markets were sent into a tailspin. 

The U.S. dollar weakened, stock indices saw sharp selloffs, and the commercial real estate industry started to compute what all this meant for its assets and portfolios: rising construction costs, housing market affordability pressure, supply chain disruption, economic uncertainty resulting in decreased demand for commercial real estate, and investors giving the U.S. a wide berth … the list goes on. 

If there’s one thing that bond investors don’t enjoy, it’s volatility. CMBS — which was having a stellar run — tripped up (or was it pushed?) on the heels of Liberation Day. Some deals failed to price, and were pulled altogether as market confidence took a nosedive off a cliff. 

For some lenders with (big) balance sheet capability, that volatility and uncertainty could work in their favor in coming months. 

“For those people who traffic in [the CMBS and CLO] spaces a lot, things are going to slow down,” Starwood’s Dennis Schuh said. “The market may whipsaw back, but everyone thinks we’re in for a volatile quarter or two. There was a big SASB deal for over $1 billion that was pulled, and now the borrower is asking us: ‘Could you do the whole billion-dollar loan?’ ” 

The Barclays team is having real-time conversations with its clients who are now asking whether they should go SASB or balance sheet. “We can offer both, and so things actually feel very strong across the board, but of course we’ll see where the world goes,” Larry Kravetz said. 

Naturally, market bumps (read: the market equivalent of a skier’s takeoff at the precise moment they’re catapulted into orbit) are nothing new to the honorees on this list. 

A pandemic? They got through it. Rising interest rates? Damn near killed them but they’re getting through it. Anticipated hasty interest rate lowering that never came? Let’s not talk about it, it’s still too painful. Still, if the aforementioned terrible threesome was the equivalent of the pineapple knife, gun and pina colada that could have killed the whole market, this current period of macroeconomic uncertainty is something we can hopefully get through, too.

“Overall, [in 2024] given the volatility to the market, and change to the political landscape in the U.S., we did a great job,” Bank OZK’s Mike Moran said. “Our stakeholders were very happy with where we ended up.” 

And, heck, if we survive this, too, there’s not much else that can be thrown at commercial real estate… right? (RIGHT?! )

For all those shaking in their boots today, look to Blackstone’s Katie Keenan for the inspiration to tackle it head-on: “This environment is unlike most of what we’ve lived through, but I’m just really excited by it, because we have all the tools and also this really exciting energy around how to tackle it,” she said. 

Pop the kettle on, and we’ll be over to 345 Park Avenue in a jiffy to soak up some of that confidence, Katie!