Quarterly Newsletter Q1 2025

Investment Volume Rises

According to CBRE Research, commercial real estate investment volume increased by 24% quarter-over-quarter and 31% year-over-year in Q4 to $121 billion. In 2024, annual volume increased by 8% to $392 billion. The increase was attributed to portfolio sales, which surged by 63% to $24 billion, while single-asset sales grew by 32% year-over-year in Q4, reaching $97 billion. There were no entity-level transactions in Q4.

In Q4, multifamily properties continued to be the leading investment sector, with volume rising 59% year-over-year to $43 billion (Fig. 2). The industrial and logistics sector ranked second again, recording $32 billion in investment volume, a 28% year-over-year increase. Office investment volume rose 35% year-over-year to $21 billion, while retail investment increased 7% to $14 billion. The hotel sector dipped 27% year-over-year, down to $6 billion from $8 billion.

For the trailing four quarters ending in Q4 2024, New York continued to lead the market with $33 billion, followed closely by Los Angeles at $30 billion and Dallas-Ft. Worth at $20 billion (Fig. 3). Among the top 20 markets, Seattle posted the highest growth year-over-year with a sharp increase of 84%, followed by Denver (79%), Minneapolis (55%), and Charlotte (49%).

Private investors dominated for the second consecutive quarter, accounting for $70 billion, 58% of Q4 investment volume, representing a 22% increase from a year ago (Fig. 4). REITs and cross-border investors were net buyers in Q4, whereas private and institutional investors were net sellers. REITs/public companies had the largest year-over-year volume increase, up 90% to $9 billion, followed by institutional investment volume, which increased 61% to $24 billion.

Source: CBRE Research, Q4 2024

To view larger images and dive deeper into the data, click on the images above.

On February 25, the Council on Environmental Quality (CEQ) issued an interim final rule (IFR) that rescinds all existing CEQ regulations implementing the National Environmental Policy Act (NEPA), a 1970 law requiring federal agencies to consider the environmental impact of major actions. An accompanying memorandum directs agencies to revise their own NEPA regulations within 12 months (while removing environmental justice issues from the process) and to prioritize “efficiency and certainty over any other policy objectives that could add delays and ambiguity to the permitting process." CEQ also encourages agencies not to expressly consider “cumulative effects.” The 30-day condensed public comment period on the IFR closed March 27, and the interim rule took effect April 11.

These actions follow President Trump’s Executive Order 14154, “Unleashing American Energy,” which directed CEQ to propose rescinding its existing NEPA regulations by February 19, 2025. The question of whether CEQ had the authority to issue binding regulations has lingered for decades, with the U.S. Court of Appeals for the D.C. Circuit ruling in November 2024 that it does not. In February 2025, the U.S. District Court for the District of North Dakota vacated CEQ’s 2024 NEPA implementing regulations for similar reasons.

Next Steps

According to CEQ’s guidance, federal agencies should continue to follow their existing practices and procedures during the revision period. However, many agencies incorporate CEQ’s now-rescinded regulations within their own. Additionally, while the CEQ encourages agencies to use the 2020 (Trump-era) version of the rules, the memorandum also suggests that agencies can use whatever version of the NEPA regulations they choose. This means that each federal agency could take a different regulatory approach, leading to confusion, conflicts, delays, and potential litigation. Because consistent implementation of NEPA is essential to ensuring timely and cost-effective environmental reviews, affected stakeholders should actively participate in the various agency rulemakings.

EPA’s brownfields program has long enjoyed bipartisan support. In just the first few months of 2025, lawmakers from both sides of the aisle have introduced key legislation to reauthorize and expand support for the cleanup and reuse of brownfield sites.

The Brownfields Reauthorization Act of 2025 (S.347), introduced by U.S. Senators Shelley Moore Capito (R-W.Va.), Chairman of the EPW Committee, and Lisa Blunt Rochester (D-Del.), would reauthorize the program while streamlining the application process, reducing cost-share requirements, and modernizing the grant amounts to match current construction costs and project sizes. The legislation would also expand the definition of eligible entities to include organizations defined under Section 501(c)(6) of the Internal Revenue Code, which includes business leagues, chambers of commerce, real estate boards, boards of trade, and professional football leagues.

Congressman Mike Turner (R-Ohio) and Congresswoman Mikie Sherrill (D-NJ) reintroduced the Brownfields Redevelopment Tax Incentive Reauthorization Act (H.R. 815), which would reinstate a long-expired tax incentive that enables developers to fully deduct the costs of cleanup expenses for contaminated property in the year the costs are incurred. The incentive was initially created in 1997 but expired in 2012; it allowed parties who voluntarily investigated and remediated contaminated properties to deduct all cleanup costs on their federal income tax return for the year the money was spent.

Brownfields 2025

With continued interest from the public and private sectors, brownfields redevelopment remains a priority at local and national levels. The 2025 National Brownfields Training Conference, taking place August 5–8 in Chicago, will once again bring together government agencies, environmental professionals, community leaders, and developers to share best practices, explore policy developments, and connect on project opportunities.

On February 11, the acting chairman of the SEC, Mark Uyeda, signaled that the commission would not defend the climate risk disclosure rules originally adopted on March 6, 2024, in a consolidated lawsuit before the Eighth Circuit Court of Appeals. He directed commission staff to request that the court not schedule the case for argument “to provide time for the Commission to deliberate and determine the appropriate next steps in these cases.” Then, on March 27, the commission officially voted to end its defense of the rules.

The rules require public companies to disclose material climate-related risks in their registration statements and annual reports. (For an overview of the rules, see SEC Adopts Final Climate Risk Disclosure Rules; Issues Stay in Light of Legal Challenges.)

Challenge to California Climate Disclosure Laws Rejected

On the state level, a federal judge recently rejected claims by the U.S. Chamber of Commerce that new California climate disclosure laws requiring most large U.S. companies to disclose greenhouse gas (GHG) emissions and climate-related risks are unconstitutional.

The district court found that the California rules do not violate the U.S. Constitution and extraterritoriality rules. The court also rejected the Chamber’s claim that the Climate-Related Financial Risk Act (S.B. 261) violates the law by “shaming” companies to regulate GHG emissions, concluding that the requirement “imposes no liability for failure to reduce emissions; only for failure to disclose climate-related financial risk and the measures adopted to reduce such risk.”

However, the court did not dismiss the case, which means the Chamber’s challenge may proceed.

On January 24, Connecticut’s Department of Energy and Environmental Protection (DEEP) published its Release-Based Cleanup Regulations (RBCRs), replacing the state’s Transfer Act as the primary remediation site cleanup program. The regulations await Connecticut General Assembly approval and have a proposed effective date of March 1, 2026.

Under Connecticut’s new release-based, risk-based approach, property transfers will no longer trigger mandatory investigations into historical contamination. Instead, investigations will occur at the discretion of the property owner as part of their environmental due diligence. Reviewing historical records that suggest a past release will not, on its own, require reporting. Accordingly, any person who creates or maintains (discovers) a new or newly discovered historical release will be responsible for reporting and remediating the release. This shift brings Connecticut in line with nearly every other state’s cleanup framework.

The RBCRs retain and recodify existing soil and groundwater standards and add new risk-based cleanup approaches related to the release reporting rules. These approaches prioritize completing release cleanups within a year of occurrence, with set objectives and technical analysis requirements for site inspections. Releases for which cleanup will take more than a year require reporting and are subject to new risk-based, tiered cleanup alternatives, where less dangerous releases will be subject to less stringent requirements. They include special provisions for multifamily properties, aligning remediation requirements with actual risk to expedite housing development and adopt new “permit-by-rules” that create a streamlined approach to manage polluted soil below buildings, concrete, and pavement and eliminate the need to excavate and dispose of lightly polluted soil when the property is used for commercial or industrial uses.

Additional details on these changes are available on DEEP's Release-Based Cleanup Program Regulation Development webpage.

In January, the Texas Railroad Commission (TRC), the state’s primary regulator of the oil and gas industry, rewrote rules governing waste pits at extraction facilities. The action is part of a waste management rulemaking package and the first meaningful amendments to 16 TAC Chapter 4 in four decades. The revised rules on waste pits significantly expand that part of the program, adding a new classification scheme and new design, registration, siting, and monitoring requirements. Notably, a new registration process will apply to all authorized pits (those permitted by rule) put into operation after June 30, 2025.

New classifications of waste management pits will add type-specific requirements, and new provisions will more narrowly specify the types of pits that can operate without a permit. Authorized pits will be classified into two categories; Schedules A and B. Schedule A will signify pits other than produced-water recycling pits. Produced-water recycling pits (Schedule B pits), often the largest and most environmentally impactful pits — i.e., those that process the most waste and operate for relatively long periods — garnered the most agency rulemaking attention. A new section requires operators of Schedule B pits to maintain financial security by January 1, 2026. In addition, revisions include over a dozen new or more stringent siting provisions for Schedule B pits. These include prohibitions on locating within 300 feet of surface water and less than 100 feet of the ground surface and groundwater without a clay liner. The amended rules are effective July 1, 2025.

Thank you to STP ComplianceEHS for contributing the articles under State Developments in this edition.

A recent ERIS webinar provided practical strategies for utilizing environmental insurance to mitigate risk in commercial real estate transactions.

The first step in solving the environmental risk problem is to understand what the risk is, said Dennis Toft, an environmental attorney with CSG Law in New Jersey. Site location and operations, compliance history, off-site disposal issues, and regulatory requirements can all impact risk. “Whenever you’re dealing with a property that’s got a history of contamination, it behooves you to have a policy in place,” Toft said.

There are different types of environmental insurance policies, said Jared Dubrowsky, Senior Vice President of NFP, but site pollution liability policies are most common in the transactional space, as they offer a wide array of coverage (including remediation, bodily injury, property damage, and legal defense) and can be tailored to the specific deal.

Other strategies to keep in mind include the following:

• Work collaboratively to define coverage needs. Consultants should engage early with clients and insurers to identify the specific issues that require coverage, considering the site's history, potential future risks (such as evolving PFAS regulations), and the full scope of associated costs.
• Negotiate policy terms thoughtfully. Policy language isn’t set in stone. Taking the time to understand key provisions and involving all parties early can result in more tailored and comprehensive coverage.
• Monitor market shifts. The availability and structure of environmental coverage continue to evolve, so staying informed about market trends is key to securing the right policy at the right time.

To Phase II or Not to Phase II?

Regarding Phase IIs, Gary Walters, an environmental engineer with Bridge House Advisors, explained that he does not view them as risk management tools, as they don’t reduce financial exposure and often uncover issues that insurers exclude. However, as Jared Dubrowsky noted, a Phase II may be necessary for redevelopment, capital improvements, or a change in site use. Otherwise, it’s often possible to structure a policy without one that still provides broad coverage.

To learn more, you can watch the full webinar recording and/or view the associated slide deck here.