Author: Edward Brawer

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Wednesday, November 19, 2025. Here’s what we’re covering today: the latest on interest rates and financing, an uptick in deal activity amid some distress, and a spotlight on one city where new housing policies are shaking things up.

Let’s start with interest rates. The Federal Reserve cut rates again last month, bringing its benchmark below 4%. That should eventually help borrowers, but so far long-term loan costs haven’t fallen much. The 10-year Treasury is still hovering around 4%, which means many commercial mortgages are stuck near 6%. Deals remain tough to finance, but there is a silver lining: lending is finally thawing a bit. An index of commercial loan activity just hit its highest level since 2018, and some multifamily loans are now available below 5%. It’s not the dirt-cheap money of 2021, but it’s progress and a sign that credit is loosening up for solid projects.

Now on to the market. After a quiet first half, investors are cautiously coming back. September ended up the busiest month of the year so far, with roughly $27 billion in sales across asset types. That rebound spanned multiple sectors – apartments, retail centers, even some big office deals. One group bet over a billion dollars on an office portfolio, while others snapped up large retail and multifamily packages. Buyers are still picky and focusing on quality, but they’re finding opportunities again. The gap between seller expectations and buyer offers is finally starting to close. In fact, many properties are now trading at prices on par with or above their last sale – though older offices remain an exception. One Manhattan office tower, for example, sold for roughly 40% below its peak value.

What about distress? A major worry is the wave of commercial mortgages coming due over the next year. Loans that were fixed at 3% interest are facing refinancing at 6% or 7%, and that jump can wreck the finances of an otherwise solid property. We’re already seeing some owners try to extend loan terms or refinance with more equity, and others are selling or even defaulting – especially if their building is an older office with high vacancy. It’s a stressful situation, and we’ll likely see more of these cases in the months ahead. But there are also signs of stabilization. Property values have stopped falling and seem to be leveling off. Lenders have grown a bit less strict on the best deals, not demanding as high a risk premium as they were earlier this year. It’s not a full rebound, but it suggests the stronger parts of the market are beginning to weather the storm.

Finally, our regional spotlight is on Los Angeles. In a city known for expensive housing and endless permitting delays, there’s a surprising bright spot: affordable housing development is suddenly booming. Los Angeles launched a fast-track approval policy in late 2022 to speed up 100% affordable housing projects. Approvals that once took years can now happen in about 60 days. The result? Over 40,000 affordable units have already been proposed under this program. Developers are flocking to it, thanks to the quick turnaround. By cutting red tape, LA has turned a once-niche, slow-moving sector into a hot opportunity. Other cities are taking note and considering similar moves to spur development.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael—until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Friday, November 14, 2025. Here’s what we’re covering today: interest rates and lending conditions are finally easing up; commercial property deals are gaining momentum; we’ll talk about where distress still lingers versus signs of recovery; and we’ll have a spotlight on the Sun Belt, where a few standout markets are leading the way this year.

After a year of high borrowing costs, we’re finally seeing some relief. The Federal Reserve has cut rates two meetings in a row, and the 10-year Treasury yield just dipped below 4% for the first time in over a year. In fact, even agency loans for multifamily are now dipping under 5%, and private lenders are back in action – a sign that financing is loosening up. Lower financing costs are crucial because they help more deals pencil out.

Deal activity is indeed picking up. Commercial real estate investment volume jumped roughly 17% year-over-year in the third quarter, thanks largely to renewed U.S. buyer appetite. With borrowing costs stabilizing, buyers and sellers are finally starting to meet in the middle on pricing . We’re seeing a broad-based recovery across property types, led by sectors like multifamily and industrial where demand remains strong .

Even the beleaguered office sector is showing signs of life. U.S. office sales jumped over 40% in the first half of 2025 . Office leasing hit its highest level since 2019, and vacancies have finally started to tick down . With so little new construction, companies hunting for prime space have limited options – sparking competition for the best offices . Meanwhile, industrial remains a star thanks to e-commerce, and retail has stabilized to the point that well-located shopping centers are drawing investor interest again.

That said, not everything is rosy. There are still a lot of distressed properties out there – especially older offices. But one encouraging sign: in Q2 of this year, more troubled loans were resolved than new ones added, perhaps marking a peak in the distress cycle. Even so, about $100 billion of commercial real estate debt remains in default or workout.

Now for our regional spotlight: the Sun Belt. High-growth Sun Belt cities have been investor darlings lately. Dallas, for example, just claimed the number-one spot for 2025. Miami, Houston, and Tampa also ranked among the top markets as companies and people keep flocking to those areas. In Texas, the momentum is remarkable – Dallas is up roughly 11% in jobs since 2020, and Austin nearly 17%. That kind of growth is fueling broad real estate demand. No wonder capital is pouring into the Sun Belt, where investors see the best prospects. By contrast, New York’s recovery has been slower, making the Sun Belt’s boom even more striking.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael—until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Wednesday, November 12, 2025. Here’s what we’re covering today: national commercial real estate updates, from lending conditions and capital markets to interest rates and whether we’re seeing distress or recovery; the current landscape for refinancing and investment activity; and a spotlight on the Dallas–Fort Worth market, where major deals and trends are unfolding for CRE investors.

National Market Update: We’re nearing the end of 2025 and the commercial real estate market is sending mixed signals. Overall sentiment is cautious optimism. On one hand, borrowing costs are still high and lenders remain picky; on the other hand, transaction activity is slowly picking up again after a very quiet 2023–24. Let’s start with interest rates: after a rapid series of hikes in the last few years, the Federal Reserve finally began easing its policy a bit this fall. They’ve cut rates twice since mid-September, bringing the benchmark rate down into the low-4% range. But don’t break out the champagne yet – those cuts take time to flow through to commercial mortgages. In practice, new loans today are still being made at interest rates in the mid-6% range on average, compared to maybe 4.5–5% on loans originated a few years ago. For anyone refinancing, that means higher monthly payments and tougher underwriting. It’s a big adjustment, and lenders know it. Many banks have responded by tightening credit standards and focusing on the most creditworthy deals. Regional banks in particular have been cautious, given their heavy exposure to commercial real estate. They’ve been extending a lot of loans at maturity rather than foreclosing, essentially “kicking the can” and hoping that lower rates in the future will bail everyone out. The strategy has worked so far to prevent a wave of defaults – in fact, many banks reported stable or even lower non-performing loan levels in their CRE portfolios this quarter – but it can’t last indefinitely. A huge wall of maturities is looming: by some estimates, well over $1 trillion in commercial mortgages will come due by the end of 2026, with a big chunk of that – possibly close to $1 trillion – needing refinancing in 2025 alone. About one-fifth of those maturing loans are on office properties, which is the weakest sector right now. So the question heading into 2026 is: will lenders keep extending loans and modify terms to avoid defaults, or will we start to see more distress hitting the market as these debts come due?

Now, despite those headwinds, the capital markets haven’t frozen up completely – far from it. In fact, the latest data shows some improvements. Commercial real estate investment volume nationwide is on the rise again. In the third quarter of 2025, investment sales totaled roughly $112 billion, which is a 13% jump compared to the same period last year. It’s still a far cry from the frenzied peak of 2021, but it’s a clear sign that buyers and sellers are finding a middle ground on pricing. Who’s doing the buying? Mostly private capital – think high-net-worth investors, family offices, and opportunistic private equity. These private buyers accounted for more than half of Q3’s volume, outpacing big institutional investors. In part, that’s because institutions and REITs pulled back during the uncertainty, leaving room for entrepreneurial players to snap up assets at adjusted prices. Another trend: cross-border investment is down this year, so it’s largely domestic money fueling the deals. On the lending side, we’re seeing a similar shift: the traditional banks have become more conservative, and alternative lenders (like debt funds, mortgage REITs, and private credit firms) have stepped up. In Q3, non-bank lenders made up the largest share of new loan originations – by some measures, these alternative lenders did well over a third of all commercial mortgages last quarter, more than the banks’ share. They often come with higher interest rates, but also more creativity and flexibility in structuring deals, which is appealing in this environment. Even the government-backed lenders are playing a role – for example, Fannie Mae and Freddie Mac have been very active in financing multifamily properties this year, helping fill the gap especially for apartment owners who need refinancing.

Let’s talk property sectors. It remains an uneven recovery across the board. Industrial real estate is still the standout winner – if you own warehouses or logistics centers, you’re probably feeling pretty good. Demand for modern distribution space keeps growing thanks to e-commerce and companies retooling their supply chains. Occupancy in well-located industrial parks is high, and rents are continuing to climb, albeit not as explosively as a couple of years ago. This sector has been so strong that investors are aggressively competing for industrial deals, and cap rates (the yields) have stayed relatively low for prime properties even in a high-rate environment. On the opposite end, we have office. Office space is still the problem child of commercial real estate. We’re nearly three years into the widespread return-to-office push, yet demand hasn’t fully recovered. Many companies have settled into a hybrid work model, which means they simply need less office space than before. National office vacancy rates are hovering at levels higher than even the aftermath of the 2008 financial crisis. In some downtown markets, you can see vacancy rates of 25% or more, especially in older, Class B/C buildings. Landlords and lenders are feeling the pain: recent data shows office loan delinquencies approaching record highs (around 12% of office loans are delinquent right now), and property values for aging office towers have plummeted in many cities. We’ve seen some high-profile buildings in cities like San Francisco and Chicago trade at huge discounts or even slide into foreclosure. The silver lining? The best offices – the newer, high-end, amenity-rich buildings – are still attracting tenants. There’s a clear flight to quality. Some firms are even upgrading their space as a way to entice employees back. So top-tier office assets in prime locations are holding value much better than the rest. And there’s a big industry push to repurpose the worst of the bunch – converting obsolete offices into apartments, labs, or hotels where feasible (we’ll talk more about that in our regional spotlight, because one city in particular is embracing conversions). Moving on to multifamily, the apartment market is in a healthier spot. After years of double-digit rent growth in 2021 and 2022, things have cooled off to a normal pace. We’re seeing rent growth back to the low single digits nationally, and even some modest rent declines in a few cities that had a lot of new supply come online. Vacancy rates for apartments crept up a bit this year, but generally remain within a normal range. Developers went on an apartment building spree, and those new units are delivering now, so renters have a bit more choice. Still, multifamily fundamentals are solid overall – occupancy is healthy and longer-term demand is supported by things like high single-family housing costs keeping people renting. Investors remain very interested in multifamily, especially now that prices have adjusted down from their peak. And as I mentioned, the financing is there for apartments thanks to the government agencies. Next, retail – a surprise comeback story of sorts. A few years ago, everyone thought retail was on the brink of apocalypse due to online shopping. But in 2025 we’re seeing a renaissance in certain kinds of retail properties. Well-located neighborhood shopping centers, especially those anchored by grocery stores or essential services, are performing well. Consumers are back out shopping in person, and retailers have adapted by using stores for both shopping and e-commerce pickup/returns. Occupancy in open-air shopping centers has improved, and investors have started buying retail centers again, looking for higher yields than they can get in multifamily or industrial. Now, not all retail is rosy – older malls and funky specialty centers are still struggling – but broadly, retail real estate has stabilized and even improved for the first time in a long while. Hospitality (hotels) and specialty sectors like senior housing, student housing, and data centers each have their own story, but the common theme is selective resilience. Travel is fully back, so hotels in vacation destinations or business travel hubs had a strong summer, though high operating costs and staffing issues are squeezing margins. Meanwhile, data centers and warehouses remain hot due to the digital economy, and sectors like senior living are drawing attention as the population ages.

So nationally, where does that leave us? The lending environment is still challenging, but slightly better than it was a year ago. Capital is available for good opportunities, but it’s coming at a higher cost and often from non-traditional sources. Property values have adjusted downward in many segments to reflect higher cap rates – we’re talking anywhere from a 5% to 20% drop from the 2021 peak depending on asset type and location. That reset, while painful for sellers, is what’s allowing buyers to step back in and volume to tick up again. There’s also a sense that the worst-case scenarios (a cascade of forced sales, a wave of bank failures due to CRE loans, etc.) haven’t materialized, at least not yet. Instead, we have a kind of grinding recovery: it’s slow and uneven, but inching in the right direction. If interest rates continue to ease into 2026 (which is still a bit uncertain – the Fed has signaled caution, especially with inflation not completely tamed), that would certainly help. Even a stable rate environment – just no more surprises – would give investors and lenders more confidence to make longer-term bets. As of today, most industry players are preparing for what we might call a new normal: slightly higher interest rates than the 2010s, stricter underwriting, and a bigger premium on quality assets and locations. Adaptation is the name of the game, whether it’s repurposing properties or restructuring deals, and we’re seeing a lot of that creative problem-solving happening now.

Refinancing & Investment Landscape: Now let’s zoom in on the refinancing crunch and what’s happening with investment activity. We’ve all been hearing about the “maturity wall” for a while – all those loans made 5-10 years ago that are now coming due. Well, we’re in it. 2025 and 2026 are peak years for commercial debt maturities, and owners are facing the music of much higher interest rates. How are they dealing with it? In many cases, by scrambling. A lot of owners are going back to their lenders and negotiating extensions or modifications. If a property is performing decently – say an apartment complex that’s cash-flowing or an office building with stable tenants – banks have shown some willingness to extend the loan a couple of years rather than force a refinance at an inopportune time. Nobody really wants to repossess a property if they can avoid it. We often hear the phrase “extend and pretend,” and it’s happening: lenders extend the loan term, often with the “pretend” hope that conditions will improve by the new maturity date. Of course, extensions sometimes come with strings attached – like the borrower putting in more cash to reduce the loan balance, or higher interest reserves. For properties that can’t support today’s rates or that have seen big occupancy drops (think a mostly empty older office building), refinancing is extremely tough. Those owners have limited options: they might need to sell the asset (if they can find a buyer), bring in a new equity partner, or in the worst case, default and hand the keys back. We’re seeing all of those scenarios play out. Some opportunistic investors are circling, raising funds to buy distressed loans or properties at a discount. So far, the distress is hitting selectively – again, mostly in offices and some retail – but it could ramp up next year if the economy softens or if lenders lose patience.

On the investment sales side, as noted earlier, activity is coming back, but it’s very stratified by asset class and quality. Many investors sat on the sidelines waiting for clarity on interest rates. With the Fed now at least cutting a little, and the consensus that rates might have peaked last year, buyers are tiptoeing back into the market. They are still demanding better pricing to compensate for higher debt costs. Sellers, for their part, have started to adjust expectations – we’re seeing more realistic pricing, which is facilitating deals. For example, cap rates (which move inversely to prices) have expanded significantly from the 2021 lows. A multifamily property that traded at a 4% cap two years ago might trade at a 5% or 5.5% cap now. That means a lower price, but for buyers using debt, the math works better at that higher cap rate given today’s loan terms. The most active segments for investment right now are multifamily and industrial, no surprise, since their fundamentals are strongest. We’ve seen large portfolio sales in those areas and continued development activity. Retail transactions are also up for certain types of centers – there’s a bit of a “hungry for yield” story there, where investors are enticed by the higher cap rates retail offers compared to apartments or warehouses. Office sales remain the thinnest. Outside of a few specific situations (like buying to convert to another use, or prime buildings trading between local owners), there’s not a lot of office deal flow. The bid-ask gap is still wide: sellers don’t want to unload at 50% off, and buyers are hesitant to catch a falling knife in the office sector unless it’s a steal. But even that might change as prices adjust further or if financing becomes more available for office repositioning projects. One positive sign is that financing is starting to loosen modestly for the right deals. As I mentioned, private debt funds are active – they’re willing to lend on acquisitions but usually at lower leverage (maybe 50-60% loan-to-value instead of the 70-75% that was common in the past) and at higher interest rates with more covenants. Some life insurance companies are also still lending selectively, because they like to lock in higher yields for long-term loans. And for multifamily, the agency lenders (Freddie and Fannie) will often step in up to 65-70% LTV, which is helping a lot of apartment deals pencil out. We also see creative financing structures making a comeback: mezzanine debt, preferred equity, and seller financing are in the toolbox again to bridge gaps between what banks will lend and what buyers are willing to pay. In short, the refinancing and investment landscape in late 2025 is all about adjustment. Everyone is adjusting to a higher-rate world: borrowers adjusting their balance sheets, lenders adjusting their terms, and investors adjusting their return expectations. Deals can still get done – and are getting done – but they often require more equity, more creativity, and sometimes a stronger stomach for risk. The good news is the market is not completely dormant; it’s active, just under a new set of rules.

Regional Spotlight – Dallas–Fort Worth: Finally, let’s turn our focus to a specific regional market outside of New York. Today, we’re putting the spotlight on Dallas–Fort Worth (DFW) in Texas – a metro area that has been red hot and is giving investors plenty to talk about. In fact, according to a major industry survey released this month, DFW was ranked the #1 real estate market to watch in 2026 for the second year in a row. And it’s not hard to see why. The Dallas metroplex has a powerful combination of factors: a booming population, strong job growth, a business-friendly environment, and relatively low costs of living and doing business. Over the past several years, dozens upon dozens of corporations have relocated or expanded into North Texas – by one count, around 100 companies moved their headquarters into the DFW area between 2018 and 2024. That influx of employers and talent keeps demand high for commercial space of all kinds, from offices to warehouses to apartments. Even the financial sector is beefing up in Dallas (some call it “Y’all Street” in a nod to Wall Street), adding high-paying jobs that fuel the economy. For commercial real estate investors, this all translates into opportunities.

Let’s talk deals and development in Dallas. One big trend: industrial real estate in DFW is a juggernaut. The region is one of the country’s top distribution hubs, thanks to its central location and transportation infrastructure. Just this past quarter, a significant industrial deal closed in the Dallas area – a brand-new, 757,000 square foot distribution center in the East Dallas/Mesquite submarket was acquired by W. P. Carey, which is one of the largest net-lease real estate investment trusts. Why did they want this asset? Well, it checked all the boxes: it’s a state-of-the-art facility with 40-foot high ceilings and dozens of loading docks, it’s fully leased long-term (the tenant is a global solar energy company with a 10-year lease), and it sits right by a major rail intermodal terminal and highway, making logistics a breeze. In short, it’s a core industrial asset in a high-growth market – exactly the kind of deal investors love. The brokers involved noted that the East Dallas industrial submarket has a track record of high occupancy and rent growth, which gives investors confidence in future cash flow. So that’s the kind of capital inflow we’re seeing: big national players buying into Dallas industrial real estate for steady, long-term income.

Now, how about office in Dallas? As we discussed nationally, office is tricky everywhere – and Dallas does have a high office vacancy rate overall (north of 25%). But what’s interesting is how the city is tackling it. Dallas has become a leader in office-to-residential conversions. According to a recent report, Dallas is second only to New York’s Brooklyn in the amount of old office space being converted into apartments or other uses. There are roughly 20 conversion projects either in progress or on the drawing board in the Dallas area, which together will transform about 6 million square feet of office space into new residential units, hotels, or mixed-use developments. This trend is both a response to the office glut and a way to meet the strong demand for housing in the urban core. A concrete example: just a couple of months ago, a major real estate investment firm closed a $132 million loan to finance the conversion of a downtown Dallas office tower into residential apartments. That’s a huge vote of confidence in the adaptive reuse approach – essentially saying, if offices aren’t filling up, let’s turn them into something that will. The city and local developers have generally supported these conversions, streamlining approvals in many cases, because it helps revitalize downtown areas and absorb surplus office inventory. So for investors, Dallas’s proactive stance on repurposing real estate is a positive sign. It means the market isn’t sitting idle with its challenges – it’s innovating through them.

That said, not all Dallas offices are suffering. The quality divide is evident there as well. Newer or well-located office buildings are doing relatively fine. For instance, in the prestigious Highland Park area of Dallas, a recently renovated Class A office building (about 175,000 square feet) just managed to get a refinancing deal done with a local regional bank. This building is around 90% leased and the owner invested significant money into upgrades – things like modernizing the lobby, adding tenant amenities, and improving energy efficiency. Those efforts paid off, literally, as the building secured a fresh 5-year loan. It’s quite telling: even in today’s tight credit environment, if you have a strong asset with good occupancy in a prime submarket, banks will still lend on it. This particular refinance signals a couple of things about Dallas: one, local lenders have confidence in the market’s stability (at least for well-performing assets), and two, it underscores the importance of asset quality – the older, unimproved offices might not find financing, but the updated, well-leased ones can still thrive.

Beyond industrial and office, multifamily remains huge in Dallas–Fort Worth. The metro has been among the national leaders in apartment construction and absorption. Thousands of new units have been delivered in the past year, yet demand has kept up pretty well thanks to population growth. Investors are keen on Dallas apartments, and both national and international capital has been flowing in to acquire multifamily complexes there. Yields are generally higher in Texas than in coastal markets, which is attractive, and the long-term outlook for rental demand is strong. The same goes for select retail projects – as the suburbs expand, new retail centers are popping up, and existing shopping districts in places like Plano, Frisco, and Arlington are bustling with activity as people continue to spend on dining and entertainment. One more thing to note: the business climate. Texas famously has no state income tax and tends to have lighter regulations, which many in the real estate industry cite as a reason it’s easier to get deals done or new developments approved. That “ease of doing business” factor was highlighted in the survey that ranked Dallas highly. It means we can expect DFW to continue drawing outsized investment because comparatively, it’s just less cumbersome and costly to build and operate properties there than in, say, a Northeast city.

To sum up our Dallas spotlight: the region exemplifies a lot of the trends in today’s CRE landscape. It has strong tailwinds (growth, inbound capital, diversification of its economy) that are helping it outperform, and it’s tackling headwinds (like office oversupply) with creative strategies and local confidence. For investors looking outside of the traditional gateway markets, Dallas–Fort Worth remains a top contender – it’s a place where deals are happening, from big industrial acquisitions to innovative redevelopments. Keep an eye on North Texas as we move into 2026; it often serves as a bellwether for broader Sun Belt real estate trends.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael—until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Wednesday, November 12, 2025. Here’s what we’re covering today: national commercial real estate updates, from lending conditions and capital markets to interest rates and whether we’re seeing distress or recovery; the current landscape for refinancing and investment activity; and a spotlight on the Dallas–Fort Worth market, where major deals and trends are unfolding for CRE investors.

National Market Update: We’re nearing the end of 2025 and the commercial real estate market is sending mixed signals. Overall sentiment is cautious optimism. On one hand, borrowing costs are still high and lenders remain picky; on the other hand, transaction activity is slowly picking up again after a very quiet 2023–24. Let’s start with interest rates: after a rapid series of hikes in the last few years, the Federal Reserve finally began easing its policy a bit this fall. They’ve cut rates twice since mid-September, bringing the benchmark rate down into the low-4% range. But don’t break out the champagne yet – those cuts take time to flow through to commercial mortgages. In practice, new loans today are still being made at interest rates in the mid-6% range on average, compared to maybe 4.5–5% on loans originated a few years ago. For anyone refinancing, that means higher monthly payments and tougher underwriting. It’s a big adjustment, and lenders know it. Many banks have responded by tightening credit standards and focusing on the most creditworthy deals. Regional banks in particular have been cautious, given their heavy exposure to commercial real estate. They’ve been extending a lot of loans at maturity rather than foreclosing, essentially “kicking the can” and hoping that lower rates in the future will bail everyone out. The strategy has worked so far to prevent a wave of defaults – in fact, many banks reported stable or even lower non-performing loan levels in their CRE portfolios this quarter – but it can’t last indefinitely. A huge wall of maturities is looming: by some estimates, well over $1 trillion in commercial mortgages will come due by the end of 2026, with a big chunk of that – possibly close to $1 trillion – needing refinancing in 2025 alone. About one-fifth of those maturing loans are on office properties, which is the weakest sector right now. So the question heading into 2026 is: will lenders keep extending loans and modify terms to avoid defaults, or will we start to see more distress hitting the market as these debts come due?

Now, despite those headwinds, the capital markets haven’t frozen up completely – far from it. In fact, the latest data shows some improvements. Commercial real estate investment volume nationwide is on the rise again. In the third quarter of 2025, investment sales totaled roughly $112 billion, which is a 13% jump compared to the same period last year. It’s still a far cry from the frenzied peak of 2021, but it’s a clear sign that buyers and sellers are finding a middle ground on pricing. Who’s doing the buying? Mostly private capital – think high-net-worth investors, family offices, and opportunistic private equity. These private buyers accounted for more than half of Q3’s volume, outpacing big institutional investors. In part, that’s because institutions and REITs pulled back during the uncertainty, leaving room for entrepreneurial players to snap up assets at adjusted prices. Another trend: cross-border investment is down this year, so it’s largely domestic money fueling the deals. On the lending side, we’re seeing a similar shift: the traditional banks have become more conservative, and alternative lenders (like debt funds, mortgage REITs, and private credit firms) have stepped up. In Q3, non-bank lenders made up the largest share of new loan originations – by some measures, these alternative lenders did well over a third of all commercial mortgages last quarter, more than the banks’ share. They often come with higher interest rates, but also more creativity and flexibility in structuring deals, which is appealing in this environment. Even the government-backed lenders are playing a role – for example, Fannie Mae and Freddie Mac have been very active in financing multifamily properties this year, helping fill the gap especially for apartment owners who need refinancing.

Let’s talk property sectors. It remains an uneven recovery across the board. Industrial real estate is still the standout winner – if you own warehouses or logistics centers, you’re probably feeling pretty good. Demand for modern distribution space keeps growing thanks to e-commerce and companies retooling their supply chains. Occupancy in well-located industrial parks is high, and rents are continuing to climb, albeit not as explosively as a couple of years ago. This sector has been so strong that investors are aggressively competing for industrial deals, and cap rates (the yields) have stayed relatively low for prime properties even in a high-rate environment. On the opposite end, we have office. Office space is still the problem child of commercial real estate. We’re nearly three years into the widespread return-to-office push, yet demand hasn’t fully recovered. Many companies have settled into a hybrid work model, which means they simply need less office space than before. National office vacancy rates are hovering at levels higher than even the aftermath of the 2008 financial crisis. In some downtown markets, you can see vacancy rates of 25% or more, especially in older, Class B/C buildings. Landlords and lenders are feeling the pain: recent data shows office loan delinquencies approaching record highs (around 12% of office loans are delinquent right now), and property values for aging office towers have plummeted in many cities. We’ve seen some high-profile buildings in cities like San Francisco and Chicago trade at huge discounts or even slide into foreclosure. The silver lining? The best offices – the newer, high-end, amenity-rich buildings – are still attracting tenants. There’s a clear flight to quality. Some firms are even upgrading their space as a way to entice employees back. So top-tier office assets in prime locations are holding value much better than the rest. And there’s a big industry push to repurpose the worst of the bunch – converting obsolete offices into apartments, labs, or hotels where feasible (we’ll talk more about that in our regional spotlight, because one city in particular is embracing conversions). Moving on to multifamily, the apartment market is in a healthier spot. After years of double-digit rent growth in 2021 and 2022, things have cooled off to a normal pace. We’re seeing rent growth back to the low single digits nationally, and even some modest rent declines in a few cities that had a lot of new supply come online. Vacancy rates for apartments crept up a bit this year, but generally remain within a normal range. Developers went on an apartment building spree, and those new units are delivering now, so renters have a bit more choice. Still, multifamily fundamentals are solid overall – occupancy is healthy and longer-term demand is supported by things like high single-family housing costs keeping people renting. Investors remain very interested in multifamily, especially now that prices have adjusted down from their peak. And as I mentioned, the financing is there for apartments thanks to the government agencies. Next, retail – a surprise comeback story of sorts. A few years ago, everyone thought retail was on the brink of apocalypse due to online shopping. But in 2025 we’re seeing a renaissance in certain kinds of retail properties. Well-located neighborhood shopping centers, especially those anchored by grocery stores or essential services, are performing well. Consumers are back out shopping in person, and retailers have adapted by using stores for both shopping and e-commerce pickup/returns. Occupancy in open-air shopping centers has improved, and investors have started buying retail centers again, looking for higher yields than they can get in multifamily or industrial. Now, not all retail is rosy – older malls and funky specialty centers are still struggling – but broadly, retail real estate has stabilized and even improved for the first time in a long while. Hospitality (hotels) and specialty sectors like senior housing, student housing, and data centers each have their own story, but the common theme is selective resilience. Travel is fully back, so hotels in vacation destinations or business travel hubs had a strong summer, though high operating costs and staffing issues are squeezing margins. Meanwhile, data centers and warehouses remain hot due to the digital economy, and sectors like senior living are drawing attention as the population ages.

So nationally, where does that leave us? The lending environment is still challenging, but slightly better than it was a year ago. Capital is available for good opportunities, but it’s coming at a higher cost and often from non-traditional sources. Property values have adjusted downward in many segments to reflect higher cap rates – we’re talking anywhere from a 5% to 20% drop from the 2021 peak depending on asset type and location. That reset, while painful for sellers, is what’s allowing buyers to step back in and volume to tick up again. There’s also a sense that the worst-case scenarios (a cascade of forced sales, a wave of bank failures due to CRE loans, etc.) haven’t materialized, at least not yet. Instead, we have a kind of grinding recovery: it’s slow and uneven, but inching in the right direction. If interest rates continue to ease into 2026 (which is still a bit uncertain – the Fed has signaled caution, especially with inflation not completely tamed), that would certainly help. Even a stable rate environment – just no more surprises – would give investors and lenders more confidence to make longer-term bets. As of today, most industry players are preparing for what we might call a new normal: slightly higher interest rates than the 2010s, stricter underwriting, and a bigger premium on quality assets and locations. Adaptation is the name of the game, whether it’s repurposing properties or restructuring deals, and we’re seeing a lot of that creative problem-solving happening now.

Refinancing & Investment Landscape: Now let’s zoom in on the refinancing crunch and what’s happening with investment activity. We’ve all been hearing about the “maturity wall” for a while – all those loans made 5-10 years ago that are now coming due. Well, we’re in it. 2025 and 2026 are peak years for commercial debt maturities, and owners are facing the music of much higher interest rates. How are they dealing with it? In many cases, by scrambling. A lot of owners are going back to their lenders and negotiating extensions or modifications. If a property is performing decently – say an apartment complex that’s cash-flowing or an office building with stable tenants – banks have shown some willingness to extend the loan a couple of years rather than force a refinance at an inopportune time. Nobody really wants to repossess a property if they can avoid it. We often hear the phrase “extend and pretend,” and it’s happening: lenders extend the loan term, often with the “pretend” hope that conditions will improve by the new maturity date. Of course, extensions sometimes come with strings attached – like the borrower putting in more cash to reduce the loan balance, or higher interest reserves. For properties that can’t support today’s rates or that have seen big occupancy drops (think a mostly empty older office building), refinancing is extremely tough. Those owners have limited options: they might need to sell the asset (if they can find a buyer), bring in a new equity partner, or in the worst case, default and hand the keys back. We’re seeing all of those scenarios play out. Some opportunistic investors are circling, raising funds to buy distressed loans or properties at a discount. So far, the distress is hitting selectively – again, mostly in offices and some retail – but it could ramp up next year if the economy softens or if lenders lose patience.

On the investment sales side, as noted earlier, activity is coming back, but it’s very stratified by asset class and quality. Many investors sat on the sidelines waiting for clarity on interest rates. With the Fed now at least cutting a little, and the consensus that rates might have peaked last year, buyers are tiptoeing back into the market. They are still demanding better pricing to compensate for higher debt costs. Sellers, for their part, have started to adjust expectations – we’re seeing more realistic pricing, which is facilitating deals. For example, cap rates (which move inversely to prices) have expanded significantly from the 2021 lows. A multifamily property that traded at a 4% cap two years ago might trade at a 5% or 5.5% cap now. That means a lower price, but for buyers using debt, the math works better at that higher cap rate given today’s loan terms. The most active segments for investment right now are multifamily and industrial, no surprise, since their fundamentals are strongest. We’ve seen large portfolio sales in those areas and continued development activity. Retail transactions are also up for certain types of centers – there’s a bit of a “hungry for yield” story there, where investors are enticed by the higher cap rates retail offers compared to apartments or warehouses. Office sales remain the thinnest. Outside of a few specific situations (like buying to convert to another use, or prime buildings trading between local owners), there’s not a lot of office deal flow. The bid-ask gap is still wide: sellers don’t want to unload at 50% off, and buyers are hesitant to catch a falling knife in the office sector unless it’s a steal. But even that might change as prices adjust further or if financing becomes more available for office repositioning projects. One positive sign is that financing is starting to loosen modestly for the right deals. As I mentioned, private debt funds are active – they’re willing to lend on acquisitions but usually at lower leverage (maybe 50-60% loan-to-value instead of the 70-75% that was common in the past) and at higher interest rates with more covenants. Some life insurance companies are also still lending selectively, because they like to lock in higher yields for long-term loans. And for multifamily, the agency lenders (Freddie and Fannie) will often step in up to 65-70% LTV, which is helping a lot of apartment deals pencil out. We also see creative financing structures making a comeback: mezzanine debt, preferred equity, and seller financing are in the toolbox again to bridge gaps between what banks will lend and what buyers are willing to pay. In short, the refinancing and investment landscape in late 2025 is all about adjustment. Everyone is adjusting to a higher-rate world: borrowers adjusting their balance sheets, lenders adjusting their terms, and investors adjusting their return expectations. Deals can still get done – and are getting done – but they often require more equity, more creativity, and sometimes a stronger stomach for risk. The good news is the market is not completely dormant; it’s active, just under a new set of rules.

Regional Spotlight – Dallas–Fort Worth: Finally, let’s turn our focus to a specific regional market outside of New York. Today, we’re putting the spotlight on Dallas–Fort Worth (DFW) in Texas – a metro area that has been red hot and is giving investors plenty to talk about. In fact, according to a major industry survey released this month, DFW was ranked the #1 real estate market to watch in 2026 for the second year in a row. And it’s not hard to see why. The Dallas metroplex has a powerful combination of factors: a booming population, strong job growth, a business-friendly environment, and relatively low costs of living and doing business. Over the past several years, dozens upon dozens of corporations have relocated or expanded into North Texas – by one count, around 100 companies moved their headquarters into the DFW area between 2018 and 2024. That influx of employers and talent keeps demand high for commercial space of all kinds, from offices to warehouses to apartments. Even the financial sector is beefing up in Dallas (some call it “Y’all Street” in a nod to Wall Street), adding high-paying jobs that fuel the economy. For commercial real estate investors, this all translates into opportunities.

Let’s talk deals and development in Dallas. One big trend: industrial real estate in DFW is a juggernaut. The region is one of the country’s top distribution hubs, thanks to its central location and transportation infrastructure. Just this past quarter, a significant industrial deal closed in the Dallas area – a brand-new, 757,000 square foot distribution center in the East Dallas/Mesquite submarket was acquired by W. P. Carey, which is one of the largest net-lease real estate investment trusts. Why did they want this asset? Well, it checked all the boxes: it’s a state-of-the-art facility with 40-foot high ceilings and dozens of loading docks, it’s fully leased long-term (the tenant is a global solar energy company with a 10-year lease), and it sits right by a major rail intermodal terminal and highway, making logistics a breeze. In short, it’s a core industrial asset in a high-growth market – exactly the kind of deal investors love. The brokers involved noted that the East Dallas industrial submarket has a track record of high occupancy and rent growth, which gives investors confidence in future cash flow. So that’s the kind of capital inflow we’re seeing: big national players buying into Dallas industrial real estate for steady, long-term income.

Now, how about office in Dallas? As we discussed nationally, office is tricky everywhere – and Dallas does have a high office vacancy rate overall (north of 25%). But what’s interesting is how the city is tackling it. Dallas has become a leader in office-to-residential conversions. According to a recent report, Dallas is second only to New York’s Brooklyn in the amount of old office space being converted into apartments or other uses. There are roughly 20 conversion projects either in progress or on the drawing board in the Dallas area, which together will transform about 6 million square feet of office space into new residential units, hotels, or mixed-use developments. This trend is both a response to the office glut and a way to meet the strong demand for housing in the urban core. A concrete example: just a couple of months ago, a major real estate investment firm closed a $132 million loan to finance the conversion of a downtown Dallas office tower into residential apartments. That’s a huge vote of confidence in the adaptive reuse approach – essentially saying, if offices aren’t filling up, let’s turn them into something that will. The city and local developers have generally supported these conversions, streamlining approvals in many cases, because it helps revitalize downtown areas and absorb surplus office inventory. So for investors, Dallas’s proactive stance on repurposing real estate is a positive sign. It means the market isn’t sitting idle with its challenges – it’s innovating through them.

That said, not all Dallas offices are suffering. The quality divide is evident there as well. Newer or well-located office buildings are doing relatively fine. For instance, in the prestigious Highland Park area of Dallas, a recently renovated Class A office building (about 175,000 square feet) just managed to get a refinancing deal done with a local regional bank. This building is around 90% leased and the owner invested significant money into upgrades – things like modernizing the lobby, adding tenant amenities, and improving energy efficiency. Those efforts paid off, literally, as the building secured a fresh 5-year loan. It’s quite telling: even in today’s tight credit environment, if you have a strong asset with good occupancy in a prime submarket, banks will still lend on it. This particular refinance signals a couple of things about Dallas: one, local lenders have confidence in the market’s stability (at least for well-performing assets), and two, it underscores the importance of asset quality – the older, unimproved offices might not find financing, but the updated, well-leased ones can still thrive.

Beyond industrial and office, multifamily remains huge in Dallas–Fort Worth. The metro has been among the national leaders in apartment construction and absorption. Thousands of new units have been delivered in the past year, yet demand has kept up pretty well thanks to population growth. Investors are keen on Dallas apartments, and both national and international capital has been flowing in to acquire multifamily complexes there. Yields are generally higher in Texas than in coastal markets, which is attractive, and the long-term outlook for rental demand is strong. The same goes for select retail projects – as the suburbs expand, new retail centers are popping up, and existing shopping districts in places like Plano, Frisco, and Arlington are bustling with activity as people continue to spend on dining and entertainment. One more thing to note: the business climate. Texas famously has no state income tax and tends to have lighter regulations, which many in the real estate industry cite as a reason it’s easier to get deals done or new developments approved. That “ease of doing business” factor was highlighted in the survey that ranked Dallas highly. It means we can expect DFW to continue drawing outsized investment because comparatively, it’s just less cumbersome and costly to build and operate properties there than in, say, a Northeast city.

To sum up our Dallas spotlight: the region exemplifies a lot of the trends in today’s CRE landscape. It has strong tailwinds (growth, inbound capital, diversification of its economy) that are helping it outperform, and it’s tackling headwinds (like office oversupply) with creative strategies and local confidence. For investors looking outside of the traditional gateway markets, Dallas–Fort Worth remains a top contender – it’s a place where deals are happening, from big industrial acquisitions to innovative redevelopments. Keep an eye on North Texas as we move into 2026; it often serves as a bellwether for broader Sun Belt real estate trends.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael—until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Monday, November 10, 2025. Here’s what we’re covering today: first, the national commercial real estate outlook – how the capital markets are reacting to a shifting rate environment. Next, current conditions in lending and refinancing: is credit finally loosening up? Then we’ll discuss where we’re seeing distress versus signs of recovery across different property sectors. And finally, we’ll spotlight an interesting regional market trend outside of New York City that investors should know about.

Alright, let’s start with the big picture. The interest rate environment is beginning to take a turn. The Federal Reserve recently cut interest rates for the second time this year, bringing the benchmark rate down to the lowest level we’ve seen in nearly three years. That marks a significant shift from the rapid rate hikes of 2022 and 2023. What does it mean for real estate? In short, borrowing costs are finally easing up a bit. The yield on the 10-year Treasury has pulled back from its peak, now hovering just above 4%. Mortgage rates for commercial loans, while still high compared to the ultra-cheap money days, have dipped slightly. Many new CRE loans are being written around the mid-6% range, whereas a year ago we were looking at 7% or higher for similar deals. This slight relief is already making a difference: refinancing activity is on the rise, and more borrowers are coming off the sidelines to seek financing. Essentially, the financing fog is lifting enough that deal-makers can see a path forward again.

And indeed, capital markets activity has picked up momentum as we approach year-end. After a sluggish 2024, investors are returning to the market with renewed interest. In the first half of 2025, U.S. commercial property sales volume was up by double digits compared to last year. That rebound continued through the third quarter – globally, investment volumes in Q3 were about $213 billion, roughly 17% higher than the same time in 2024, with the U.S. leading the charge. It’s a welcome change: last year, rising rates had frozen a lot of transactions, but now buyers and sellers are finding some middle ground again. We’re seeing better liquidity and even a bit of healthy competition for high-quality assets. Private investors and high-net-worth buyers, along with some sovereign wealth funds, have been especially active, stepping in while some institutional players remained cautious. By property type, multifamily remains a favorite for investors – no surprise there, given the housing demand – and interestingly, senior housing has been a standout with one of the strongest growth rates in investment this year, as demographics drive new opportunities. Even the much-maligned retail sector has attracted attention: in fact, retail real estate investment surged in the last quarter. Nationwide, roughly $16 billion in retail property deals closed in Q3, up around 40% year-over-year – the biggest quarter for retail in three years. Clearly, investors see value in select shopping centers and storefronts, especially where occupancy is strong. Overall, the mood is turning more optimistic. Investor sentiment has improved, and you can feel a cautiously positive vibe that maybe, just maybe, the worst is behind us for the broader market.

Now, let’s talk about the lending and refinancing landscape. With the Fed pivoting to lower rates, credit conditions are gradually thawing. Over the past year or two, getting a commercial real estate loan was like pulling teeth – lenders were extremely conservative, if not completely on pause for certain deals. Today we’re in a somewhat better place. Banks and insurance companies, which had really tightened up, are slowly regaining their appetite for real estate loans, especially for solid projects. They’re still picky – don’t expect the banks to fund speculative office towers anytime soon – but for stabilized assets with good cash flow, we’re seeing more willingness to lend than we did a year ago. More importantly, alternative lenders remain very active. Debt funds, private credit firms, and other non-bank lenders have been stepping in to fill the gap, providing financing where traditional banks won’t. There’s actually plenty of debt capital out there chasing deals; it’s just coming from different sources and often at a higher price. The good news is that for high-quality, low-risk deals, access to credit has improved and terms are even starting to ease a bit – lenders might be lowering spreads or becoming slightly more flexible on leverage now that interest rates are edging down and market clarity is improving.

However, we have to acknowledge that a lot of deals only penciled out thanks to creative financing maneuvers. One major trend this year has been “extend and pretend” – instead of foreclosing on troubled properties, lenders and borrowers have been extending loan maturities and hoping for better days. In fact, a record volume of commercial mortgages – on the order of hundreds of billions of dollars – that were supposed to mature by now have been pushed out into 2025 and beyond. Nearly half of 2025’s scheduled loan maturities were actually loans that got extended from prior years. Lenders granted 1- to 3-year extensions on a massive scale, essentially kicking the can down the road. Why? Because in many cases, owners couldn’t refinance at the interest rates of today without either injecting more equity or suffering big valuation hits, and lenders frankly didn’t want to take a loss or seize the property. So, they’re buying time. This has kept a lid on foreclosures so far, but it also means we’re going to be dealing with those maturing loans eventually – hopefully in a more benign rate environment. The takeaway for anyone seeking financing now is this: credit is available, but it’s still conservative. Lenders expect you to put more skin in the game, and underwriting standards remain strict. If you have a stable asset in a good market, you can likely find a loan, and even at a slightly better rate than six months ago. But if your deal is shaky – say, a half-empty office building or an overleveraged older property – you’re probably going to need a rescue capital partner or a very strategic plan, because banks will still take a hard pass on that. One more thing on lending conditions – refinancing activity is picking up now that rates have come down a tad. A lot of owners have been rushing to lock in refinancing for loans that were on the brink. We’re seeing an uptick in loan applications as borrowers try to get ahead of any further rate volatility. It’s a bit of a race, but at least there’s more breathing room than there was when rates were peaking.

Now, let’s turn to the signs of distress versus recovery across the real estate landscape. It’s really a tale of two worlds right now. On one side, distress is still a major concern in certain segments – most notably, the office sector. Offices have been ground zero for post-pandemic stress, and frankly, that hasn’t fully resolved yet. Nationally, office vacancy rates are hovering at historically high levels. In many big downtowns, you still have vacancy north of 20%, and even higher if you count sublease space. The result is that office property values have been hit hard, and many office landlords are underwater on their loans. Just last month, the delinquency rate on office loans in CMBS (that’s Commercial Mortgage-Backed Securities) reached a record high. Industry trackers report that the overall CRE distress rate is around 11%, near an all-time peak, largely driven by office mortgages going bad. We’ve seen some high-profile office buildings fall into default and some owners essentially handing the keys back to the lender because they can’t make the math work. This includes older offices in cities like San Francisco, Chicago, even New York – buildings that have lost tenants to remote work or newer, more modern spaces and can’t cover their debt at current income levels. It’s a grim situation for those assets. And it’s not just offices – a few older shopping malls and struggling hotels have also faced distress – but offices are definitely the epicenter. The ripple effect is being felt in the lending world (hence the loan extensions we discussed) and even in city budgets for places heavily reliant on office property taxes. So distress is very real, and investors hunting for bargains are circling these troubled properties, though truly distressed sales have still been only a small slice of total deal volume so far this year (many owners and banks are avoiding fire sales).

On the other side, we have areas of real resilience and recovery that deserve attention. Take the retail sector as one example. A couple of years ago, many were writing retail’s obituary, expecting a flood of store closures. Instead, what we have now is a bifurcated but generally encouraging retail landscape. Well-located retail centers and shopping districts are performing well, and retailers are cautiously expanding again. National retail vacancy is at a historic low – roughly around 5% – which is actually tighter than it was pre-pandemic. There’s been almost no new retail development in recent years, so the limited supply is working in landlords’ favor. Landlords of grocery-anchored centers or high-traffic urban retail are finding they have pricing power again because tenants want those few available spaces. We’re seeing this on the ground in various cities: for instance, Chicago’s retail market – which was hit hard a few years back – has been mounting a comeback as foot traffic returns to shopping corridors and new stores open. Even some legacy department store chains, believe it or not, have rethought their strategies and are keeping their best urban flagships alive by improving the in-store experience. Consumer spending, while not red-hot, has been steady enough to support this retail rebound, especially for necessity-based retail and dining. It’s not uniform – weaker malls in less populated areas are still struggling – but the narrative that “retail is dead” has flipped to “retail is evolving.” Investors have noticed too: as I mentioned earlier, retail deal volume jumped this past quarter, reflecting that renewed confidence.

Another bright spot is industrial real estate. Warehouses and logistics facilities had a tremendous run during the height of e-commerce growth, then hit a bit of a lull as a lot of new supply came online. But that pause looks to be ending. Industrial demand has remained robust, and now that developers pulled back on new construction starts, the market is tightening up again. In many major logistics hubs, vacancies that inched up are starting to edge back down. Rents for modern warehouse space are still rising, and tenants are out there looking for quality distribution facilities as supply chains re-optimize. Essentially, the industrial sector’s fundamentals are solid – companies still need to move goods efficiently, and with trends like same-day delivery, etc., they’re not cutting back on warehouse space significantly. Recent reports show that by the third quarter, logistics real estate hit an inflection point: absorption picked up and the outlook is for vacancy to peak and then gradually decline over the next year. So industrial properties continue to be a favored asset class and a recovery leader.

And we must mention the multifamily (apartment) sector as well. Multifamily has been the stalwart through market turmoil and remains so. There were concerns about oversupply in some cities and the impact of high interest rates on apartment values, but by Q3 2025 we’re seeing clear signs of stabilization. Nationwide apartment vacancy is roughly in the mid-6% range and has held steady for about a year. Rent growth had cooled off from the huge jumps we saw in 2021, but now rents are growing at a more normal, sustainable pace – around 1% to 2% annually in many markets, which is much more in line with historical averages. That moderation, coupled with the slight dip in financing costs, has actually brought investors back into the multifamily game with vigor. Investment activity in apartments is climbing again after a lull – multifamily accounted for the largest share of sales volume this year. With the cost of homeownership still high for many Americans (due to high mortgage rates and prices), rental demand remains solid. Additionally, construction of new apartments has started to slow down after peaking, meaning the big wave of new supply is easing. This sets the stage for a healthier balance between supply and demand going into 2026, and potentially even tightening vacancy in the coming years. So, for multifamily owners, things are looking pretty decent: stable occupancy, modest rent increases, and now a chance to refinance or acquire assets with slightly better financing terms. It’s no wonder that multifamily is still regarded as one of the safer harbors in real estate and an area where lenders like agency lenders (Fannie Mae and Freddie Mac) are still actively lending, albeit with more focus on affordability mandates. All in all, the recovery signals are blinking green for sectors like multifamily, industrial, and prime retail, even as sectors like office still flash red in many locations.

Now, for our spotlight on a regional market development outside of NYC – today let’s talk about the Sun Belt and its booming office markets. Yes, you heard that right: office markets that are doing well – but not in the places you might traditionally expect. While New York City and San Francisco have garnered a lot of attention for their office challenges, a very different story has been unfolding in cities like Atlanta, Charlotte, Dallas, and others across the Sun Belt. These markets are quietly emerging as big winners in the office sector. Over the past couple of years, we’ve seen a wave of corporate relocations and expansions into these Sun Belt cities. Companies – especially in tech and financial services – have been moving operations out of high-cost, dense coastal cities and into business-friendly, lower-cost locales. For example, Charlotte has snagged major new offices from companies like Coinbase, Pacific Life, and Citigroup establishing East Coast hubs there. In Texas, Dallas-Fort Worth continues to attract corporations (Goldman Sachs is building a huge campus in Dallas, just to name one high-profile project). And in Nashville, Atlanta, Raleigh – similar trends: firms are setting up regional headquarters or moving entirely, drawn by the talent pool and quality of life in those cities.

This migration has given a real boost to Sun Belt office landlords. Big Sun Belt-focused office REITs and developers – think of players like Cousins Properties in Atlanta or Highwoods Properties in the Carolinas and Tennessee – are reporting strong leasing momentum. In fact, one CEO described it as a “firm re-acceleration” of demand in the region. Here’s a telling statistic: one major office landlord in the Southeast signed over 1 million square feet of new leases through the third quarter of this year, marking its eighth consecutive quarter of strong leasing gains. Even more impressive, roughly one-third of that volume was brand-new tenants expanding into the portfolio, not just renewals. That indicates real growth, not just shuffling the same deck of cards. The result is that in cities like Atlanta and Charlotte, office vacancy rates have started to decline and landlords are actually seeing a bit of rent growth – something virtually unheard of in, say, San Francisco right now. Landlords in these markets have newfound confidence; some are even starting new projects cautiously, or at least talking about build-to-suit opportunities, because they see demand on the horizon.

So why is this happening in the Sun Belt? It comes down to population and job growth. The Sun Belt states have led the nation in population inflows – people and companies moving in – for several years running. With that comes strong employment growth, particularly in white-collar jobs that use office space. Companies are chasing the workforce and lower costs, and the pandemic really enabled this shift since remote/hybrid work proved you didn’t have to be in Manhattan or the Bay Area to operate effectively. Sun Belt cities offer lower taxes, cheaper real estate, and often a warmer climate and desirable lifestyle, which helps in recruiting talent. And importantly, many of these cities have invested in their downtowns and infrastructure over the past decade, so they’re more attractive to big employers now. The upshot is a unique trend: Sun Belt office market resilience in contrast to coastal struggles. It’s not that the Sun Belt is immune to the challenges of remote work – they have their share of older buildings that need upgrades – but the sheer level of inbound growth has offset a lot of those headwinds. For investors, this is a notable development. It means that “office real estate” isn’t a monolithic story nationwide. If you look outside New York (and other traditional hubs), there are office markets in America that are thriving and landlords there are gaining pricing power again. It’s a trend worth watching, as it could shape where future development and investment in the office sector flows. We’re essentially seeing a rebalancing of the office geography – talent and capital shifting to regions once considered secondary markets, which are quickly becoming primary engines of growth. It also underscores a broader theme: follow the demographics and the jobs, and you’ll find real estate opportunity, even in a sector that’s been as challenged as offices.

That’s our rundown for today: interest rates are finally providing a tailwind, capital is flowing back into real estate deals, lenders are cautiously opening their doors, and while we still have pockets of distress – notably in offices – we also have clear signs of recovery and even boom times in certain regions and sectors. It’s a complex picture, but overall a much more encouraging one than a year ago.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael — until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Tuesday, November 4, 2025. Here’s what we’re covering today: the latest commercial real estate developments as the market finds its footing, the fallout and opportunities from a fresh Fed rate cut, what lenders and interest rates are signaling for deals ahead, and a round-up of big property moves—from a major REIT takeover bid to an office foreclosure shaking the market. Let’s get started.

Fed Rate Cuts and Market Reaction

First up, interest rates. Late last week, the Federal Reserve delivered its second straight quarter-point rate cut, bringing the benchmark rate down to roughly 3.75–4.0%. That marks a drop of about 150 basis points over the past year – a significant pivot from the rapid hikes we saw earlier. The decision wasn’t unanimous: some Fed officials argued for a bigger cut to bolster the economy, while others wanted no cut at all. Chair Jerome Powell struck a cautious tone in his press conference, emphasizing that another rate reduction at the December meeting is “not a foregone conclusion.” In other words, the Fed isn’t promising a steady diet of cuts from here on out – it’s going to watch the data and play it by ear.

So how did markets respond? Initially, we saw a burst of optimism. Bond yields, which move inversely to prices, fell right after the Fed’s announcement – in fact, the 10-year Treasury briefly dipped below the 4% mark for the first time in months. For borrowers, that was a welcome development. One Moody’s analyst even called those sub-4% yields a “momentary gift” for anyone looking to refinance or make a deal. However, that gift didn’t last long. As Powell poured cold water on the idea of multiple future cuts, traders reassessed, and the 10-year yield bounced back above 4% during his remarks. Stock markets overall have been relatively steady through this; the S&P 500 is hovering near recent highs, while REIT stocks initially jumped on the rate news but then gave up some gains as long-term yields rebounded. The push-and-pull in markets shows there’s both relief that rates are coming down and uncertainty about how much further relief we’ll actually get.

Complicating the outlook is the lack of fresh economic data. Washington’s budget stalemate has led to an ongoing federal government shutdown, which means many official reports – on things like jobs and inflation – aren’t being published on schedule. The Fed is essentially flying partially blind. From what we do know, inflation has cooled to around 3%, and unemployment is somewhere in the mid-4% range, but without up-to-date government numbers, it’s harder for policymakers to gauge the economy’s exact condition. Powell admitted the path forward is murky. This data vacuum is making the Fed even more cautious, since they don’t want to ease up on inflation too soon, but they also don’t want to miss signs of a sharper slowdown.

Now, for commercial real estate, these rate cuts are already having an impact. Even before the latest Fed move, the CRE market was showing sparks of life after a very quiet spell. September’s deal volume for commercial properties hit about $42 billion, which is up roughly 19% compared to a year ago. That’s a notable jump, and it wasn’t just apartment buildings or industrial warehouses – even the office sector saw an uptick in sales as some brave investors went bargain-hunting. By mid-year, office transaction activity was up over 40% from its lows, a surprising sign of resilience in a sector that’s been under extreme pressure. Investors seem to be entering the fourth quarter with a bit more confidence and a clearer sense of where property values should be. The Fed’s rate cuts have opened a window of opportunity: lower financing costs are enticing buyers and sellers back to the table. Still, that window may not stay open indefinitely. With the Fed divided and more cuts not guaranteed, many dealmakers are thinking, “Better to act now while conditions are favorable.” In short, the rate relief is energizing the market, but there’s a shared understanding that we should enjoy it while it lasts – uncertainty is still hanging in the air.

Financing and Lending Outlook

Next, let’s shift to financing. The lending environment for commercial real estate is looking brighter than it has in quite some time, though with a few caution flags. The Mortgage Bankers Association (MBA) just released a new forecast, and they’re predicting a significant rebound in loan activity next year. According to the MBA, commercial and multifamily mortgage originations could surge by about 24% in 2025, reaching roughly $827 billion in volume. To put that in perspective, that would make 2025 one of the busiest financing years on record. They’re expecting about half of that to be in multifamily lending (around $417B) and the other half in loans for offices, retail, hotels, and industrial properties combined. What’s driving this anticipated jump? In their view, falling interest rates and a surprisingly resilient property market. Basically, as borrowing costs come down and property income holds up better than some feared, more investors are going to refinance and transact, and lenders will be more willing to extend credit.

However, this rosy lending outlook hinges on the Fed continuing to ease policy. The MBA’s scenario assumes that after those rate cuts in September and October, the Fed will cut once more in December and possibly keep trimming in 2026. Their chief economist noted that the Federal Reserve’s priorities appear to be shifting – inflation is less of a red alarm now, while concerns about economic growth and a cooling job market are rising. If the Fed is indeed pivoting toward stimulating the economy, that bodes well for interest rates staying low or going lower, which in turn supports more lending and deal-making.

That said, lenders aren’t losing their discipline overnight. In fact, the MBA expects this financing boom to be somewhat short-lived. Beyond 2025, they see volumes leveling off or even slipping back as the cycle progresses. By 2027, they project total CRE loan volumes could actually dip a bit from that peak, as the economy might slow and the easy gains from rate drops peter out. So there’s a sense that 2025 might be a high-water mark – a year to make hay while the sun shines – before a possible cooling off. In practical terms, if you’re an investor or borrower, the message is: the next 12-18 months could present the best financing conditions we’ve seen in a while, but don’t assume it’ll last for the entire decade.

Now let’s talk current interest rates and lender sentiment. As mentioned, the 10-year Treasury yield is hovering around the low-4% range right now, which is a noticeable improvement from the 4.5%–5% territory it was in at the start of the fall. Mortgage rates for commercial loans have correspondingly edged down. We’ve heard of some deals that were penciling at interest rates well over 6% now coming in closer to the low-6 or high-5 percent range for solid borrowers – a relief, though still higher than the sub-4% loans of the ultra-low-rate era. Importantly, credit spreads (the extra cushion lenders demand above the Treasury yield) remain on the wider side, reflecting a bit of caution. But even those spreads are starting to tighten a touch as more capital competes to lend. Banks, for example, have been slowly increasing their real estate lending again after hitting the brakes last year. And while some regional banks are still digesting their issues from earlier this year, life insurance companies and private debt funds have stepped up, keen to finance good projects now that yields are attractive. We’re even seeing a comeback in more creative financing: things like mezzanine debt and preferred equity are available again for the right deals, albeit at a price.

Yet, it’s clear not all is completely healed in the debt markets. A look at the commercial mortgage-backed securities (CMBS) arena shows ongoing stress. New data from Trepp for October showed the overall CMBS delinquency rate ticked up again to about 7.5%, one of the highest levels in years. The office sector is the real trouble spot – office loans in CMBS are now nearly 11.8% delinquent, an all-time high, after worsening again last month. That means more than one in nine office-backed CMBS loans is in some stage of default. And it’s not just offices: even multifamily CMBS loans, which typically have very low default rates, have seen delinquencies rise above 7% for the first time in a decade. This broadening stress tells us that higher interest costs and softer property values have been taking a toll on loans made a few years back.

So lenders remain vigilant. They’re doing deals, but they’re carefully picking their spots. We hear that lending terms are still conservative – think lower loan-to-value ratios, more scrutiny on borrower track records, and interest rate caps or hedges often required for floating-rate loans. The silver lining is that with each rate cut and each month of market stability, lenders get a bit more comfortable that the worst-case scenarios (like a cascade of forced fire sales) might be avoided. In fact, there’s a sense of selective optimism: some banks and debt funds report that their pipelines for new loans are filling up again, especially for multifamily projects and well-leased industrial properties where the fundamentals are strong. Bottom line on financing: conditions are improving and 2025 is shaping up to be a much better year for getting deals funded. But the scars of the past two years mean underwriting is still tight, and any sign of economic trouble could make credit markets skittish again. For now, though, the cost of capital is easing, and that’s good news for the deal junkies out there.

Deals, Defaults, and Developments

Now let’s dive into some major deals and developments making headlines in commercial real estate. It’s been eventful on all fronts – we’ve got an unsolicited REIT buyout bid, a bargain office tower sale, and a high-profile foreclosure all unfolding at once, illustrating the mix of opportunity and pain in today’s market.

First, the REIT sector rarely sees hostile takeover attempts, but that’s exactly what’s brewing with Whitestone REIT. Whitestone is a publicly-traded real estate investment trust focused on neighborhood retail centers, and its stock has been underperforming. Enter MCB Real Estate, a private real estate investment firm: MCB already owns about 9% of Whitestone’s shares, and yesterday it went public with an offer to buy the rest of the company. They’re proposing $15.20 per share in cash, which is roughly a 20% premium over Whitestone’s recent stock price (and about 25% above the 30-day average price). They’ve signaled that the financing is lined up – reportedly with both equity partners and debt support, including a financing letter from Wells Fargo – so they mean business. MCB’s argument is that Whitestone’s management hasn’t delivered, pointing out that the company’s valuation and operating performance trail its peers. In their announcement, MCB effectively told Whitestone’s board, “Work with us on a sale or start seriously shopping the company to others – otherwise we, as significant shareholders, will take action,” hinting they’d vote against the current board if ignored. We’ll see how Whitestone responds, but it’s a striking move that shows how investors are hunting for value. With REIT stocks beaten down in the past year by high interest rates, some deep-pocketed buyers smell an opportunity to take properties private at a discount. The fact that MCB is willing to pay a premium suggests they see upside, perhaps betting that lower rates and a rebound in tenant demand will lift the underlying property values. This will be an important one to watch; if it succeeds, it could embolden other activist investors to go after underpriced real estate companies.

Next, turning to the office sector, we have a tale of two very different outcomes: one of opportunity and one of distress. On the opportunity side, an eye-catching office tower deal just closed in Chicago. Portland-based Menashe Properties has purchased a 31-story, 640,000-square-foot office tower at 125 South Wacker Drive in downtown Chicago’s West Loop for only $51.5 million. If that price sounds low, it is – it works out to roughly $80 per square foot for a big high-rise right across the street from Willis Tower. To put that in context, replacement cost for a building like that would be several times higher, and such buildings traded for hundreds of dollars per square foot a few years ago. But this is the new reality: the tower was only 63% leased and struggling to fill space, and the previous owner (a large Canadian institutional investor) decided to cut its losses and sell. Menashe, on the other hand, sees upside. This isn’t their first rodeo in Chicago; they bought another large downtown Chicago office building in 2023 at a steep discount as well. In that case, they took a 60% occupied tower and, through aggressive leasing, managed to raise occupancy to around 85% in under two years. Their CEO was quoted saying Chicago’s office market is “under-officed” – basically arguing that demand for quality space is still there, but new construction has been nil, so well-located buildings can rebound. He pointed out that the top-tier, trophy office buildings in Chicago are still largely full; it’s the outdated Class C stock that’s really struggling. The Wacker Drive building they just bought is considered an “A-minus” quality property with no single tenant taking more than one floor – which actually can be an advantage, giving them flexibility to lease in chunks to all kinds of midsize tenants. It’s a bold bet for sure, but if Menashe can lease it up from 63% to, say, 90% over the next few years, they will have acquired a flagship asset at a bargain-basement basis. Deals like this highlight a trend of value investors swooping in to buy office buildings at prices unimaginable before the pandemic. These buyers are essentially saying: yes, the office sector is in turmoil, but not every office is obsolete. If you can buy at a low enough price, you can make the numbers work – either by repositioning the property, leasing it up, or just waiting for the market to stabilize. It’s high risk, high reward, and it’s not for the faint of heart, but it’s happening in select cities.

On the other end of the spectrum, we have continuing distress in offices, exemplified by a situation involving Brookfield Asset Management. Brookfield is a global real estate powerhouse that, among many things, owns a lot of office buildings. Over the past year, they’ve made headlines by defaulting on loans for certain office properties where they saw the outlook as too bleak to keep feeding cash. The latest chapter unfolded in the Washington, D.C. suburbs. Brookfield had a portfolio of 12 suburban office buildings in Maryland and Northern Virginia that it acquired in the mid-2010s. These weren’t trophy downtown skyscrapers, but rather mid-rise offices in markets that have been hurt by tenants shrinking and moving out. Brookfield had financed that portfolio with a $223 million CMBS loan – and earlier this year, they defaulted on that loan, essentially deciding not to continue supporting assets that were deep underwater. Fast forward to last week: the lender syndicate forced a foreclosure auction for these properties. At the auction, five buildings in Maryland ended up going back to the lenders because bidders either didn’t show up or bid too low. Only one building, an office property in North Bethesda, actually attracted an outside buyer willing to pay more than the lender’s opening bid. That one sold for about $17.9 million, which was notably above the lender’s minimum – so that at least indicates there’s some price at which investors will step in. But for the rest, there were essentially no takers, so the lender had to take ownership. This is pretty significant: even at fire-sale pricing, most of these suburban offices couldn’t find a buyer. Brookfield, of course, is now out of the picture on those assets – they’ve been stripped of them. And remember, Brookfield is as savvy and deep-pocketed as they come; if they’re walking away, it tells you those particular properties were in dire straits. We learned that these offices had high vacancy and likely large capital expenses looming (for renovations or re-tenanting) that just didn’t pencil out. In fact, Brookfield had already surrendered two other buildings from this portfolio earlier in the year (one in Atlanta, one in Northern Virginia), so this auction was the grand finale of that loan’s collapse. It underscores a broader reality: many older office buildings, especially in less prime locations, are facing valuation drops of 50% or more, and not every owner will continue to hold on. We should expect to see more foreclosures and hand-backs like this across the country, unfortunately. The flip side is that these distressed sales could eventually pave the way for repurposing some of these buildings. At the Brookfield auction, for instance, a local developer did show up and bid on one office building with plans to tear it down and build housing. They didn’t win it – the lender credit-bid $12.5 million to keep that one – but it shows the interest is there to convert or redevelop obsolete offices if the price is right. It may take time and further price drops, but this kind of recycling of old office assets into apartments or other uses is likely part of the endgame in markets with too much office space.

Stepping back from individual deals, let’s touch on the broader property sector trends that tie into these stories. We’ve been talking a lot about offices, so let’s acknowledge: not every office market is in freefall. In fact, there are signs of life. Nationwide, the office sector has now notched six consecutive quarters of positive net absorption. That means, in aggregate, more office space is being leased than is being vacated quarter after quarter for the past 18 months or so. It’s a slow grind, but it’s positive momentum. As a result, the national office vacancy rate actually edged down in Q3 to about 16.4%, from a peak that was a bit higher. Some places are really outperforming: New York City, for example, saw a solid uptick in office leasing recently and a dip in its vacancy rate. Tech-centric markets like San Jose also saw improvement as certain companies expanded or upgraded spaces. And interestingly, a few Sun Belt cities (Miami-Dade comes to mind) and Midwestern markets (like Milwaukee or Indianapolis) are boasting some of the lowest office vacancies in the country, often because they didn’t overbuild and still have companies needing space. So, the office story is becoming very bifurcated – the best buildings in the best locations are doing okay or even well, while the weak are getting weaker. That mirrors what we just discussed: someone will buy a well-located, decent-quality building and fill it, but an outmoded building in a saturated suburban market might fall by the wayside.

Looking at multifamily, conditions are softer than the boom days of 2021, but far from disastrous. Apartment supply has increased; we’ve had a lot of new units come online this year, especially in fast-growing metros like Austin, Dallas, and Phoenix. That new supply has pushed vacancies up a bit in those cities and tempered rent growth. Nationally, apartment vacancy is around 4.6%, which is up from the rock-bottom 3-4% range we saw during the post-pandemic rental frenzy, but it’s still low by historical standards. In fact, it’s about a full percentage point lower than it was a year ago – partly because some previously empty new buildings have filled up, and partly because construction is starting to slow. Rents nationally are more or less flat to modestly up year-over-year, with a lot of variation by city. Oversupplied markets (again, think many Sun Belt cities) have seen rents stagnate or even dip a little, while supply-constrained markets like parts of the Midwest or coastal cities (Chicago, Cleveland, even San Francisco) have surprisingly seen rents rise north of 5% over the past year. The reason? Those latter markets didn’t build as much, so even a normal level of demand is enough to tighten them up. The takeaway on apartments: demand is steady and helped by high house prices (many people can’t afford to buy and thus keep renting), but an abundance of new units in certain locales is giving renters more choices and keeping landlords in check. Importantly for investors, multifamily remains a favored asset class for financing – banks and agencies like Fannie Mae are generally open for business on good apartment projects, which goes back to why the MBA is forecasting solid multifamily lending growth.

The industrial sector – warehouses and logistics facilities – has been the darling of commercial real estate for years, and it’s still performing well, though it’s normalizing a bit. Developers added a huge amount of industrial space over the last decade (over 3.5 billion square feet built in ten years, which is extraordinary). That building boom is finally catching up to the market, and we’re seeing vacancies in warehouses tick up as some of that new space awaits tenants. Industrial vacancy is now about 7.8% nationwide, a 12-year high, but context is key: 7.8% is still quite healthy by most standards, and much of the empty space is brand-new construction that’s in lease-up. In the third quarter, roughly 20 million square feet of industrial space was absorbed (meaning tenants moved in), which shows that underlying demand from e-commerce, manufacturing, and third-party logistics firms is still positive – just not as white-hot as a couple of years ago when companies were scrambling for any storage they could find. The hottest industrial markets remain near major ports and distribution hubs – Southern California’s Inland Empire, parts of New Jersey, Dallas-Fort Worth, Atlanta – those are still seeing strong activity. And interestingly, data centers (a subtype of industrial, in a way) continue to be a growth area; places like Northern Virginia and Dallas are booming with data center developments as big tech firms invest in cloud infrastructure. So industrial real estate’s trajectory is more of a moderation from extreme highs, rather than a downturn.

Finally, retail real estate. This one often gets overlooked, but it’s quietly steady and even improving. The narrative for years was that e-commerce is killing physical retail, but what we see now is a more nuanced picture. Quality retail centers, especially those anchored by grocery stores, essential services, or popular dining and entertainment options, are doing quite well. The national retail vacancy rate is under 5%, which is lower than it was pre-pandemic. In top-tier trade areas – for instance, parts of the Northeast like Northern New Jersey, or booming areas like South Florida – retail vacancies are extremely low, sometimes under 3-4%, and landlords actually have some pricing power on rents again. There are still weak spots: older malls continue to struggle unless they reinvent themselves, and any retail tied to discretionary luxury spending could be tested if consumer confidence falters. In fact, looking ahead, some retailers are cautious with the holiday season approaching, especially with a backdrop of higher consumer prices and, believe it or not, some new tariffs on imported goods that could raise costs. But so far, from a property perspective, retail landlords are seeing tenants expand in segments like discount stores, groceries, fitness centers, and fast-casual restaurants. Even many e-commerce brands are opening brick-and-mortar stores now, which is a trend no one expected a decade ago. So retail has its challenges, but it’s not the apocalypse that was once predicted – the sector has adjusted, and the space that remains is, by and large, the survivors that are thriving.

All told, as we sit here in late 2025, the commercial real estate landscape is showing signs of stabilization. We’re in a data-driven, bifurcated market: investors and lenders are differentiating between winners and losers more than ever. Lower interest rates are acting as a bit of a shock absorber, helping values and bringing some players back into the game. There’s fresh optimism that the worst might be behind us – you see it in the lending forecasts and the deal volume uptick – but there’s also an acknowledgement of risk in those delinquency stats and foreclosures. It’s a nuanced moment. For deal junkies like us, there’s a lot happening: you have to balance the opportunities, like scooping up a distressed asset on the cheap or locking in a low-rate loan, against the risks, like a soft economy or the possibility that an asset class won’t bounce back as hoped. In short, cautious optimism is the prevailing mood.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael — until next time!

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Wednesday, November 5, 2025. Here’s what we’re covering today: the latest commercial real estate news and trends, how markets are reacting to the Fed’s recent rate cut, what’s happening with lending, deal flow and property performance, and some notable transactions, defaults and repositionings shaping investor sentiment.

Let’s start with the big picture. Over the past few weeks, the Federal Reserve delivered another quarter-point interest rate cut – its second consecutive cut – bringing the benchmark federal funds rate down to roughly 3.75% to 4.0%. For the commercial real estate world, this marks a significant shift in the winds. After a prolonged period of rising interest rates that put a chill on dealmaking and squeezed property values, the Fed is finally easing up. Markets have certainly noticed: bond yields have been retreating since the cut. In fact, the 10-year Treasury yield briefly dipped below 4% in late October for the first time in over a year. Lower yields translate into lower borrowing costs across the board, which is welcome news for anyone refinancing loans or underwriting new deals. It’s a sign that financing conditions, while still not cheap, are moving in a more favorable direction than we’ve seen in a long time.

Equity markets have also responded positively to the Fed’s pivot. The stock market has been on a steady climb, and real estate equities are perking up as investors anticipate relief from high interest costs. Real estate investment trusts – REITs – and other property stocks generally perform better when rates fall, since cheaper debt can boost their earnings and higher-yielding real assets become more attractive. We’re seeing that dynamic begin to play out. Of course, Fed Chair Jerome Powell has been careful in his messaging – hinting that while the Fed is now in an easing cycle, future cuts will depend on the data. There’s a bit of uncertainty about whether we’ll get another cut before year-end. But for now, the trajectory of monetary policy is giving the real estate sector a much-needed breather. Inflation has been cooling to more comfortable levels, which gives the Fed room to lower rates without stoking price pressures. Even the broader economic backdrop – despite some headwinds like a drawn-out federal government shutdown last month – hasn’t derailed this cautiously optimistic mood. In short, the financial conditions for real estate are better today than they were a few months ago, and that’s injecting some optimism into the industry.

You can really see this optimism in the deal data. After a very slow start to the year, commercial real estate transactions have started to bounce back in a big way. September, in fact, was a blockbuster month: roughly $27 billion in U.S. commercial property changed hands, making it the busiest month of 2025 so far. That surge in deal volume was broad-based. Notably, big-ticket deals – those over $100 million – jumped over 20% compared to the month prior, and mid-sized deals in the $50–$100 million range also saw a strong rebound. It seems that buyers and sellers who had been sitting on the sidelines are finally coming back to the negotiating table. A lot of capital that was on pause is now looking for opportunities, encouraged by the turn in the interest rate cycle. As one industry analyst put it, September felt like an inflection point where the market started finding its footing again after an extended period of hesitation. Investors are sensing that the worst of the price correction may be behind us, and with borrowing costs inching down, they’re more willing to pull the trigger on acquisitions.

It’s important to note, though, that this is a split market – we’re seeing strength and stress side by side. On the one hand, many properties that do sell are still commanding solid prices. Data shows that a majority of assets trading now are selling for more than their previous sale price. That implies values for quality assets are holding up or even rising modestly, especially in favored sectors. On the other hand, for the more challenged corners of the market, discounts are steep and distress is very real. The clearest example is the office sector. We continue to see distress there hitting new milestones. In October, the commercial mortgage-backed securities (CMBS) delinquency rate for office loans hit an all-time high – around 11.8% of all securitized office loan balances are now delinquent. That’s a record level of default for offices, surpassing even the darkest points from earlier in the year. And it’s not just offices: overall CRE loan delinquency (across all property types in CMBS) ticked up to about 7.5%, and notably the multifamily sector’s delinquency rate climbed above 7% for the first time in a decade. In other words, even as transaction activity improves, a lot of owners are still under strain, particularly those who bought or refinanced at the peak and are now facing higher debt costs or looming maturities.

We’ve seen some high-profile defaults and troubled loans making headlines, which certainly affects investor sentiment. For instance, a notable commercial real estate finance firm recently defaulted on a package of loans amid allegations of misrepresenting collateral – a jarring reminder that some excesses and even fraud are being exposed in this tougher environment. And several landlords in big cities have effectively walked away from their office towers, handing the keys back to lenders when the math just no longer works out. Each week seems to bring news of another aging downtown office building going into receivership or being put up for foreclosure auction because tenancy has fallen and values sank below the mortgage balance. These stories are sobering for investors and lenders alike. However, they’re also part of the market’s healing process – as painful as they are, each workout or foreclosure can ultimately help reset values to a level where a new investor can step in and repurpose or re-tenant the property. We are indeed hearing about more loan workouts and restructurings behind the scenes. Lenders, especially local and regional banks and debt funds, are negotiating extensions on loans or modifying terms where they believe a property has long-term viability. Rather than immediately foreclose, many banks are opting to “amend and extend,” essentially kicking the can down the road in hopes that conditions improve or the borrower can inject more capital. It’s a delicate dance: lenders don’t want to take massive losses, and borrowers don’t want to lose their properties, so both sides are trying to find middle ground. This trend of workouts is a key storyline right now – it shows both the stress in the system and the efforts to manage through it without a fire sale wave if possible.

So, how are lenders approaching new financing today? Cautiously, but there are glimmers of easing. Big banks have broadly reduced their exposure to commercial real estate over the past year, and some high-profile bank failures earlier on put everyone on high alert. As a result, traditional bank lending has been tight, especially for riskier projects. But with the Fed’s rate cuts starting to flow through, the cost of debt is coming down a bit. Commercial mortgage rates have pulled back from their peaks – for prime borrowers, rates that were well into the 7% range earlier this year are now edging lower, in the mid-6% territory. That’s still relatively high historically, but it’s a definite improvement. Life insurance companies and private debt funds are also stepping up to lend, often filling gaps that banks leave. These alternative lenders have capital they need to deploy, and many see this moment as an opportunity to write loans at attractive yields with strong collateral. However, underwriting remains very conservative. Lenders are demanding more equity in deals (lower leverage loans), stronger covenants, and they are scrutinizing cash flows intensely. Simply put, financing is available for solid deals – think apartments with good occupancy, industrial warehouses with long-term leases, or well-performing shopping centers – but it’s still very hard to finance speculative projects or weaker assets like an old half-empty office tower. We’re also noticing that loan origination volume in CMBS and other channels, which had been subdued, is starting to stabilize. There’s talk that if rates continue to fall, we could even see a modest revival in commercial mortgage bond issuance and more refinancing activity early next year. For now, though, “caution” is the keyword in lending, even as conditions gradually improve.

Now let’s take a tour around the various property sectors to see how they’re performing, because it’s a mixed bag across the board. Starting with office, which has been the most troubled asset class: we are actually seeing some faint glimmers of hope in the highest-quality segment of the office market. In certain coastal cities, premier office buildings – the so-called “trophy” assets with great locations and modern amenities – are managing to attract tenants again. Tech and AI-related companies have driven some notable lease deals in places like the Bay Area, indicating that if an office property is truly top-notch, there’s still demand. New York City, interestingly, has reported that office attendance (the number of workers returning to the office) is now above pre-pandemic levels, and other cities like Miami are close behind. That suggests a gradual return-to-office trend is underway, which is certainly encouraging news for landlords. In some markets, we’re even seeing rents inch up for the first time in a long while – Silicon Valley and parts of San Francisco, for example, have experienced rent growth in certain submarkets driven by the flight-to-quality and by emerging tech firms needing space. However, we can’t ignore the bigger picture: nationally, office vacancy continues to rise and has hit record highs. It’s really a bifurcated situation – the Class A, high-end offices are stabilizing, while the older, less desirable Class B and C offices are struggling badly. Many companies have downsized their footprints and gravitate only to the best spaces, leaving millions of square feet of lower-tier office space empty. The life science office niche, which was booming a couple years ago, has also cooled significantly due to tighter funding in biotech; those specialized lab offices are facing very soft demand now. With office revenue under pressure, property valuations for many office buildings have plummeted, which loops back to the delinquency issues we discussed.

One of the most promising solutions for the office glut is repositioning and conversion. We’re seeing momentum build in office-to-residential conversions in several cities. It’s not easy – the economics and zoning hurdles are challenging – but it’s happening. By one count, only a few dozen office-to-resi conversions were completed in the last couple of years, but there are several hundred more in planning for 2025 and beyond. That’s a dramatic increase in pipeline. Cities like New York, Washington D.C., Chicago, and San Francisco are all looking at ways to incentivize turning obsolete office buildings into apartments, condos, or other uses. This trend gives a silver lining to the office crisis: developers are finding creative ways to recycle some of these buildings, which over time could help absorb excess supply and bring new life to downtown areas. From an investor sentiment standpoint, every successful conversion or creative repositioning story adds a bit of confidence that the office sector’s woes can be mitigated rather than just letting buildings sit dark. We’ll continue to follow those projects closely.

Shifting to the industrial sector – warehouses, logistics facilities, distribution centers – this has been the darling of commercial real estate for much of the past decade, and it remains fundamentally solid, though there are signs of cooling after red-hot growth. Earlier in the cycle, industrial landlords could practically name their price as e-commerce drove insatiable demand for space. Now, leasing activity has slowed from that breakneck pace. Rent growth, which was in the double digits annually during the peak, has flattened out in many major markets. In some of the most supply-constrained markets like Southern California’s Inland Empire, we actually saw asking rents tick down a bit recently for the first time in years. What’s causing that? Mainly a wave of new supply finally hitting the market and a slight pullback in tenant demand as companies digest the space they’ve taken in recent years. Vacancy rates for industrial properties have edged up gradually (they’re still low, but off the historic lows). And any speculative projects – warehouses built without a tenant in hand – are taking longer to lease up now. Essentially, the industrial market is normalizing from an extreme landlord’s market to something more balanced.

That said, investor appetite for industrial real estate is still very strong. Warehouses are considered a high-conviction play because the long-term drivers (like online shopping, supply chain reconfiguration, and even the rise of data centers and cloud storage requiring more specialized industrial spaces) are intact. We’re actually seeing intense competition among buyers for core industrial assets in prime locations; pricing on those has held remarkably steady through the interest rate turmoil. Now, with construction lending tighter and development starts dropping off sharply (developers have pulled back on new projects due to higher costs), the pipeline of new warehouses is shrinking. That sets the stage for a potential supply crunch down the road. Many analysts expect that, after this short-term plateau, industrial rent growth will reaccelerate in a year or two once the current batch of new buildings gets absorbed and few new ones are coming on. So the long-term outlook for industrial remains quite positive. For now, investors are selectively taking advantage of any softness – for example, if a seller of an industrial property needs liquidity, buyers are jumping at the chance to acquire a quality warehouse at a slight discount today, knowing the sector’s fundamentals are likely to strengthen again. In summary, industrial properties have moved from a torrid sprint to a steady jog, but they’re far from hitting a wall.

Next up is retail – brick-and-mortar retail real estate. A few years ago, the narrative around retail was rather pessimistic with the e-commerce threat, but here in 2025 the story is surprisingly upbeat for many retail properties. The retail sector has shown a lot of resilience. Nationally, retail property occupancy rates are hovering around 95%, which is quite high. Well-located shopping centers, especially those anchored by grocery stores, home improvement stores, or other essential retailers, are doing brisk business and maintaining foot traffic. Consumers, it turns out, have returned to in-person shopping and dining with enthusiasm after the pandemic, and retailers that survived the past decade’s shakeout are often stronger and more omni-channel savvy. We haven’t seen the big wave of post-pandemic retail bankruptcies that some feared; instead, most major chains are adapting and even expanding selectively.

Leasing activity in retail has been steady, though one interesting factor is that new development is still subdued – hardly any completely new malls or retail centers are being built compared to historical norms. That limited supply is actually helping existing centers thrive, because retailer demand – while not explosive – has fewer places to go, and every decent vacant storefront is a valuable commodity. In fact, in some cities a lack of quality retail space means tenants are waiting for spots to open up in the best centers. That’s one reason we’ve seen only modest rent growth: it’s not that demand is weak (it’s pretty healthy), but rather many of the top centers are essentially full, and the remaining vacant spaces are often in older or less attractive properties that are harder to lease. Landlords of those lesser properties are holding rates or even dropping them to lure tenants, which skews the averages. Meanwhile, for premium retail assets, rents have been stable or rising slightly, and landlords have bargaining power.

Investors have taken notice of retail’s stability. We’ve observed robust investment activity in retail real estate this year. By the first half of 2025, dozens of large retail property transactions had closed, including quite a few deals in the $100+ million range and even some megadeals north of $200 million. There’s a sense that high-quality retail centers (say, a successful open-air shopping center or a prime mall that’s been repurposed) offer reliable cash flow and, importantly, they often can be acquired at higher cap rates relative to multifamily or industrial. That means an investor can get a better current yield, which is attractive now that the spread between cap rates and interest rates is starting to widen again in a good way. We even saw one of the biggest alternative asset managers make a multi-billion dollar bet on retail real estate recently, acquiring a retail REIT that owns shopping centers. That kind of transaction underlines a renewed confidence in brick-and-mortar retail’s future.

Now, retail isn’t without challenges – certain subsectors like some department stores or specialty retail can still struggle, and there’s ongoing chatter about how tariffs or higher import costs could pressure retailer margins (for instance, tariffs on goods could make inventory more expensive, and retailers like Walmart or Costco have indicated they’ll manage costs carefully or spread them across suppliers and product lines to mitigate impact). But by and large, sentiment around retail properties has improved markedly. We should also mention repositionings in retail: a lot of older shopping malls have been undergoing transformations. Dead or dying malls are being redeveloped into mixed-use “town center” style projects with apartments, offices, entertainment venues, and modern retail all integrated. A great example recently is an aging suburban mall being reinvented into an open-air lifestyle and dining destination – these projects show that with creativity and capital, retail real estate can adapt to new consumer preferences. For investors, seeing those redevelopment plans move forward provides reassurance that even if a retail asset is obsolete in its current form, there might be a path to create value through redevelopment. That potential adds an extra layer of optimism for retail real estate going forward.

Let’s turn to multifamily, the apartment sector, which has been a steady performer but not without its own ups and downs. Apartments benefited greatly from the housing boom and then rising rents post-pandemic, but they hit a bit of a soft patch recently as a wave of new supply came online and rent growth naturally cooled from its double-digit pace of 2021-2022. Through late 2024 and into early 2025, we saw vacancy rates inch up in many markets because a lot of new multifamily projects were delivered, giving renters more choices and easing some of the frenzy. Landlords in certain cities had to offer concessions – like a free month or two of rent – to fill those shiny new units. As a result, rent growth flattened and, in a few overbuilt submarkets, even went slightly negative for a time. This was actually an expected adjustment after the feverish growth of prior years.

Now, however, it appears that the multifamily market is regaining its balance. The upward creep in vacancy has essentially leveled off, and forecasts suggest vacancies will start to decline again over the next couple of quarters. What’s driving that? A big factor is the construction pipeline is slowing down. High interest rates and higher construction costs over the last year led to far fewer new apartment developments breaking ground. So while we’re still absorbing the units that opened in 2024 and early 2025, beyond that horizon fewer new projects are set to hit the market. It’s a classic supply/demand story: with new supply drying up and the population still growing (and many would-be homebuyers sticking to renting due to expensive mortgage rates), the fundamentals for apartments look solid in the medium term.

Even in the last few months, anecdotal reports indicate leasing traffic picked up and landlords were able to scale back some of those concessions in many markets. Year-over-year rent growth is still positive nationally, albeit modest. Some regions are standouts – for example, the Bay Area has seen a strong rebound in rent growth, with projections in some Silicon Valley cities showing double-digit rent increases over the next year as the tech sector revives and hiring resumes. In contrast, some of the boomtowns in the Sunbelt like Austin, Denver, or Phoenix are still digesting a lot of new units. Those markets are seeing high concession levels right now because competition among new buildings is fierce for tenants. But even in those cities, demand is pretty robust; people continue to move in, and job growth is decent, so it’s just a matter of time until the excess supply is leased up.

One interesting trend within multifamily is a bifurcation by class of property. Class A luxury buildings have felt the brunt of new supply competition – they’re the ones offering the most rent discounts currently to keep occupancy up. Meanwhile, Class B and C apartments (older, more affordable units) are performing very well. There’s very limited new construction in the workforce or affordable segment, so these properties have low vacancy and in many cases have been able to raise rents steadily because renters priced out of the new luxury buildings still need housing and will absorb those older units. In fact, some Class B/C owners have reported they’re essentially full and can selectively increase rents, given how tight the market is for reasonably priced apartments. That’s a reminder that housing affordability issues, while challenging for society, do bolster demand for those mid-market rental properties.

From an expense standpoint, a relief for apartment operators this year has been a reversal in one key cost: property insurance. Last year, insurance premiums spiked dramatically (especially in disaster-prone areas), squeezing apartment budgets. But in 2025, increased competition among insurers has actually brought insurance costs down in many markets, or at least capped further increases. This has been a welcome budgetary relief and has helped offset rises in other expenses like property taxes or maintenance.

Investment in multifamily has been somewhat muted this year because of the interest rate spike – many potential buyers and sellers found it hard to agree on pricing when debt costs were so high. Now, with financing costs inching lower and the market outlook improving, we anticipate apartment deal volume will start to pick up again. Already, we’re seeing more listings and some closings where buyers are acquiring properties at a discount to replacement cost, figuring they can ride the next wave of rent growth as supply tightens. Apartment values overall have been pretty resilient; they took a modest hit when rates jumped, but there hasn’t been a free-fall by any means. And given the strong long-term demand for housing, investors remain generally bullish on multifamily. Lenders, however, are a bit watchful here because we have seen a tick up in multifamily loan delinquencies (as noted earlier). That’s largely tied to loans on newer developments that haven’t leased up as quickly as projected or older properties that had aggressive, floating-rate debt now facing much higher interest payments. Those situations are where we’re seeing more loan workouts – some multifamily owners are going back to the lender asking for an extension or a refinance, possibly bringing in new equity partners to shore up the deal. It’s work-in-progress, but overall, the expectation is that multifamily fundamentals will strengthen from here, which should help resolve many of those issues in time.

Before we wrap up, a quick note on other sectors that deserve mention. Hospitality – hotels – has enjoyed a strong run as travel rebounded strongly over the past year. Both leisure travel and business travel picked up, and hotel occupancy and room rates have been healthy, especially in resort markets and popular urban destinations. Some challenges for hotels include higher labor costs and the question of how sustainable the travel boom is if the economy slows, but so far, investor interest in hospitality is back. In fact, hospitality is one area attracting big capital: we’ve heard of private equity firms and even sovereign wealth funds eyeing hotel portfolios, betting on the continued desire for experiences and travel. So hotels, which were hit hardest in 2020, have made a big comeback and are on investors’ radar again.

Meanwhile, alternative property types like data centers, student housing, life science labs, and self-storage each have their own story. Data centers, for one, are booming as an investment category – the rise of cloud computing and AI means demand for server space is sky-high. There was a stat floating around that acquisitions of existing data centers jumped over 60% last year, and that momentum is carrying into 2025. It’s become a mainstream asset class for big institutional investors now. Self-storage had a bit of a cooling off after a pandemic golden era, but it’s stabilizing and remains a favored niche for many, with new supply now slowing. And as a fun fact related to adaptation: some investors are even converting underused retail big-box stores or vacant offices into self-storage facilities or last-mile logistics hubs, showing how creative reuse is happening in multiple ways.

Taking all of this together, how is investor sentiment? I’d characterize it as guarded optimism. There’s a sense that we’ve turned a corner – the Fed’s rate cuts and the prospect of lower interest rates ahead are improving confidence. Key sentiment indices bear this out: for example, a recent survey of commercial real estate developers and owners showed a noticeable uptick in confidence this fall compared to spring. Respondents in that survey indicated they expect conditions to improve over the next 12 months – interest rates were a big part of that, as many now foresee financing becoming more accessible, and they even expect cap rates to start compressing again (which would boost values). In fact, that survey’s composite sentiment index climbed to its highest reading in several years, firmly in optimistic territory, with particularly strong expectations for industrial and multifamily activity ahead. It seems the industry largely believes that while the past year was about riding out the storm, the coming year will be about carefully stepping back into growth mode.

However, optimism is tempered by realism. Investors haven’t forgotten the painful lessons of this higher-rate period and the ongoing distress in areas like offices. So due diligence is as rigorous as ever. We’re seeing buyers insist on more thorough inspections, more conservative assumptions, and sometimes structuring deals with future earn-outs or performance-based pricing to hedge against downside. There’s also the recognition that not every part of the market will recover at the same pace. The phrase “flight to quality” really sums up where investors want to be putting their money – whether it’s quality assets, quality locations, or quality sponsorship (i.e. experienced operators with solid track records). That’s where capital is concentrating. The more speculative bets are still harder to get done unless the pricing is extremely compelling.

In summary, as of November 5, 2025, commercial real estate feels like it’s at a pivotal moment. We have tangible positives: interest rates finally working in our favor, liquidity gradually returning, property fundamentals in many sectors either strong or stabilizing, and big players demonstrating their confidence through major acquisitions. At the same time, we’re navigating through lingering challenges: a pipeline of maturing loans that need solutions, an office sector that’s evolving through painful change, and an economy that isn’t without its risks. The mood among CRE investors is much better than it was six months ago, but it’s also clear-eyed. It’s not a return of irrational exuberance by any stretch – it’s more a sense of qualified optimism, the kind you get when you’ve weathered a tough period and see opportunity on the horizon but know you must tread wisely.

That’s all for now, but we’ll be back tomorrow. Don’t forget to hit follow or subscribe and leave a review to help others discover the show. I’m Michael — until next time!