Author: Edward Brawer

This is Deal Junkie. I’m Michael, and it’s 8:30 AM Eastern on Monday, October 6, 2025. Here’s what we’re covering today: the biggest gulf in decades between commercial real estate’s winners and losers; record apartment demand as more Americans opt to rent; and a tale of two properties – from a Colorado apartment default to a Manhattan office tower hitting full occupancy.

The Great Divide in CRE:

A new report finds the gap between the best- and worst-performing parts of commercial real estate is now the widest in about 40 years. With high interest rates slowing development, some assets are thriving while others are struggling. On one end, winners like modern warehouses and apartments in top markets are seeing strong rents and investor demand. On the other, losers – especially aging office towers and tired shopping centers – are plummeting in value. Overall U.S. property values are down about 18% from their 2021 peak, but that average masks huge differences. This repricing is a structural reset, not a blip, and it’s rewarding quality assets while punishing weaker ones. For investors, it’s no longer true that a rising tide lifts all boats. You have to be selective and focus on solid fundamentals, because the spread between winners and losers is still growing.

Renting Rules the Housing Market:

High mortgage rates and steep home prices are forcing many Americans to keep renting — and that’s fueling record apartment demand. A new analysis finds only about 13% of renter households can afford a median-priced home, down from around 17% in 2019. In many cities, owning now costs more than double what renting does each month. That affordability gap has filled apartments to near capacity. Nationwide apartment vacancy is hovering around 4% – near historic lows – even with lots of new units coming online. Landlords are seeing strong leasing activity; demand for rentals even outpaced new supply in recent months. Rents are inching up again, back to modest positive growth. For investors, multifamily’s resilience is a bright spot. Until buying a home becomes affordable again, those would-be homeowners are sticking with rentals – which means apartment demand should stay strong.

A Tale of Two Properties:

Here’s a tale of two properties – one in distress and one defying the odds. First, in Colorado, a 450-unit apartment complex defaulted on a $52 million loan. The owners bought it a few years ago with a floating-rate mortgage and plans to renovate for higher rents. But with borrowing costs spiking and a glut of new apartments pushing down rents, that plan unraveled. Occupancy fell while expenses jumped, and soon the owner couldn’t cover the loan payments. The property is now in special servicing and likely headed for foreclosure. It’s a cautionary tale about oversupply and floating-rate debt.

Meanwhile, in New York City, here’s the flip side: a major office lease that’s bucking the market. Guggenheim Partners renewed and expanded its lease at 330 Madison Avenue in Midtown, locking in 360,000 square feet for 17 years. That fills the entire 40-story tower – a rare 100% occupancy in today’s office market. 330 Madison may be a 1960s building, but it’s right next to Grand Central and the landlord fully modernized it. Prime location plus a quality overhaul turned it into the kind of place that can still lure marquee tenants, even as many older offices sit half-empty. It’s a stark reminder that today, location and asset quality make all the difference.

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

This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Thursday, October 3, 2025, here’s what we’re covering today: the government shutdown delays a key jobs report; a $1.3 billion bet on U.S. warehouses; and investors make moves in retail and multifamily.

(Macroeconomic Uncertainty and CRE Lending) – We’re starting with the macro picture. This morning, no new jobs data came out as scheduled – the federal government shutdown has frozen the Labor Department, meaning September’s employment report is delayed. Normally, markets would be parsing those job growth and unemployment numbers right now, but instead everyone’s flying blind. For commercial real estate investors, that missing data adds to uncertainty about where the economy is headed. The Fed has finally begun cutting interest rates after last year’s aggressive hikes, but policymakers are now working with less visibility. And CRE lenders and borrowers are feeling the strain: recently we’ve seen office loan delinquencies hit record highs, even worse than during the 2008 financial crisis. More apartment loans are starting to show stress too, as higher financing costs and softening rents squeeze some owners. The big takeaway? Banks and bond investors are extending loans and avoiding foreclosures where they can, essentially kicking the can down the road and hoping economic conditions improve. It’s a high-stakes waiting game. If the economy cools too fast – something a missing jobs report makes harder to predict – it could spell more trouble for property cash flows. On the flip side, if rate cuts gradually ease borrowing costs, that could stabilize struggling assets. For now, everyone from the Fed to CRE financiers is craving clarity that just isn’t there yet.

(Industrial Sector – Global Capital Flowing In) – Next up, a major vote of confidence in the industrial sector. One of Australia’s largest pension funds is teaming up with global developer Goodman Group to launch a new $1.3 billion U.S. logistics real estate platform. They announced a partnership where the Aussie fund will take a 49% stake and Goodman retains 51%, managing the properties. This platform has already been seeded with three Los Angeles warehouse facilities – all fully leased to strong tenants – and they’re looking to acquire more. The fact that foreign institutional capital is pouring into U.S. warehouses right now is telling. Even in a higher-interest-rate environment, top-tier industrial real estate remains a hot ticket. Why? Demand for distribution space is still outpacing supply in many markets, thanks to e-commerce and companies retooling their supply chains. Vacancies for modern logistics facilities are low, rents are holding up, and long-term investors see reliable income there. So while other sectors like office are dealing with distress, industrial is attracting new money. For CRE folks, this move underscores that capital will find its way to perceived safe havens. Big pension funds and global players have patience and deep pockets – they view any short-term market dip as a buying opportunity. This new Goodman-Australia tie-up is a prime example of that mindset: doubling down on warehouses, expecting solid growth when the economic dust settles.

(Retail and Multifamily – Notable Deals and Shifts) – Rounding out today’s update, we have some notable deal activity in retail and multifamily real estate. In retail, a massive open-air shopping center just changed hands out in California. The 870,000-square-foot Long Beach Towne Center was acquired by a joint venture of CenterCal Properties and DRA Advisors, and they’re planning a full redevelopment of the property. That’s a significant bet on brick-and-mortar retail at a time when many older malls are struggling. It shows that investors are still willing to deploy capital into retail locations that have good fundamentals – in this case, a high-traffic center – if they see a path to add value. The new owners intend to refresh the tenant mix, add dining and entertainment options, and generally re-energize the center to keep it relevant. Meanwhile, in the multifamily arena, we’re seeing signs of life in what has been a quieter investment market this year. One of the highest-priced apartment sales in the Seattle metro area for 2025 just closed: a New York investment firm paid about $56½ million for a rental community in the Puyallup area of Washington. Out-of-state buyers are tiptoeing back into apartment deals, but they’re being choosy – pricing has adjusted from the peak, and only well-performing assets are trading. This latest sale fetched a strong price, but it penciled out because the property is fully leased and located in a growth corridor. The broader theme in apartments is that higher interest rates have cooled the frenzy of the past few years, and many owners are holding off on selling unless they have to. Now, however, pressure from loan maturities and plateauing rents is gradually leading to more inventory coming to market. Investors sitting on the sidelines are starting to see opportunity as prices reset. It’s a slow thaw, but a thaw nonetheless. The fact that a sizable deal in the Pacific Northwest drew a buyer and got done suggests confidence that demand for housing in solid markets will carry through, even with today’s financing costs. Likewise, in retail, strategic players are finding diamonds in the rough to transform. These new moves in retail and multifamily indicate that while the overall investment market is subdued, deals are happening – and savvy investors are positioning themselves for the eventual rebound.

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, October 1, 2025, here’s what we’re covering today: the start of a federal government shutdown shaking up markets, President Trump’s new tariffs jolting construction costs, and a blockbuster data-center REIT debut riding the AI wave.

First, the U.S. government has officially shut down as of midnight, after Congress failed to pass a funding bill. It’s the first federal shutdown since 2018, and it’s injecting uncertainty into the economy. Thousands of federal employees are furloughed, and crucial economic reports – like the upcoming jobs data – may be delayed. In fact, private payrolls unexpectedly fell in September, with about 32,000 jobs lost, marking the weakest employment reading in over two years. That soft labor news, combined with the funding impasse, has markets rethinking the Federal Reserve’s next move. Investors are betting that rate cuts could come sooner if the economy wobbles, sharply increasing odds that the Fed might even trim rates at its next meeting. For commercial real estate, this moment is a mixed bag: the prospect of lower interest rates is a welcome relief for financing and cap rates, but a prolonged shutdown could erode business confidence and disrupt everything from leasing decisions to loan processing. Historically, markets have largely shrugged off short shutdowns, but the longer Washington stays closed, the bigger the risk to the economy – and by extension, to property investors’ outlook. We’ll be watching if lawmakers can strike a deal soon or if this standoff starts cutting into deal activity and tenant demand.

In another major development, construction costs are under new pressure. President Trump is turning up the heat on building materials with a wave of fresh tariffs. He’s announced a 10% tariff on imported lumber and timber, plus a hefty 25% duty on imported cabinets, vanities, and wooden furniture, all set to kick in by mid-October. And that’s not all – those cabinet and furniture tariffs would double to 50% on January 1 if trade partners don’t strike a deal. It’s part of the administration’s push to protect U.S. industries under national security grounds, but for developers and contractors it means one thing: higher costs. Remember, lumber prices were already a headache during the pandemic; now builders face another surcharge on any imported wood products. From homebuilders to office and retail developers, anyone budgeting a project will likely need to factor in these surcharges. This could slow down construction starts or push prices up for end-users. Apartment developers worry that higher material costs will make it even harder to pencil out new deals at a time of rising interest expenses. Essentially, a building that might have been barely feasible yesterday could be unprofitable tomorrow if material costs spike. On the flip side, domestic lumber mills and cabinet makers are cheering the move, hoping to gain market share. But overall, CRE investors should be mindful: this tariff salvo might exacerbate the affordability challenges in housing and delay some commercial projects, tightening supply in the long run. It’s a developing policy shift, so we’ll see if negotiations abroad soften the blow or if these import taxes fully hit in two weeks’ time.

Meanwhile on Wall Street, there’s a new real estate player making a splash. Fermi, a data-center REIT co-founded by former Energy Secretary Rick Perry, is going public today – and it’s one of the biggest real estate IPOs in years. The Texas-based company raised about $682 million in its IPO, giving it an initial market value around $12½ billion. What’s behind that lofty valuation? In a word, AI. Fermi is planning to build a massive high-tech campus in Amarillo, aiming to deliver up to 11 gigawatts of power for next-generation data centers – essentially creating one of the world’s largest energy and computing hubs for artificial intelligence and cloud companies. Investors are piling in because demand for data storage and AI computing capacity is red-hot; even as traditional office and retail REITs face headwinds, anything tied to digital infrastructure is attracting capital. In Fermi’s case, strong investor appetite let the firm increase its offering size at pricing – a sign that big money believes in the growth story here. Now, it’s important to note: this company is pre-revenue and doesn’t expect to generate cash flow for at least a year while it builds out facilities. So it’s not a sure bet by any means. But for the CRE community, Fermi’s successful debut is a reminder that capital is still available – but it’s chasing specific themes, like tech-oriented real estate. If you’re an investor, it underscores a trend: data centers, cell towers, life science labs – those niche sectors linked to the digital economy – continue to outperform, even as more traditional property sectors struggle with high vacancies or rising cap rates. We’ll see how Fermi trades on the Nasdaq today under ticker FRMI, and whether this fuels more activity in the proptech and infrastructure side of real estate.

And down in Florida, a big legislative change kicks in today that could boost local real estate. The Sunshine State has eliminated its sales tax on commercial lease payments as of October 1. Florida had been the only state in the U.S. that charged a tax on commercial rent – historically an extra 5%+ added to businesses’ rent checks for retail stores, offices, warehouses, you name it. Now that tax is gone, meaning tenants across Florida will see immediate savings on their rent bills. This is a significant win for landlords and tenants alike: lower occupancy costs can improve tenant retention and make Florida properties more attractive relative to other states. For example, a company leasing a big warehouse or a chain of storefronts in Florida will no longer pay that extra levy on top of base rent, which could translate to hundreds of thousands of dollars saved over a lease term. We’re already hearing that brokers and economic development folks are touting this change when courting out-of-state companies. It effectively drops the cost of doing business in Florida, which could draw even more corporate relocations and expansions – a trend Florida has been enjoying in recent years. For investors, this policy change could bolster demand and property values, particularly in high-growth markets like Miami, Tampa, and Orlando. It’s also worth noting the timing: this tax has been phased down over the years and now fully repealed, reflecting Florida’s pro-business agenda. So, if you own commercial assets in Florida, today you’ve gained a competitive edge on occupancy cost. Just be mindful of the transition – landlords will need to update their billing systems and lease language, and ensure nobody inadvertently charges (or pays) rent tax going forward. But overall, it’s a rare piece of good news on the cost front for the CRE sector, and it takes effect today.

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, September 30, 2025, here’s what we’re covering today: Fed officials signal caution amid a looming government shutdown; an office landlord slashes its dividend to shore up finances; and new signs of life in the deal market as capital begins to flow again.

Fed Balances Rate Cuts with Shutdown Jitters

Federal Reserve Vice Chair Philip Jefferson struck a cautious tone in remarks yesterday. He noted the U.S. economy is growing around a 1.5% pace and inflation is hovering near 2.7%, but the labor market is “softening”. Jefferson backed this month’s quarter-point rate cut – the Fed’s first since last year – as insurance against a weakening job market. Crucially, he signaled the Fed stands ready to cut rates further if needed, even as core inflation (about 2.9% year-over-year) remains above target. For CRE investors, that hints at some relief on financing costs ahead – floating-rate borrowers already got a small breather with the September cut, and more easing could be on the way if price pressures keep cooling.

But a big wrinkle right now is Washington. Congress hasn’t passed a funding bill, and a government shutdown could start at midnight. Why does that matter for the Fed? In a shutdown, agencies like the Labor Department might delay key economic reports – for example, this Friday’s jobs report could be put on hold. The Fed is trying to steer policy with an eye on incoming data; if the data goes dark, it complicates their decision-making. The markets are watching this showdown carefully. So far, investors seem guarded but not panicked – stock indexes have been choppy, and the 10-year Treasury yield is hovering around 4.1% as the quarter ends, roughly steady from last week. In fact, Treasuries are set to finish their third straight quarter of gains, reflecting bets that interest rates have peaked. Lower bond yields are good news for real estate in the long run, but near-term uncertainty (like a shutdown) could still spark volatility. The bottom line: the Fed is moving into an easing cycle, yet must navigate some immediate political and economic hurdles. CRE players should stay nimble – rate relief is coming, but the path might be bumpy in the weeks ahead.

Office REIT Cuts Dividend to Fortify Balance Sheet

Turning to commercial real estate companies – the office sector pain just forced a dramatic move by a major landlord. Brandywine Realty Trust, a Philadelphia-based office REIT, slashed its quarterly dividend by 47%. This is a company that hadn’t touched its payout in over three decades, so the cut underscores how severe the office crunch has become. Brandywine’s dividend will drop from $0.15 to $0.08 per share, a move that frees up roughly $50 million a year in cash. Management says they’ll use that cash to pay down debt and boost liquidity – in fact, Brandywine plans to prepay a $245 million loan next month that isn’t due until 2028. By knocking out that loan early, the REIT will unencumber seven properties that had been tied to the debt, giving it more flexibility (and perhaps improving its leverage ratios).

For context, Brandywine’s stock had been yielding over 13% – a sign investors were already braced for a cut. By pulling the trigger now, the REIT’s leadership is effectively acknowledging that preserving cash is more important than maintaining appearances. Office landlords are grappling with higher interest expenses and lingering vacancies, especially in markets like Philly. We’ve seen rising defaults and hand-backs on office towers this year; Brandywine clearly wants to avoid that fate by shoring up its balance sheet. The CEO framed the dividend cut as a “strategic move” to invest in properties and strengthen the core portfolio. It’s a bitter pill for shareholders in the short term, but if it helps the company survive and eventually rebound, it could be the right long-term call. CRE investors take note: this might not be the last dividend cut we see in the office REIT world. As borrowing costs stay elevated, even well-established firms are choosing to play defense – cutting payouts, refinancing what they can, and even selling assets – to ride out the storm. It’s a reminder that in troubled sectors, cash flow management trumps investor distributions. Brandywine’s drastic step may actually put it on sounder footing to seize opportunities when the office market finally stabilizes.

Deals and Lending Show Flickers of a Thaw

Now, some encouraging news on the deal-making front: there are signs that commercial real estate capital is starting to trickle back in. New data from Q3 shows that property sales activity picked up modestly. In fact, September’s transaction volume is on track to come in above August levels, and both mid-sized deals (in the $50–100 million range) and larger nine-figure deals ran about 12% higher than the monthly average for the rest of 2025. It’s hardly a boom, but after a very slow first half, any uptick in deal flow is notable. Industry analysts are crediting the improved sentiment partly to the Fed’s rate cut – just the hint of easier money seems to be narrowing the bid-ask gap between buyers and sellers. As one market watcher put it, “Rate relief is the catalyst everyone’s been waiting for.”

We’re seeing concrete examples of capital beginning to move. Blackstone, for instance, just secured a $465 million refinancing package for a portfolio of 1,700 apartment units across Massachusetts, Florida, and Georgia. That’s a significant deal in the debt market, and it wasn’t a simple bank loan – it combined a CMBS loan with a mezzanine piece, showing that lenders are getting creative to finance quality assets. The fact that big institutions like Morgan Stanley and Natixis were willing to originate this new debt is a positive sign. It suggests that for solid multifamily portfolios, credit is available – albeit with structured terms – even in today’s cautious climate.

On the sales side, multifamily remains the standout. In Seattle, we just saw one of the year’s largest apartment transactions: a 903-unit portfolio traded hands for about $400 million (roughly $444,000 per unit). Plus, a few other sizable Seattle apartment communities were snapped up by investors in recent weeks. This flurry of activity hints at a thaw in investor appetite, at least for high-quality residential assets in strong markets. Why Seattle? It’s viewed as a resilient market with solid tech-driven demand, and apartment occupancies there are still around 95%. More broadly, apartments and industrial properties are still the darlings of institutional portfolios going into 2025 – they have stable demand and more predictable cash flows than say, office or retail. We’re also hearing about select “trophy” retail centers finding buyers after steep repricing, and some opportunistic office trades, though those remain rare.

The big picture: capital markets for CRE aren’t frozen solid anymore. They’re thawing selectively. Lenders and investors are differentiating – they’ll back a first-class apartment deal or a fully leased logistics warehouse, but they’re still wary of fringe properties. As interest rates ease down, expect that thaw to continue. We likely won’t return to frothy 2021-style volumes soon, but even a gradual pickup is welcome. For institutional investors, this is the time to dust off those investment committees – the deals are starting to pencil out again in certain segments, and early movers can take advantage of less competition. If the Fed delivers another rate cut or two by year-end, 2026 could see a much healthier transaction environment than 2024 or 2025 did. So, cautiously optimistic vibes here – the ice is cracking in the CRE deal market.

Tax Shock Hits CRE Sellers

Finally, a heads-up on the tax front: Many real estate sponsors are experiencing a nasty surprise when they go to sell properties these days – a huge tax bill due to depreciation recapture. It stems from the bonus depreciation rules enacted a few years back (in what some dub the “Big Beautiful Bill” tax law). That law let investors write off a large chunk of a building’s value upfront, which was a great boost to early returns. But now the other shoe is dropping. When you sell a property – or even hand it back to the lender – all those depreciation deductions are subject to recapture and taxed as income. In plain English: the IRS wants its cut back.

This has become a major issue in distressed asset workouts. Imagine you bought an office building and took millions in bonus depreciation deductions. If the building’s value fell and you’re now forced to sell at a loss (or you default on the loan), you might still owe the government for the prior tax write-offs. We’re hearing that some sponsors, after transferring a troubled property, are left on the hook for unexpected tax liabilities even though they lost money on the deal. It’s an unpleasant surprise, and it’s changing behavior. Some owners are now hesitant to sell assets, because selling triggers that tax hit. Others in foreclosure are trying to negotiate deeds-in-lieu or other arrangements to mitigate the tax impact. Advisors are calling it a “depreciation recapture shock” – it’s adding insult to injury for those already dealing with value declines.

For institutional investors, the takeaway is to factor this into your strategy. If you aggressively utilized bonus depreciation on acquisitions, plan ahead for the tax consequences on exit. It might make sense to hold assets longer, execute 1031 exchanges, or structure sales creatively to defer or reduce the recapture. This dynamic could also contribute to lower transaction volume, as would-be sellers decide to wait rather than incur a big tax charge in a weak market. In short, a well-intentioned tax break from a few years ago is now biting back. Make sure your finance teams and tax advisors are gaming out scenarios – nobody wants a surprise multi-million dollar tax bill after closing a sale. This is a nuanced development, but it materially affects after-tax returns and deal decisions, so it’s firmly on our radar.

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’s 8:30 AM Eastern on Thursday, September 26, 2025. Here’s what we’re covering today: fresh inflation data that could spell relief for interest rates; an activist investor wants to spin off Six Flags’ real estate; and a $6 billion housing revival plan launching in Baltimore.

Let’s start with the macro picture. Investors are breathing a sigh of relief after encouraging inflation news. The latest consumer spending and price readings came in right on target, suggesting that price pressures are easing. That means the Federal Reserve may not need to keep interest rates so high for much longer—especially since it already made a rate cut this month. For commercial real estate players who’ve been squeezed by expensive debt, any hint of rate relief is welcome. Easing inflation and a pause in hikes could boost investor confidence, help more deals pencil out, and take pressure off property values. We’re already seeing signs of life in some sectors – investor demand for industrial properties has been surprisingly resilient even with high rates – so any borrowing relief would only help. Fed officials are still a bit cautious – one noted he’s not convinced inflation is fully defeated – but this is the kind of news CRE investors have been waiting for, hinting that the worst of the interest rate squeeze might finally be behind us.

Next, a potential shake-up in the theme park world that’s really about real estate. Activist investor Land & Buildings is urging Six Flags to unlock the value of its property holdings. In a new letter, L&B argues that the land under those roller coasters and water parks could be worth up to $6 billion. Their plan: sell the real estate or spin it off into a separate REIT, while Six Flags leases back the parks and keeps running them. Essentially, a giant sale-leaseback on all Six Flags locations. Six Flags’ stock has been struggling, and the activist believes carving out the real estate from the operations could send shares higher. We’ve seen similar moves with casinos and some retailers, but never with a theme park chain. It highlights how much hidden value might be locked in corporate real estate. If Six Flags’ board goes for it, this would be one of the year’s biggest real estate monetization plays – and it might pressure other companies to consider similar strategies to boost shareholder value.

Our third story comes from Baltimore, which is launching an ambitious plan to revive its neighborhoods – potentially the largest housing redevelopment effort in the country. It’s a 15-year, $6 billion initiative to tackle tens of thousands of vacant and blighted properties citywide. The city and state are putting up about $1.2 billion, hoping to attract roughly $5 billion more from private investors and big banks. The goal is to rehab or redevelop over 65,000 abandoned homes and lots across Baltimore, essentially rebuilding whole neighborhoods in the process. The plan doesn’t stop at housing – it includes upgrades to infrastructure and business corridors to help make these areas vibrant again. For a city that’s faced decades of disinvestment, this is a major push. For context, one downtown Baltimore office building is being sold out of foreclosure for just a few million dollars – pennies on the dollar compared to a decade ago. And for developers and contractors, all that new money could mean significant opportunities as projects roll out. If Baltimore can pull this off, it could become a national model for turning around urban blight – and it’s definitely a story to watch given its scale and ambition.

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, September 25, 2025, here’s what we’re covering today: a massive Chicago office tower trades at a steep discount, industrial deals defy the slowdown, and fresh signals from the Fed have CRE investors both hopeful and cautious.

First up, a fire-sale office deal in Chicago is turning heads. The owner of Chicago’s iconic Old Post Office is nearing a deal to buy a 1.4 million-square-foot office tower in the Loop at a jaw-dropping discount. Brookfield Properties defaulted on a $280 million loan on the 22-story building at 175 West Jackson Boulevard after occupancy plunged below 50%. Now investor 601W Companies – known for betting big on Chicago offices – is poised to scoop it up for only a fraction of the loan’s value. Remember, Brookfield paid over $300 million for this property in 2018; today it might trade for mere pennies on that dollar. It’s a stark reality check on office valuations in a post-pandemic market of high vacancy and expensive debt. For opportunistic buyers like 601W, though, these distressed prices are an opening. They’re wagering that today’s bargains will look like steals a few years from now if office demand stabilizes. This deal, once finalized, could reset pricing benchmarks for big-city office assets and signal that value-add investors are stepping in where traditional landlords are bowing out.

Next, in the industrial sector, deals are still humming along despite broader slowdown fears. Westcore Properties just sold a 663,000-square-foot warehouse portfolio – with properties in Denver and Salt Lake City – to a joint venture of Hyde Development and Mortenson. The Denver portion alone fetched about $48 million, and while the Utah price wasn’t disclosed, the sale is part of Westcore’s strategy to monetize a multi-state industrial portfolio. What’s striking is that industrial real estate continues to attract hefty capital even as the economy cools. Nationwide, year-to-date warehouse sales are nearly keeping pace with the last couple of boom years, totaling almost $34 billion by mid-year. Big-ticket trades are closing: a small-bay warehouse portfolio in Phoenix just commanded about $168 million, and a Southern California industrial collection sold for over $165 million. Investors clearly still love logistics assets – thanks to e-commerce and supply chain needs – and are willing to pay up for them. Cap rates for top-tier distribution centers remain relatively low, and competition for well-leased industrial space is fierce. For CRE investors, industrial remains the standout performer: even with a slight rise in vacancy from last year’s historic lows, demand is solid and rent growth is still healthy in many markets. In short, the warehouse market’s engine is far from stalled – it’s proving to be a resilient safe haven amid uncertainty.

Turning to the bigger picture, let’s talk macroeconomics and the Fed, because they’re driving a lot of investor sentiment right now. We got some fresh data this morning – and it’s a mixed bag. Second-quarter U.S. GDP growth was revised up to a robust 3.8%, showing the economy’s still got some kick. At the same time, weekly jobless claims fell to about 218,000, near historically low levels, which means layoffs remain minimal. On its face, strong growth with low layoffs sounds great for real estate – more jobs and spending boost demand for all property types. But here’s the catch: the labor market isn’t as hot as it looks. Job creation has slowed to a crawl (unemployment ticked up to 4.3% in August), and that “cooling but not cracking” dynamic is exactly why the Federal Reserve cut interest rates by a quarter-point last week. The Fed is trying to ease financial conditions just enough to cushion the slowdown, and more rate cuts are likely on the table. For CRE investors, lower interest rates ahead could be a lifeline – potentially reducing financing costs and breathing life into dealmaking and refinancing. We’re already seeing a bit of thaw: commercial mortgage lenders are exploring new loans, and CMBS issuance is perking up now that borrowing costs have dipped. That said, high borrowing costs over the past year have left some pain. Even top-tier owners are feeling it – for example, one of Simon Property Group’s large outlet malls in Pennsylvania is reportedly on the verge of defaulting on its loan. That’s a reminder that retail real estate, especially in less prime locations, is still under stress from both e-commerce and expensive debt. And Fed officials are sending somewhat mixed signals: just this week one Fed president mused about making the inflation target more flexible, even as Chair Jerome Powell warned stock valuations are “fairly high.” The bottom line: interest rates are finally edging down, but the economy’s cross-currents mean investors should stay nimble. Cheaper debt is good news, yet we have to watch if persistent inflation or other shocks slow down the Fed’s rate-cut cycle. It’s a balancing act – one that will continue to sway property values and investment strategy as we close out the year.

Finally, the multifamily sector is proving its enduring appeal – evidenced by big capital flows even now. In fact, a Dallas-based firm just raised a $1.1 billion fund purely to invest in U.S. apartments. The Milestone Group closed this oversubscribed fund to target value-add multifamily deals across the country. Think about that: in a climate where raising money isn’t easy, investors still handed over a billion dollars to chase apartment opportunities. Why? Because rental housing fundamentals remain relatively strong. Yes, higher interest rates have cooled some development and tempered price growth, but occupancy in quality apartment assets is steady and long-term demand drivers – like limited housing supply and affordability pressures – make the rental sector attractive. We’re also seeing large-scale transactions getting done. Just a week ago, industry data showed one of the largest apartment portfolio sales of the year closed at around $1.1 billion, spanning multiple states. And new joint ventures are launching (some backed by institutional giants) to acquire both affordable and market-rate complexes. For CRE investors, the takeaway is that capital is still available for multifamily – arguably more so than any other property type right now. Lenders too prefer apartments in this environment, given their resilient cash flows. That doesn’t mean every deal is easy – buyers are being choosy and underwriting rent growth cautiously – but relative to office or retail, apartments are the darling. The fresh billion-dollar fund from Dallas will likely target mid-tier properties where they can upgrade units and improve management. It’s a classic play: buy underperforming complexes, renovate, and cash in on the robust renter demand in coming years. So despite some headwinds, multifamily continues to shine as a must-have asset class, and smart money is lining up to invest in the next wave of apartment deals.

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, September 24, 2025, here’s what we’re covering today: Powell signals caution on rate cuts; a Wall Street probe rattles a top real estate brokerage; and a $13 billion data center REIT IPO rides the AI wave.

Powell Pumps the Brakes on Rate Cuts: Federal Reserve Chair Jerome Powell struck a careful tone in remarks yesterday, stressing that any interest rate cuts will be gradual. That cautious stance comes just after the Fed’s first rate reduction in this cycle. For commercial real estate investors, it’s a mixed signal. On one hand, the era of relentless rate hikes appears to be over – a relief for deal makers staring at high financing costs. In fact, we’re hearing early signs that investment activity is picking up now that borrowing costs have likely peaked. Some data even suggest cap rates have stopped climbing and might be inching down in select markets, a hint that property values could be stabilizing. On the other hand, Powell’s message is clear: don’t expect a return to rock-bottom interest rates overnight. The central bank is determined to keep inflation in check, so any monetary easing will be slow and measured. What’s the bottom line? The capital markets won’t be flooded with cheap money anytime soon, but just the belief that rates won’t go much higher is pulling some investors off the sidelines. We’re seeing it in pockets of the market – apartment buildings, for example, are benefiting from strong tenant demand and limited new supply, which is shoring up rents. Even retail real estate has bright spots: one big power center outside Chicago just sold to an institutional buyer after the seller boosted occupancy from around 60% to over 90%. These are signs that as long as the economic backdrop stays reasonably solid, certain property sectors will weather the higher-for-longer rate environment. Still, caution prevails, especially in the office sector, which continues to grapple with high vacancies and refinancing challenges. The Fed’s slow-and-steady approach means CRE investors should prepare for a gradual recovery, not a sudden rebound.

Wall Street Watchdog Eyes Real Estate Insider Trades: In industry news, a major real estate brokerage is under scrutiny. Douglas Elliman – a century-old firm known for selling luxury homes – revealed it’s facing a probe by FINRA, the Wall Street self-regulator, over trading activity around a failed takeover bid. Here’s the story: back in May, news broke that rival Anywhere Real Estate had offered to buy Douglas Elliman, sending Elliman’s stock price soaring 50% in a single day. It turns out a Douglas Elliman board director had purchased a chunk of shares just a couple weeks before that news went public. That coincidence was enough to raise eyebrows at FINRA. Now regulators have asked who at the company knew about the takeover offer and when, looking to see if any insider trading occurred. The firm says it’s cooperating and that this is a routine review, but it’s definitely a headache for Douglas Elliman, which has already been struggling with losses and other legal troubles. For context, those takeover talks with Anywhere ultimately fell apart in June – and in a twist, just this week Anywhere agreed to be acquired by another brokerage giant, Compass. So the brokerage world is rapidly consolidating as firms seek scale in a tough market. The takeaway for investors? Real estate may be a brick-and-mortar business, but it doesn’t escape Wall Street’s eye. Regulatory scrutiny is rising, especially as big deals and mergers shake up the industry. It’s a reminder that even in CRE, transparency and good governance matter. Any whiff of insider advantage can and will be probed. We’ll watch how this inquiry unfolds – it could potentially slow down other merger talks or at least make executives extra careful about their trading around deal time.

Big Bet on Data Centers and AI: Our final story is about a huge new play in the commercial real estate capital markets – one that combines property with the tech world’s hottest trend. A startup data center company called Fermi is planning to go public, and it’s seeking a whopping $13 billion valuation in its IPO. If that sounds ambitious, it is. Fermi was co-founded by former U.S. Energy Secretary Rick Perry and only launched this year, but it’s pitching itself as a key player in the AI revolution. How? By building massive data center campuses needed to power artificial intelligence projects. Their flagship plan, dubbed Project Matador, is a 5,000-acre development in Texas that would use a mix of nuclear, natural gas, and solar energy to run huge server farms – targeting one gigawatt of capacity by 2026. To get there, Fermi aims to raise about $550 million from the IPO, and it’s already nabbed a big financing infusion from Macquarie Group. Now, it has zero revenue today – this is a bet on future demand. But investors are extremely hungry for anything AI-related, and data centers are the infrastructure behind the curtain. For CRE investors, Fermi’s bold IPO is a signal of where the smart money is flowing. While traditional assets like offices languish, niches like data centers (and I’d add life-science labs and logistics warehouses) are attracting capital at eye-popping scales. If Fermi pulls this off, it would be one of the largest real estate investment trust debuts in years. It shows confidence that the need for modern, high-tech real estate is only growing. Of course, with big rewards come big risks – Fermi is trying to build one of the world’s largest data center complexes from scratch. But the fact that it’s moving ahead with an IPO tells you something about market sentiment: there’s optimism that demand for cutting-edge real estate (whether data hubs for AI, or distribution centers for e-commerce) will keep rising. In short, the CRE landscape is bifurcating. Investors are paying top dollar for properties that cater to new economy trends, even as older property types adjust to a post-pandemic reality. It’s a “follow the money” moment – and right now, the money is chasing server racks and cloud computing infrastructure in addition to the usual brick-and-mortar.

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!