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This is Deal Junkie. I’m Michael, It is 8:30 AM Eastern on Thursday, August 15, 2025, here’s what we’re covering today: a surprise inflation jump collides with a cooling job market; major moves by industry giants from Brookfield to Altus Group; and Sunbelt apartments face oversupply while retail centers shine.

We start with the economy. New data is painting a mixed picture right now. U.S. wholesale prices jumped nearly 1% in July, the biggest monthly spike in inflation in three years – a shock blamed on rising import costs from new tariffs. But at the same time, the job market is finally cooling off: hiring has slowed sharply this summer.

So the Federal Reserve finds itself pulled in two directions – inflation is running a bit hot again, but growth is clearly cooling. Up until this week many on Wall Street were banking on an interest rate cut as soon as next month. Now that’s much less of a sure thing. Fed officials are reportedly split over whether high inflation or slow growth is the bigger worry. For real estate investors, that means uncertainty: a rate cut would lower financing costs and boost property values, whereas stickier inflation could keep borrowing costs higher for longer.

Next, some major moves by industry giants making waves. Brookfield, one of the world’s largest property owners, reports that its real estate arm is finally rebounding from last year’s losses. In the second quarter, Brookfield’s property division lost about $46 million – still a loss, but a world of difference from the nearly $800 million it lost in the same quarter a year ago. This turnaround comes as some of Brookfield’s investment funds booked gains and its borrowing costs eased a bit. It’s an encouraging sign, though Brookfield admits its office buildings are still struggling with high vacancies.

Meanwhile, Altus Group – the company behind the Argus real estate software – announced it’s exploring a sale after drawing strong interest from private equity. That shows there’s serious money eager to invest in the tech that powers real estate. If Altus is acquired, it would mark one of the biggest proptech shake-ups in recent memory.

Finally, we’re seeing a growing divide across property types. On the downside, multifamily and office are under pressure. In parts of the Sunbelt, years of rapid apartment construction have created a glut, especially in Florida, where rents are now dipping year-over-year as new units flood the market. Landlords are offering concessions, and some developers are even putting projects up for sale. Offices, meanwhile, remain the most troubled sector. Older downtown towers in many cities are suffering high vacancies and falling values, with some owners walking away from properties. But it’s not all doom and gloom – top-tier office buildings are still landing tenants who want quality space. In Charlotte, a new office tower just landed a major bank as its anchor tenant, showing that prime offices in growth markets can still draw interest.

On the upside, retail and industrial real estate are holding strong. Open-air shopping centers have high occupancy and rising rents, thanks to steady consumer spending and very limited new development in that segment. Modern warehouses remain in high demand thanks to e-commerce. The warehouse boom isn’t as frenetic as it was a couple of years ago, but well-located distribution centers are still seeing healthy leasing activity. Investors are favoring those steadier retail and industrial assets and staying cautious on offices and oversupplied apartment markets.

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, August 14, 2025, here’s what we’re covering today: record apartment demand tightens the rental market, Florida axes a decades-old tax on commercial leases, and cooling inflation boosts hopes for lower interest rates.

Multifamily Comeback: The U.S. apartment sector is roaring back. New data out this morning show renters absorbed more units last quarter than in any second quarter on record. For a fifth straight quarter, demand exceeded new supply, pushing the national apartment vacancy down to roughly 4% – the lowest in years. Landlords are finally regaining some pricing power: average rents just saw their first meaningful uptick in two years. With fewer projects breaking ground now, this tight market dynamic is expected to continue into 2026. Investors have noticed as well – multifamily led all property types in sales volume last quarter. It’s a stark turnaround from the soft conditions of a year ago, and a sign that fundamentals have dramatically strengthened.

Florida Ends Commercial Rent Tax: Florida is scrapping a unique tax that no other state charges – its 2% levy on commercial leases. Come October 1st, that 55-year-old tax will be history, effectively giving every office, retail, and industrial tenant in Florida a 2% rent cut. For a business paying $100,000 a month in rent, that’s an extra $24,000 a year kept in their pocket. This change gives tenants serious savings and gives Florida a new competitive edge in attracting companies. It’s expected to further boost leasing demand, especially in Florida’s already tight warehouse and retail markets. Office landlords, who have struggled with high vacancies, hope the tax break will entice more firms to relocate or expand in the state. Some landlords might try to raise base rents to offset the lost tax, but in a competitive market tenants will insist on keeping the savings. Overall, this rare tax repeal is a clear tailwind for Florida’s commercial real estate – lowering occupancy costs, potentially lifting property values, and offering another incentive for investors to pour into Florida’s booming markets.

Cooling Inflation, Rate Cut Buzz: On the economic front, new data may finally give the Fed cover to ease up on interest rates. Consumer prices in July rose at their slowest pace in years – just about 2.7% year-over-year. Core inflation is a bit higher but trending down as well, and the job market has cooled considerably. As a result, Wall Street is betting rate cuts could happen sooner rather than later. In fact, markets now see good odds the Federal Reserve might cut rates as soon as next month. For real estate, that would be a game-changer. After a year of punishing borrowing costs that stalled many deals, even a hint of lower rates is lifting sentiment. Some developers are already revisiting stalled projects, anticipating cheaper financing ahead. Sectors that depend on financing for growth – like apartments and retail development – would get some much-needed breathing room. Now, it’s not a done deal: if the Fed thinks inflation isn’t fully tamed or sees other red flags, they could hold off. And remember, a rate cut would likely mean the economy is slowing, which isn’t great for tenant demand. But for now, the mere prospect of an early Fed pivot has put a spring in the market’s step. Real estate investors are hoping easier money will unlock deals and help stabilize property values by year-end.

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, August 13, 2025, here’s what we’re covering today: leasing is surging as major CRE firms turn bullish; affordable housing support lifts multifamily optimism; and cooling inflation has the Fed poised to cut rates.

First up, commercial real estate is showing clear signs of a comeback. Several of the biggest brokerage firms posted strong second-quarter results and raised their full-year forecasts for the first time since 2020. This rebound is being fueled by a surge in leasing activity across sectors. In offices, tenants are chasing top-tier “trophy” space again – and even well-located second-tier buildings are benefiting as companies like JPMorgan and Amazon enforce return-to-office mandates. Industrial real estate is also seeing big moves: Terreno Realty just paid $233 million for nine Seattle warehouses in one of this year’s largest industrial acquisitions, a sign of confidence in the logistics sector. Now, high interest rates and a slowing economy are still potential speed bumps for deal-making. But after years of caution, sentiment is much more upbeat. Many in the industry feel we’re in the early innings of a real recovery, with landlords and tenants finally ready to make long-term commitments again.

Shifting to housing, new federal support is boosting confidence in the multifamily sector. A law passed last month effectively doubled Fannie Mae and Freddie Mac’s capacity to finance affordable housing, adding billions in potential funding for low-income apartment projects. Developers say this policy jolt has lifted their outlook – a national builder sentiment index for multifamily ticked up in the second quarter, led by optimism around subsidized units. The extra government backing could help get more projects off the ground that previously didn’t pencil out. Still, it’s not all smooth sailing. High construction costs, pricey financing, and strict zoning rules are still holding development back. Even tech giants that pledged huge sums for housing have been stymied by permitting delays in places like California – proving money alone can’t fix the housing crunch overnight. The bottom line: momentum is building to add more housing supply, and over time that should bolster the multifamily market. But patience is key – these projects will take time to materialize, and investors will need to navigate the hurdles along the way.

And finally, on the macro front, the latest economic data is tipping in favor of real estate investors. Inflation in July came in around three percent – way down from the peaks of the past couple years. With price growth finally moderating and the job market cooling, the Federal Reserve looks likely to ease up on interest rates. In fact, markets are now almost fully pricing in a rate cut at the Fed’s meeting next month. Some officials in Washington are even pushing for an extra-large half-point cut, given the recent weak employment reports. Any cut would be the first in well over a year and mark a major policy shift. For the CRE world, lower rates can’t come soon enough. Cheaper debt would help revive deal activity and refinancing that have been frozen by high borrowing costs. Of course, a Fed rate cut also signals the economy might be losing steam, so it’s a mixed blessing. But right now, just the expectation of falling rates is improving investor sentiment across property markets after a long stretch of tightening.

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, August 12, 2025. Here’s what we’re covering today: inflation comes in cool, sparking talk of Fed rate cuts; office attendance is rising as some investors wade back in; and a billion-dollar data center deal highlights the strength of industrial real estate.

First up, the inflation picture. New data shows consumer prices running at 2.7% annually in July – essentially flat from June – with just a 0.2% increase on the month. Inflation is finally in the Federal Reserve’s target zone, and investors are hopeful the Fed might begin cutting interest rates in the coming months. Treasury yields even dipped on the news as traders anticipate less need for Fed tightening. But one Fed official today urged caution, noting inflation is still a bit above goal and the economy remains resilient, so he favors holding rates steady for now. The bottom line? The era of Fed rate hikes appears to be over, and the prospect of stable or even lower borrowing costs ahead is a big relief for real estate dealmakers after a year of sky-high financing costs.

Turning to the office sector, there are clear signs that employees are heading back to workplaces – and it’s slowly shifting companies’ real estate plans. A new survey finds 72% of large firms now meet their office attendance targets, up from 61% last year. The average employee is coming in nearly three days a week. That’s still not five days, but definitely more than during the height of remote work. As staff return, many companies are rethinking space cuts. Roughly two-thirds of employers now plan to keep or even expand their office space, reversing the widespread downsizing expected last year. It’s tentative good news for landlords of quality buildings. And even investors are tiptoeing back in. In one notable deal, Apollo Global just snapped up a 286,000-square-foot office tower in Houston – likely at a discount. The fact that a big player is bargain-hunting offices again suggests some see opportunity brewing in select markets after a long dry spell.

Meanwhile, industrial real estate – including its high-tech cousin, data centers – continues to draw huge investment. In Houston, a massive 62-acre logistics park called TriPort 8 will add nearly 900,000 square feet of warehouse space across five buildings. The project is backed by Alliance Industrial and Northwestern Mutual, showing that major capital remains keen on expanding distribution hubs. And in Georgia, data center operator DC Blox just secured a whopping $1.15 billion financing package to build a new campus near Atlanta. That’s one of the largest construction loans in recent memory, underlining red-hot demand for server space driven by the cloud and AI boom. In short, even as some property sectors have cooled, warehouses and digital infrastructure are still attracting big bets – thanks to surging e-commerce and an insatiable appetite for data.

One quick note on multifamily: Apartment construction has fallen to its lowest level since 2015, after a record boom two years ago. With far fewer projects breaking ground now due to high costs and tight credit, new supply is shrinking dramatically – markets like Austin and Phoenix have seen building activity plummet. That could tighten rental markets down the line, which is something apartment investors will be watching.

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, August 11, 2025, here’s what we’re covering today: signs the Fed might be done raising rates, a fire sale of a landmark office tower, and investors doubling down on apartments.

First off, inflation seems to be finally coming under control. Fresh data out this morning shows price growth easing to the lowest pace in over two years, with July’s consumer inflation just a touch above the Federal Reserve’s 2% target. Over the weekend, a top Fed official suggested the central bank may not need to raise interest rates further if this trend holds. That’s a big deal for anyone in real estate – higher interest rates have been the storm cloud over property markets for the last couple of years. If the Fed is truly done hiking, it could mean borrowing costs stabilizing at last. That would give investors and lenders more confidence to finance deals without fear of another rate spike. Now, rates aren’t likely coming down fast either – the Fed’s making clear it wants to see inflation completely defeated before even thinking about cuts – but just knowing we might have hit the peak is a relief for planning ahead.

Meanwhile, the office sector is still feeling the pain. In New York City, one of the biggest office deals of the year just closed – and it’s essentially a fire sale. A 50-story office tower in Midtown Manhattan was sold for roughly half of what it was valued at just a few years ago. The previous owner, facing high vacancy and a looming loan maturity, decided to cut their losses and unload the building at a steep discount. The buyer, a private equity firm, is betting they can turn things around over the long term – possibly by repurposing some of the space or simply by holding on until the market recovers. For current owners, sales like this are painful and set new, lower price benchmarks. But for the market as a whole, these kinds of transactions may actually be a step toward finding a bottom. Prices are adjusting to reality, and that price discovery is what needs to happen before investors at large regain confidence. It’s a stark reminder of how dramatically the office landscape has changed with remote work and higher interest costs – but also a hint that opportunistic capital is starting to wade back in, looking for bargains.

Now, on a brighter note, investors are still finding pockets of opportunity – especially in rental housing. One example: Blackstone just announced a deal to acquire a portfolio of apartment complexes for around half a billion dollars across several Sun Belt cities. Even with higher interest rates, the multifamily sector has remained resilient, thanks to solid tenant demand and a persistent housing shortage. Deals did slow down when financing costs spiked, but as rates level off we’re seeing buyers and sellers inch closer on pricing. Everyday investors are also cautiously returning, eyeing well-located apartment buildings as safer bets. The thinking goes: people will always need a place to live, so apartments should bounce back faster than offices or retail if the economy stays on track. And some of the money that sat on the sidelines is now trickling into real estate funds targeting apartments and even warehouses – capital is shifting toward the sectors with the strongest fundamentals.

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 Thursday, August 8, 2025, here’s what we’re covering today: Sunbelt apartment oversupply pressures rents and loan performance; warehouse vacancies reach a 12-year high; and the Fed faces a balancing act as a new 401(k) rule could boost real estate investment.

Sunbelt Apartments Feeling the Heat: The boom in multifamily construction across the South and West is finally catching up with the market. A flood of new apartments is leaving more units empty and giving renters the upper hand. Vacancy rates in some Sunbelt cities have surged above 8%, compared to about 3.5% in the tight Northeast. With so much new supply, rent growth has basically stalled in places like Texas and Florida – in some cases even dipping – while the Midwest and Northeast still see modest increases. Now, despite softer fundamentals, the investment market hasn’t seized up entirely. Apartment sales actually picked up a bit in the second quarter (though volumes remain below last year), and cap rates edged down to around 5.4%, meaning prices firmed up slightly. That’s largely because financing is still available – just not from banks. It’s Fannie Mae, Freddie Mac and other government-backed lenders that are carrying the load, stepping in as regional banks retreat. But cracks are starting to show: even multifamily loans, long considered rock-solid, are under stress now. In fact, newly released data on commercial mortgage-backed securities shows apartment loans driving a jump in delinquencies last month. Multifamily CMBS delinquency climbed into the six-percent range – a notable increase – while troubled office loans, which had been the big worry all year, actually leveled off slightly from record highs. It’s a reality check for apartment investors: the easy money and endless rent rises of the past few years are over. Lenders and buyers are getting more cautious, especially in overbuilt markets. Deals will need more realistic rent projections and probably more equity to get done. The upside? Well-managed properties in supply-constrained regions are still performing, and many owners are in decent shape thanks to low fixed-rate debt. But going forward, expect a much tougher lending environment for new developments and a laser focus on location and quality to separate winners from losers in multifamily.

Warehouse Boom Hits a Speed Bump: Next up, the industrial sector – where we’re seeing the first real pause after a decade-long warehouse frenzy. The national industrial vacancy rate just hit about 7.3%, the highest since 2013. It’s not panic time by any means, but it marks a clear shift from the ultra-tight market of the pandemic years. Developers delivered a huge wave of logistics space in the last quarter – roughly 71 million square feet – while tenants only leased about one-third of that amount. Amazingly, this sector is still on a 15-year streak of positive net absorption (companies are still taking more space than they give back), but the race between supply and demand is getting lopsided. Vacancy is creeping up across most regions, especially in big distribution hubs. The South, including mega-markets like Dallas and Atlanta, now has the highest industrial vacancy around 8.5% thanks to all that new construction. The Midwest remains the tightest (near 5.5% vacancy) since building there has been more restrained. On the West Coast, some previously white-hot areas like the Inland Empire are seeing vacancies rise and even a quarter of negative absorption as e-commerce growth cools off. The good news is that developers are tapping the brakes. The amount of industrial space under construction nationwide has dropped dramatically – it’s less than half of what it was at the peak in 2022. That should bring the market closer to balance by early next year, with vacancies expected to plateau around the mid-7% range. Meanwhile, rents for warehouses are still inching up on average – roughly 4% higher than a year ago nationally – though rent growth is much slower than before and even reversing in a few oversupplied submarkets. For investors in industrial real estate, this is a moment to adjust expectations. We’re moving from the feverish boom to a more normal, sustainable environment. Landlords might have to start offering a few concessions to fill space, and buyers will underwrite deals more conservatively, knowing that double-digit rent jumps are off the table. But demand for modern logistics facilities remains structurally strong, so well-located warehouses should continue to perform. In short, the sector is catching its breath – not falling off a cliff.

Fed Juggles Risks, and 401(k) Money Eyes Real Estate: Finally, let’s zoom out to the macro picture, where new signals from Washington could shape the CRE outlook. The Federal Reserve is in wait-and-see mode, facing mixed signals on the economy. On one hand, inflation has been cooling off; on the other, the job market is finally showing signs of slowing. In a speech on Friday, St. Louis Fed President Alberto Musalem said policymakers now see “risks on both sides” of their mandate – meaning they’re worried about inflation staying too high and about growth and employment softening too much. With that balancing act in mind, he didn’t commit to any policy move yet. But the general expectation on Wall Street is that rate cuts are getting close. Investors are betting the Fed might trim its policy rate at the September meeting and again by December, especially after July’s anemic jobs report and ongoing fallout from trade tariffs. Remember, the Fed has kept rates unchanged for five consecutive meetings this year, holding the benchmark around 4.25 to 4.5 percent. Any hint of an upcoming cut is music to the ears of real estate folks, because lower interest rates would relieve some pressure on financing costs and cap rates. Meanwhile, the political side is also getting interesting for the Fed. President Trump this week named economist Stephen Miran to an open seat on the Fed’s Board of Governors – a move that could tilt the central bank slightly more dovish as we head toward an election year and an eventual decision on the next Fed Chair. We’ll keep an eye on that, but there was another big policy development just yesterday that could have long-term implications for commercial real estate investing. Trump signed an executive order directing regulators to make it easier for 401(k) retirement plans to invest in alternative assets – and yes, that includes real estate. This is a huge $12 trillion pool of capital in 401(k)s that, up until now, has been mostly off-limits to private real estate and private equity funds. The order tells the Labor Department and other agencies to update the rules so that regular workers’ retirement portfolios could eventually include things like real estate projects, infrastructure, maybe even crypto and other non-traditional investments. Now, nothing changes overnight – it will take months for regulators to propose and finalize how this works, and it could be years before your average 401(k) offers a real estate fund option. There’s also plenty of debate around it: supporters say it will unlock new diversification and return potential for savers, while critics warn about higher fees, illiquidity, and risks that 401(k) investors might not fully grasp. But if it does go forward, we could see a wave of new capital flowing into real estate funds down the road, which would be a game-changer. For commercial property investors today, the immediate focus is still on the Fed – when will those rate cuts come? – but this 401(k) news is a reminder that big shifts in how capital moves into the sector may be on the horizon. Lower rates and fresh sources of funds would be welcome relief after a year of tight money. Of course, we’ll believe it when we see it – the industry has learned to be nimble in the face of uncertainty – but it’s certainly something to watch in the months ahead.

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, August 7, 2025, here’s what we’re covering today: the exit of a major office landlord from Chicago and San Francisco, the silver lining in a nationwide construction slowdown, and a Fed official’s warning that the economy may be hitting a turning point.

First up, Vornado Realty Trust signaled it’s ready to shed its last big assets outside New York City. On an earnings call, CEO Steven Roth said “nothing is sacred” – Vornado would sell Chicago’s Merchandise Mart and San Francisco’s 555 California Street “for the right deal at the right time.” Those two properties are the remaining 10% of Vornado’s portfolio not in NYC, so selling them would complete its pivot to an all-New York strategy. This comes on the heels of a strong quarter for Vornado, with major Manhattan leases and sales reinforcing Roth’s view that Manhattan is the strongest market in the country. Markets like San Francisco and Chicago are struggling by comparison, even though 555 California is nearly full while its city’s office market has record vacancy. The takeaway: even blue-chip landlords are retrenching to core markets. Vornado is doubling down on what’s working and cutting bait where it isn’t – a reminder that in today’s CRE landscape, location and asset quality drive strategy.

Next, new data on construction is giving commercial real estate owners a reason for cautious optimism. U.S. construction spending has fallen for nine straight months and is about 4% lower than a year ago – a clear sign that developers are pumping the brakes. While a building slump sounds bleak, it’s easing future supply pressures. Fewer projects in the pipeline means less competition for existing properties. In sectors that saw some overbuilding – like apartments and industrial warehouses – this cooldown is helping occupancy and rents stabilize as demand catches up. Office and retail construction was already minimal, given remote work and e-commerce headwinds, so hardly any new offices or shopping centers are breaking ground. The upshot: with fewer cranes in the sky, landlords may see their buildings hold value better and fundamentals improve. And big capital is still on the move – this week Brookfield Asset Management agreed to invest $6 billion for a 20% stake in Duke Energy’s Florida utility business. That’s an infrastructure play, not a traditional property deal, but it shows that even with higher interest rates, large investors are still hunting for opportunities when the terms are right.

Finally, on the macro front, Americans’ long-term inflation expectations have jumped – driven in part by new tariffs – which could make the Fed think twice about cutting rates. But at the same time, Fed Governor Lisa Cook called the latest jobs report “concerning,” noting hiring has averaged only ~35,000 a month recently and prior numbers were revised way down. That pattern often signals an economic inflection point. In short, inflation isn’t defeated yet, but the economy is clearly losing momentum. It’s a tricky balance for policymakers: markets are now betting the Fed might cut rates as soon as next month to shore things up. For real estate investors, a rate cut would ease financing costs – a welcome break for refinancing and deals – but only if it doesn’t come alongside a severe downturn. All eyes are on the Fed’s next move.

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, August 6, 2025, here’s what we’re covering today: recession storm clouds put the Fed in a bind; office investors hunting for a market bottom; and retail surprises with resilience.

First up, the macroeconomic backdrop. The U.S. economy is sending mixed signals that have investors on edge. A leading economist is warning the economy is “on the precipice of recession,” after last week’s data showed weaker-than-expected job growth and a pickup in inflation. Consumer spending has flatlined, manufacturing and construction are contracting, and even hiring is slowing down. With inflation still running a bit hot, the Federal Reserve faces a dilemma – it can’t easily cut rates to stimulate growth without risking higher prices. Markets are now wagering that the Fed might cut interest rates as soon as next month if the data continues to weaken. In fact, bond yields have dipped in recent days, and mortgage rates fell for the third week in a row. Lower rates have already given a jolt to housing activity – mortgage applications jumped about 3% last week as borrowers seized the moment. For commercial real estate investors, this environment is a double-edged sword: cheaper debt may be on the horizon, but a potential recession could soften tenant demand across property types. Even the once-red-hot apartment sector is showing a few cracks – national occupancy is still very high (around 95%+), but rent growth has essentially stalled out as landlords prioritize keeping units filled. It’s a reminder that while the economy’s cooling could ease financing costs, it’s also prompting caution about leasing and rents moving forward.

Turning to the office sector – could we be seeing a tentative turnaround? In Los Angeles, office building sales have suddenly surged, suggesting some investors believe the worst may be over at least in that market. Office investment volume in L.A. more than doubled in the second quarter from a year ago to roughly $1.2 billion, after a long drought. Brokers are saying this might mark a bottoming-out: more sales are finally giving clarity on pricing, and a few big deals north of $100 million indicate bargain hunters are back. There’s a sense that with so many distressed office properties hitting the market, buyers are swooping in on discounted towers and resetting values. Owners under pressure – like those with high vacancies or looming loan maturities – are increasingly offloading buildings at fire-sale prices. Opportunistic investors see that distress as a chance to buy low, hoping to reposition the buildings or refinance at better terms. Private local buyers have led the charge so far, but interestingly some institutional players and REITs are tip-toeing in again, looking at prime locations that are now available at fractions of their old prices. Does this mean offices are out of the woods? Not by a long shot – L.A.’s office vacancy is still sky-high (around one-quarter of space sits empty) and roughly half of the city’s office stock is considered “economically unviable” in its current form. Many buildings simply aren’t earning enough to cover their debt, which is why we’re seeing these steep discounts. And this isn’t just an L.A. story: nationwide, office vacancies are near record levels and office loan defaults have spiked to their highest rate since the Great Financial Crisis. Lenders are getting tougher about extending terms, so more troubled offices are likely to change hands in the coming months. The slight silver lining is that prices have fallen so much in some cities that buyers are finally willing to deal – that’s the first step toward a recovery. But it’s a long road ahead. In fact, some major investors are still steering clear of the office sector entirely. Just this week, private equity giant Carlyle Group closed a $9 billion real estate fund that pointedly won’t touch office buildings (or malls, for that matter). They’re pouring that capital into apartments, warehouses, and self-storage instead – sectors they see as having better fundamentals. That kind of says it all: even as a few brave buyers test the office waters, the big money is mostly betting elsewhere until the office outlook improves.

Finally, let’s talk about retail – a sector that’s quietly defying some of the doom and gloom. 2025 has thrown a lot at retailers, from sticky inflation to rising labor costs, and we’ve seen a parade of familiar names struggle. In the first half of the year, several big chains went bust or downsized – we’re talking Party City, Rite Aid, Joann Fabrics, and others closing stores and filing bankruptcy. It’s been a challenging environment, especially for legacy brands that failed to adapt. Yet, it’s not all bad news on Main Street. In fact, many retailers are in expansion mode and backfilling those empty spaces. Discount and value-oriented chains are leading the charge: brands like Burlington, Five Below, and Tractor Supply are opening new stores by the dozen, capitalizing on consumers’ hunt for bargains. Even some more upscale and specialty retailers are growing – for instance, Nordstrom Rack and Boot Barn are adding locations, and the once-eulogized Barnes & Noble has returned to opening new bookstores with a revamped concept. Perhaps most surprisingly, digitally-native companies are flocking to brick-and-mortar. A wave of online brands – from eyewear to apparel – have decided they need physical stores to reach customers. We’ve seen Warby Parker hit 300 stores, and newcomers like certain e-commerce fashion and lifestyle brands are popping up in malls and street fronts, bringing fresh concepts into the mix. All this expansion energy means that while some older retailers fade away, there’s a pipeline of new tenants ready to sign leases, especially in prime locations.

The latest results from the biggest mall owner in the country underscore this resilience. Simon Property Group, which owns many top-tier malls, just reported a strong quarter and actually raised its full-year outlook. They’ve managed to push occupancy at their malls up to about 96% – a level not seen in years – and their net income jumped, prompting management to hike their profit guidance and even boost the dividend. In plain English: shoppers are back, and the best retail centers are benefiting. Simon’s executives did note some caution around the broader economy and those ever-present tariff issues (since higher import costs can hit retailers’ margins). But overall, the message was optimistic – tenant sales and foot traffic are healthy at quality malls, and retailers are keen to lease space there. This highlights a “flight to quality” theme we’re hearing across CRE: Class A retail properties in good locations are thriving, even as lower-tier shopping centers still struggle with vacancies. Landlords with the right locations and mix of tenants are able to charge higher rents and are seeing very low vacancy, whereas outdated strip malls or malls in weaker markets are the ones dealing with empty storefronts. For investors, the retail picture is more nuanced than a few headline bankruptcies suggest. The sector is evolving: experiential tenants, like restaurants and entertainment venues, are taking up slack in many centers, and essential-needs retailers (grocery, discount, home improvement) continue to drive steady traffic. So while some investors have been wary of retail – lumping it in with office as “troubled” – the reality is far more balanced. There are clear winners and losers, but the winners are showing that brick-and-mortar retail still has plenty of life. In short, American consumers haven’t given up on shopping in person – and that’s keeping savvy retail landlords and investors in the game.

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, August 5, 2025, here’s what we’re covering today: record apartment vacancies, mounting office distress, and a surprising retail and industrial rebound.

Apartment Market Oversupply: America’s multifamily sector is flashing caution signs. National apartment vacancies have surged to around 7% – the highest level on record – and average rents are slightly below where they stood a year ago. The culprit is a glut of new units after a construction wave. Many landlords are now offering discounts to fill buildings. Rent declines have been sharpest in overbuilt Sunbelt metros like Austin. Some previously weak markets are stabilizing, but for now landlords have little pricing power. Investors are feeling the squeeze on income, though if new development continues to pull back, the market could gradually regain its balance.

Office Sector Struggles: The office market’s downturn is deepening. Vacancies are stuck near 20% nationwide, and billions of dollars in office mortgages are coming due with uncertain prospects for refinance. With higher interest costs and remote work reducing demand, more landlords are walking away from properties instead of digging deeper. Some buildings that do sell are trading at massive discounts from their past values. Sensing the risk, major investors are shying away from offices entirely. For example, private equity giant Carlyle just raised a multi-billion dollar real estate fund that will completely avoid office assets, focusing instead on sectors it views as more stable. One silver lining: we’re seeing more empty office towers being converted to apartments or other uses, which could slowly help absorb excess space.

Bright Spots – Industrial and Retail: Not every corner of commercial real estate is struggling. Industrial and logistics facilities remain a relative bright spot. Warehouse vacancies have risen only slightly from record lows, and well-located distribution space is still in strong demand. Developers continue to bring new projects online, but much of that space is pre-leased by companies expanding their supply chains. Rents for modern warehouses are even inching up, and big landlords like Prologis remain bullish, pressing ahead with new builds.

Meanwhile, restaurants are leading a retail real estate revival. In big cities such as New York, retail vacancy has fallen to its lowest in a decade as eateries snap up vacant storefronts. Food and beverage tenants are expanding aggressively – even retrofitting former shops with costly kitchens – to feed surging consumer demand for dining out. (As the saying goes, you can’t stream a steak.) These lively new restaurants are drawing foot traffic back to shopping districts, helping lift rents in prime locations and offsetting some of the pressure that online shopping placed on traditional retail.

Macro Outlook – Potential Rate Relief: Finally, interest rates may soon become a tailwind instead of a headwind for real estate. After a surprisingly weak July jobs report, speculation is building that the Federal Reserve could cut rates in the near future – possibly as early as its September meeting. Fed officials have signaled that a policy shift is on the table if the labor market continues to cool. For commercial real estate investors, a rate cut would lower financing costs and could breathe life into deal activity. The flip side is that the economy is slowing, which could temper tenant demand. Still, the prospect of cheaper debt ahead is a welcome development after a long stretch of painful borrowing costs.

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, August 4, 2025, here’s what we’re covering today: a surprising rebound in commercial real estate deals, a bold bet on distressed office buildings, and new warning signs for construction and credit markets.

Commercial real estate investment is finally perking up again. New figures show U.S. property sales totaled $182 billion in the first half of 2025 – roughly 25% higher than a year ago. Dallas–Fort Worth is leading the charge, with sales nearly double what they were last year thanks to a wave of apartment building trades. Multifamily assets are drawing strong interest nationwide, and industrial demand remains solid as well. Even retail isn’t left out – a REIT just bought ten single-tenant store properties for about $76 million. Overall, sales volumes are still a bit below last year’s pace, but momentum is building. Many expect the market to strengthen further in the second half as buyers and sellers adjust to the new normal.

The office sector remains a trouble spot – but even here, some investors see opportunity amid the distress. In the Washington, D.C. area, landlord JBG Smith is taking a contrarian gamble by snapping up distressed office buildings at bargain prices. It just paid $42 million for three office properties in Tysons, with plans to convert one into apartments. To fund it, JBG sold roughly $450 million worth of apartments, effectively rotating out of multifamily and into offices. Their CEO calls today’s rock-bottom office prices the best buying opportunity in twenty years. Meanwhile, WeWork is trying to reinvent itself with a “WeWork for Business” rebrand aimed at corporate tenants, shedding its old startup image. Overall, the office landscape is still bleak, but a few bold players are picking their spots – betting that today’s wreckage will yield returns down the road.

On the economic front, a key forward-looking indicator for construction is still flashing caution. The American Institute of Architects’ Billings Index remains stuck below the breakeven 50 mark, signaling that architecture firms are seeing fewer new projects ahead. That points to a slowdown in development over the next year. The AIA’s forecast calls for only minimal growth in commercial building spending this year and next.

Meanwhile, credit conditions remain tight, and many owners are in limbo with their loans. A new report from Trepp highlights a growing “maturity wall” – roughly $23 billion in securitized commercial mortgages have blown past their maturity dates without resolution, a huge jump from virtually none a few years ago. Many borrowers are still paying interest, but lenders and owners are kicking the can instead of forcing painful refinances or sales. This is mostly happening with office loans and some apartment loans, while retail and hotel debt has seen fewer issues. That extend-and-wait approach has prevented a flood of foreclosures, but it’s also frozen part of the market until financing gets cheaper.

And speaking of financing, the Federal Reserve held rates steady at its last meeting, and there’s talk a couple of Fed officials wanted to cut rates – hinting the tide could be turning. Still, with inflation above target, the Fed isn’t declaring victory yet. As long as the 10-year Treasury yield sits around 4.3%, refinancing remains expensive and many deals will stay on ice. Finally, a bipartisan housing bill advancing in the Senate aims to spur more development to ease housing shortages over time.

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!