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This is Deal Junkie. I’m Michael, it is 8:30 AM Eastern on Monday, October 13, 2025, here’s what we’re covering today: fresh signals from the Fed as it weighs interest rate cuts, a spike in office loan defaults shaking the market, and Starbucks closing hundreds of stores in a $1 billion overhaul.

Let’s start with the macro picture. Federal Reserve officials are hinting at caution even as rate cuts loom. After the Fed’s first rate reduction in nine months last month, futures traders expect two more quarter-point cuts by year-end. But some at the Fed aren’t so sure. St. Louis Fed President Alberto Musalem said he’s open to an “insurance” rate cut to support the job market, but he warned there’s limited room to ease with inflation still well above the 2% target. Basically, they don’t want to spark higher prices by cutting too fast. The latest survey of economists reflects this tension – they see inflation ending the year around 3%, with only one more Fed cut likely in 2025. Meanwhile, the economy is proving resilient in some areas. Business investment is strong (thanks in part to the AI boom) and GDP growth forecasts have been revised up. But hiring has cooled and a federal government shutdown dragging into its third week is adding a headwind. For commercial real estate investors, all this matters because interest rates drive financing costs and property values. High borrowing costs have already put a damper on dealmaking. Even the once-hot apartment sector is feeling the pinch: national multifamily rents just saw their sharpest September decline since 2009 as a wave of new supply hit the market. On the bright side, industrial real estate is still a relative rock – warehouses remain near full occupancy thanks to e-commerce demand. So the macro backdrop is a mixed bag: the Fed is likely to cut rates somewhat, but not as aggressively as markets hoped, and real estate folks are trying to read the tea leaves for 2026.

Now turning to commercial real estate’s most troubled spot: offices. New data show office investors and lenders are facing growing distress. Delinquencies on office mortgages spiked in September, driven largely by a major New York City loan default. Fitch Ratings reported the office CMBS delinquency rate jumped to just over 8%, the highest in years, after a $180 million loan on a Manhattan office tower went into default when it matured. That Manhattan building – nearly a century old and half-empty – even lost a key tenant when Starbucks closed its store there late last month. And it’s not just New York; the second-biggest office default in September was on a skyscraper in Hartford, Connecticut. Office landlords are getting squeezed by rising debt costs and tenants shrinking their footprints. Overall CMBS delinquency ticked up as a result, a warning sign that credit stress in commercial real estate isn’t over. Yet, there are glimmers of recovery on the horizon for offices. Believe it or not, Manhattan’s office leasing activity is on track for its best year since 2019. Companies are inking new leases for quality spaces, albeit often at discounted rents or with rich incentives. Essentially, the top-tier, well-located buildings are finding takers, while older and less attractive offices struggle to stay afloat. We’re witnessing a bifurcated office market: shiny, amenity-rich towers fill up (slowly) as firms bring workers back, but outdated buildings face an uncertain future. For investors, this means pricing and valuations remain under pressure. We’re seeing big owners adjust – just last month, JPMorgan put a Midtown Manhattan office tower up for sale at roughly half its pre-pandemic price. The takeaway: in the office world, distress and opportunity are walking hand-in-hand. Lenders are bracing for more loan workouts and potential foreclosures, even as optimists point to a modest uptick in demand for the best space.

And in the retail realm, one of the country’s most ubiquitous tenants is pulling back – Starbucks is making a headline-grabbing retreat from some locations. The coffee giant’s new CEO, Brian Niccol, announced a $1 billion restructuring plan that includes shuttering about 1% of Starbucks stores across North America. That works out to roughly 450 stores slated to close, including some high-profile spots like the massive Seattle Reserve Roastery and other underperforming cafes. Starbucks says it’s aiming to refocus on the “coffeehouse experience” and trim locations that aren’t measuring up – whether due to location issues, oversaturation, or maybe those unionization battles in a few cases. The closures will mostly wrap up by the end of this year. For retail landlords, hearing that a big national tenant is closing hundreds of stores is never welcome news. Many of these Starbucks sit in prime shopping centers and urban street corners, so owners will be looking to backfill quickly. The company insists it still has over 18,000 U.S. and Canada locations and isn’t scaling down its overall presence by much – essentially they’re pruning the portfolio. Still, this move underscores the shifting currents in retail real estate. Even major brands are re-evaluating their footprints post-pandemic, responding to changing consumer habits and cost pressures. On the flip side, some retailers are expanding – discount chains and grocery stores, for example, continue to open new units – but it’s clear the industry is in flux. For investors in retail properties, the Starbucks news is a reminder to be selective. Well-capitalized, “experiential” tenants and essential services are safer bets right now than oversaturated coffee shops or purely apparel retailers. If there’s a silver lining, it’s that new local coffee shops or other concepts may step into some of these vacant Starbucks spots, potentially at lower rents. In any case, fewer Starbucks might slightly cool foot traffic in some centers until replacements come in. It’s a shake-up worth watching as we head into the crucial holiday season for retail.

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, October 10, 2025, here’s what we’re covering today: investors are pouring capital into huge deals in apartments, warehouses and retail centers even as offices struggle; the federal shutdown is starting to sting commercial real estate; and the Fed hints at more interest rate cuts as the economy cools.

Investors Target Big Deals in Resilient Sectors as Office Lags

There’s plenty of capital out there for commercial real estate, but it’s being choosier than ever about where it goes. Newly released data show record-breaking single-asset sales over $100 million in sectors like logistics warehouses, multifamily apartments, and even top-tier retail properties. High-quality, newly built properties in these areas are fetching premium prices as investors chase stable income and solid fundamentals. In fact, large one-off deals in industrial, multifamily, and retail hit record highs in the last quarter, reversing several years of declines. This wave of big-ticket investment comes as many institutional investors have billions in dry powder ready – but they’re deploying it surgically, favoring fewer, larger deals in the strongest sectors.

Meanwhile, the overall sales market is still subdued compared to pre-pandemic times – total U.S. commercial property sales are roughly 20% below 2019 levels. The drag comes mainly from slumping office sales and a pause in portfolio-wide deals. Before the pandemic, office buildings dominated the large-deal market, but not anymore. In the past year, office properties over $100M totaled only about $14 billion, a mere fraction of the $40–50 billion seen annually before 2020. Today multifamily leads the pack for big investments, followed by industrial and select retail assets, while office has fallen to the back of the line. Investors are effectively saying: “We’ll spend big, but only on sure bets.”

What’s the takeaway for investors? This bifurcated market could persist until confidence in struggling sectors returns. On one hand, we have a “flight to quality” – major funds and REITs doubling down on trophy apartments, logistics facilities, and prime retail centers where performance is strong. On the other hand, office and other challenged segments see minimal action as buyers and lenders stay cautious. Industry analysts say once leasing picks up and risk appetite improves down the road, all that sidelined capital could quickly reignite broader deal activity. But for now, top-tier single assets are the name of the game, and bulk portfolio sales or speculative office bets remain on hold.

Federal Shutdown Begins to Sting CRE Markets

The U.S. government shutdown — now over a week old — is starting to bite for commercial real estate, especially in markets tied closely to federal activity. In Washington, D.C., where federal workers and contractors are a huge part of the local economy, businesses near government offices are feeling the pain. Restaurants, coffee shops, and hotels that normally cater to these workers are reporting sharp drops in foot traffic and sales. One D.C. brewpub owner noted that happy hours and events are getting canceled as unpaid employees tighten their belts. It’s not just D.C.; other cities with big federal footprints are seeing similar ripples. In downtown Chicago, for example, shops around federal office buildings have gone quiet, and in Los Angeles, a shopping plaza near a large federal complex has seen noticeably fewer pedestrians.

So far, the broader CRE impact is limited and localized, but the concern is what happens if the shutdown drags on. Analysts warn that a longer shutdown could slow down leasing decisions and new deals, as government-related tenants delay commitments and investors grow uncertain. Sectors like urban retail, restaurants, and hotels are most at risk in affected cities, especially those already on thin margins after the pandemic. Some hospitality firms around D.C. are already fielding group booking cancellations for the fall season, fearing more to come if federal agencies stay closed. And let’s not forget, the shutdown isn’t just hurting local commerce – it’s also stalling economic data releases and federal programs. The Labor Department had to postpone the September jobs report, leaving investors and even the Federal Reserve flying a bit blind. If you’re a commercial real estate investor, that missing data adds another layer of uncertainty when assessing the market. Moreover, programs like federal flood insurance have lapsed during the shutdown, which could delay real estate transactions that require those policies. In short, a brief shutdown might just be a blip, but the longer Washington stays at an impasse, the greater the chance of real estate repercussions – from weaker tenant demand in federal hubs to hesitancy in lending and investment due to a murkier economic outlook.

Fed Signals Easing as Economic Crosswinds Blow

Turning to the macro landscape, interest rates and the economy are top of mind. A key Federal Reserve official is hinting that more rate cuts are on the way. New York Fed President John Williams – one of the Fed’s most influential voices – said in an interview that he expects interest rates will likely move lower by the end of this year. The Fed already trimmed its benchmark rate last month for the first time in this cycle, and Williams suggested further easing may be warranted given some cooling in the labor market. Importantly, he doesn’t see an imminent recession – rather, the goal is to calibrate policy so inflation keeps slowing toward 2% without choking the job market. The Fed’s recent meeting minutes back this up: policymakers noted downside risks to employment have increased, even as inflation (while still above target) has been easing off.

For commercial real estate players, this shift in monetary policy is a double-edged sword. On the one hand, the prospect of lower interest rates is welcome news – it could relieve some pressure on financing costs and help struggling property owners refinance debt that became more expensive in the high-rate environment. Already, we’re seeing banks and borrowers seeking creative solutions: the volume of CRE loan modifications has spiked as lenders extend loan terms or adjust rates to help borrowers hang on until conditions improve. If the Fed follows through with a rate cut at its upcoming meeting, it might bolster market confidence and lower cap rates a bit for prime assets.

On the other hand, why is the Fed considering cuts now? Because the economy is showing signs of cooling. Just yesterday, economists estimated that jobless claims ticked up to around 235,000 last week, a slight rise that could partly be due to contractors impacted by the federal shutdown. While that number is still low by historical standards – we’re not seeing mass layoffs – it suggests the labor market isn’t as red-hot as it was. “No firing, no hiring” is how some economists describe it: companies aren’t shedding workers en masse, but they’re cautious about adding new ones. If this slow patch continues, it could dampen demand for certain types of real estate – think of fewer new hires needing office space or apartments if growth ebbs. Moreover, the ongoing shutdown means key economic indicators (like jobs and inflation reports) are delayed, making the Fed’s job trickier. They’ll have to rely on partial data and forecasts when deciding on rates. Fed officials, including Williams, emphasize they’ll do what it takes to get inflation down to 2% without tanking the economy. For CRE investors, the bottom line is: be prepared for a shifting interest rate environment. We might be transitioning from a period of rising rates to one of stabilization or even modest cuts. That could open a window to lock in lower-cost debt or see improved asset values, but it also means staying alert to economic softening. In other words, cautious optimism – welcome the potential rate relief, but keep an eye on why it’s happening. If the Fed is easing because growth is slowing, real estate strategy may need to factor in a slower economy in the coming quarters.

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 8, 2025, here’s what we’re covering today: a fire-sale office deal highlighting deep distress; the steepest slide in apartment rents since 2009; and fresh signals from the Fed on interest rates that could shake up real estate.

Office Owners Take an 80% Loss in Atlanta – In the office sector, we have a jaw-dropping deal out of Atlanta underlining just how distressed things have become. Two 18-story towers in the Vinings area sold for just $21.75 million, after trading for about $119.5 million in 2019. In other words, the previous owners walked away with barely 18 cents on the dollar. Why the plunge? The property’s occupancy had fallen to roughly 45%, with a major tenant, Piedmont Healthcare, vacating over 250,000 square feet. The owners couldn’t refinance the maturing loan, leading to a default and a fire-sale price. The buyer, a firm called Insignia, is stepping in with plans to rebrand and lease up the nearly half-empty complex. What’s the takeaway? This is a vivid example of the pain in the office market. Remote work and higher interest rates have slashed demand for older office buildings, especially in suburban submarkets. Lenders are increasingly unwilling to extend or pretend – they’re forcing sales like this when loans come due. For opportunistic investors, it’s a sign that bargains (and big risks) abound. But for existing owners and banks, it’s a warning that office valuations in many places have reset dramatically lower, and the bottom is still a moving target.

Multifamily Rents See Rare Decline – Now onto multifamily, where apartment landlords are feeling a chill. New data shows U.S. apartment rents fell by $6 in September, bringing the national average rent down to about $1,750. That might sound small, but it’s actually the sharpest drop for any September since 2009 – back in the aftermath of the financial crisis. What’s driving it? In short: a flood of new supply and a bit of demand fatigue. Developers have been busy, and over 525,000 new units are in lease-up across the country, the most in recent memory. Renters now have more options, especially in Sun Belt markets. Cities like Austin, Phoenix, and Denver saw some of the biggest rent declines (in the ballpark of 3–4% year-over-year) as all those new projects compete for tenants with concessions and discounts. Meanwhile, high-cost, undersupplied markets are still holding up – New York and Chicago actually managed modest rent growth over the past year. For investors, here’s the context: after years of red-hot rent increases, the apartment sector’s gravity-defying run is leveling off. We’re seeing that record construction is finally catching up to demand, and a softer economy isn’t helping. The good news? Vacancies remain moderate, and with homeownership so unaffordable for many young households, the long-term rental demand is still solid. But the era when multifamily was an automatic winner is over – investors need to be pickier on location and wary of markets with oversupply. Underwriting assumptions for rent growth should be more conservative going forward. In other words, multifamily is still a stalwart, but it’s entering a phase of slower, more uneven growth that separates the strong operators from the rest.

Fed Hints at Easing – But Not Too Fast – Turning to the macro front: all eyes in finance are on the Federal Reserve’s latest signals. Today, the Fed will release minutes from its September meeting – the one where it cut interest rates for the first time in 2025. That quarter-point cut brought the benchmark rate down to around 4.1%, a potential inflection point after a long stretch of tightening. The minutes are expected to show a lively debate inside the Fed. Reportedly, a newly appointed Fed governor pushed for an even larger cut, arguing that inflation (around 2.7% now) is coming to heel and the economy needs more support. But others are wary, noting that while job growth has cooled, the economy isn’t collapsing – the stock market’s been hitting record highs, consumer spending is holding up, and unemployment is only creeping up slowly. Why does this matter for CRE investors? Because the interest rate environment dictates so much of our world – from mortgage costs to cap rates and property values. If the Fed is indeed starting an easing cycle, that’s a hopeful sign that borrowing costs for real estate could gradually come down in coming months, which would be a relief for dealmakers and anyone looking to refinance a loan. However, don’t break out the champagne just yet. The Fed is divided – they want to avoid reigniting inflation, so any rate cuts will likely be gradual. We’re not going back to zero rates, just edging down from restrictive levels. The takeaway: plan for interest rates that stay higher than the past decade’s norm, but possibly a bit lower than today. Savvy investors might start penciling in slightly lower debt costs in 2024 and beyond, but still need to price in some uncertainty. Remain nimble – if the economy wobbles, the Fed could cut more, but if inflation flares up again, they could hit the brakes. It’s a tricky balance, and the Fed’s tightrope walk will keep influencing real estate pricing and investment strategy.

Industrial Stays Hot, and Lenders Back Top-Tier Retail – Finally, let’s end with a look at the bright spots in CRE – industrial and essential retail. While offices struggle, the industrial market continues to power ahead. Case in point: Terreno Realty just sold a New Jersey warehouse for about $144 million, a phenomenal price that reflects how much demand there is for logistics facilities. Terreno had bought that property over a decade ago for only about $22 million and expanded it – now they’ve pocketed a huge profit. And in the Boston area, Blackstone’s Link Logistics arm snapped up a brand-new distribution center for $58.5 million. That facility is not huge – roughly 87,000 square feet – but it’s fully leased to UPS as a last-mile hub. The fact that Blackstone paid top dollar (over $600 per square foot) shows how confident big players are in the industrial sector’s prospects, even at premium valuations. For industrial owners, strong tenant demand from e-commerce and logistics companies is keeping occupancy high and attracting capital even in a high-rate environment. Now, on to retail – not all retail is created equal, but the good stuff is still financeable. We just saw PGIM Real Estate secure a $132 million refinancing for a grocery-anchored shopping center in Pennsylvania. That open-air retail complex, filled with necessity and discount retailers and even a busy movie theater, convinced Wells Fargo to lend fresh funds. This illustrates a broader trend: grocery-anchored centers and value-focused retail are the darlings of the retail real estate world right now. Even as some chain stores close down across the country, centers that offer experiences, essentials or bargains are holding their own. Lenders and investors are showing appetite for these resilient retail assets, whereas malls or struggling big-box chains remain a tougher sell. The broader message for CRE investors is this – capital is still out there for quality assets. Industrial warehouses, necessity-based retail, specialized sectors like data centers – these continue to attract investment and debt even while riskier parts of the market pull back. It’s a “tale of two markets”: one part is weathering the economic cross-currents just fine, and the other is facing some tough adjustments. Knowing which is which has never been more important when allocating your dollars.

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, 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!