Commercial Real Estate Investment Conference Podcast (CREIC)

• Treasury working paper: $75B in deferred capital gains outstanding across ~12,800 QOFs and ~41,000 investors as of end of 2024
• Typical OZ investor: $738K adjusted gross income; 85% are individuals
• Hard deadline: all deferred gains recognized by Dec. 31, 2026; tax due April 15, 2027 regardless of whether the fund asset is sold
• Basis step-ups: 15% for investments held 7+ years (in by Dec. 31, 2019); 10% for 5+ years (in by Dec. 31, 2021); post-2021 investments get no step-up
• Recognition formula: lesser of remaining deferred gain or FMV of fund interest on Dec. 31, 2026, minus any basis step-up
• Partnership trap: modified passthrough formula ignores net FMV; investors may recognize full deferred gain even if fund interest is underwater due to debt allocations and prior distributions
• Tax rates: up to 20% federal LTCG + 3.8% NIIT = 23.8%; state non-conformity in CA and NY may create additional liability
• 10-year hold benefit survives: appreciation on QOF investment after 2026 remains tax-free if held 10 years
• One Big Beautiful Bill Act (July 2025) made OZs permanent; new framework effective Jan. 1, 2027: 5-year deferral, 10% step-up, rural funds eligible for 30% step-up
• IRS Notice 2026-40 (June 2026): original deferred gains cannot be re-deferred into new QOFs under the 2027 regime

• Trepp: ~$65B private-label CMBS maturing H2 2026, but ~$28B has extension options pushing to 2027
• 799 hard-maturity loans ($15.1B) analyzed; $16.2B theoretical refinance capacity in aggregate
• 54% of hard-maturity balance ($8.1B) needs fresh equity; $5.6B needs 20%+ cash-in
• Interest-only: $8.2B maturing, only $6.8B refinance capacity; 80% need cash-in, 61% need 20%+
• Amortizing: $6.9B maturing, $9.4B capacity; only 23% need cash-in, 9% need 20%+
• Office: $4.8B hard maturities; 63% need cash-in, 56% need 20%+
• Mixed-use: 80% need equity, 76% need 20%+
• New York: $627M refinance gap, 40% of all loans needing 20%+ paydowns
• Debt yield is the scoreboard: 2024-2025 loans that paid off averaged 13-14%; non-payers averaged 9% or below
• 2026 total hard maturities: $76.6B; 36% ($27.3B) at or below 8% debt yield
• 39% of hard maturities concentrated in Q4
• One New York Plaza ($835M, 2.6M SF): 6.5% debt yield, modified and extended to 2028
• CMBS office delinquency hit all-time high of 12.34% in January 2026

Data Centers:

• BlackRock executed roughly $50 billion in data center activity in one week: $40 billion Aligned Data Centers acquisition and $12 billion Meta El Paso campus debt financing
• Meta operates 80/20 JV structure with BlackRock, leasing back compute while BlackRock owns infrastructure
• JLL projects nearly 100 GW of new data center capacity added between 2026 and 2030, a 14% CAGR

Multifamily:

• Q2 2026: first time since fall 2021 that lease-ups outpaced new supply
• Cushman & Wakefield: 124,600 units absorbed, fifth-highest quarterly total in 25 years
• Trailing 4Q: 362K absorbed vs 358K delivered; first time demand exceeded supply since early 2022
• National vacancy fell to 8.9%, down 35 bps, first time below 9% since 2024
• 41.2% of properties still offering concessions, up 9.9 points YoY
• Fort Myers effective rents 11.2% below advertised; Denver 8.2% below
• NYC rent-to-income ratio: 70.6% (median income $71K, average one-bedroom $4,186)

Three contrarian sectors outperforming while everyone chases data centers and industrial:

1. Retail Strip Centers & Senior Housing
Green Street Q1 2026: cap rates were frozen across 9 major sectors. Two broke out. Strip centers compressed 15bps, power centers 30-40bps. Senior housing values surged 13% year-over-year, the sharpest rally of any major sector tracked. Demand is strongest in secondary and tertiary markets, not gateway cities.

2. Austin Multifamily
97,000 units delivered since 2020, equal to 40% of total inventory. After three years of declines, Q2 2026 posted +1.3% rent growth, the first increase since fall 2022. Average rent sits at $1,425, only $120 above 2019 levels. Class C properties still down 11.6% year-over-year. The market is finding its floor.

3. San Francisco Office
Transamerica Pyramid signed 113,000 square feet in new leases under new ownership since March. AI companies have leased nearly 2 million square feet citywide. San Francisco posted 10.6% annual rent growth in Q2, the strongest in the nation. Flight-to-quality is real. Trophy assets are leasing. Average buildings are still struggling.

The macro isn't driving returns. Local supply and demand, tenant quality, and demographics are. The operators winning right now are looking where nobody else is.

The housing shortage myth is dead. MBA research shows household formation slowing from 1.13M annually to 802K over the next two decades. Sun Belt markets like Austin are oversupplied. The Northeast and Midwest remain constrained. National home price growth forecast: 1% for 2026, flat for the next two years.

Defense tech is the new trophy asset. Anduril just raised $5B at a $61B valuation. Revenue over $2B last year. Government-backed, mission-critical tenants are replacing the old office playbook. 

Data centers are printing money but hitting the zoning wall. DataBank raised $1.45B for DFW expansion. Brookfield's Csquare is targeting a $1.35B IPO. But Marietta, Georgia just froze all data center applications for six months after resident pushback.

The macro isn't driving this market. Local supply and demand, tenant credit quality, and regulatory friction are. The operators winning right now aren't waiting for the Fed. They're underwriting to the actual dynamics on the ground.

Everyone's waiting for rate cuts to save the market. But new research says the relationship between rates and returns is breaking down. Meanwhile, office vacancy is declining across major U.S. markets. DFW office leasing is up. Trophy offices are outperforming. Supply is shrinking. The comeback is happening while rates are still elevated.

Construction costs are also climbing from three directions. Labor shortages, tariffs, and data center demand. If your pro formas are using old numbers, your returns are bleeding out before you break ground.

The macro mirage. Everyone stares at the Fed while the real market moves underneath. The smart money is underwriting to fundamentals. Tenant quality. Supply constraints. Actual costs. The operators winning right now stopped waiting for the macro and started moving on the micro.

Cap rates have officially decoupled from the 10-year Treasury. The old playbook is dead.

The market is splitting in two. On one side, trophy net lease assets are compressing hard. McDonald's ground leases in the high 3s to low 4s. Chick-fil-A and Chipotle right behind them. Scarcity of quality expanding tenants is driving the compression, not rate relief. Tractor Supply opened 40 new stores in Q1 2026 alone. When institutional capital, 1031 money, and private equity are all chasing the same limited pool, cap rates compress regardless of where the 10-year sits.

On the other side, dollar stores and drugstores are widening. Dollar stores are a supply problem. Drugstores are a business trajectory problem. CVS and Walgreens are actively shrinking footprints. Pharmacy disruption is real. Buyers are discounting credit ratings based on what the next 10 years look like.

The move? Stop benchmarking against headline cap rates. The rate environment won't bail you out. Underwrite tenant quality and business trajectory separately. Watch the Q3/Q4 maturity wall for forced sellers. And keep your broker relationships tight. The question isn't where the market is. The question is which side of the split your asset sits on.

Sponsor: Rise 48 Equity - Vertically integrated multifamily investing. rise48.com

Three things happened this week that tell you exactly what's happening in the market right now. 

First, industrial leasing surged in the first half of 2026. We're talking 491 million square feet of activity. That's 27 percent above the same period last year. The third-strongest first half on record. Big-box leases, spaces over 750,000 square feet, surged 80.7 percent year-over-year. Occupiers are locking in long-term deals. They're committing capital. They're confident. Manufacturing is growing. Defense manufacturing, AI infrastructure, life sciences. These are long-term commitments. These are occupiers betting on the future. 

Second, Microsoft cut 4,800 jobs, 2.1 percent of their workforce. But here's the real story. Xbox is losing 20 percent of its staff. 3,200 people. Four game studios are being spun off. Because the business isn't healthy. Xbox C.E.O. Asha Sharma said it directly. Margins are 3 to 10 times lower than comparable businesses. They've invested 20 billion dollars over five years and revenue declined. Gaming is struggling. But the broader story is A.I. Microsoft is restructuring to prioritize A.I. investments. They're cutting costs to fund data centers and cloud infrastructure. That's where the capital is flowing. 

Third, Bass Pro Shops. 148,000 square feet. Experiential retail. Opening in La Mesa at Grossmont Center in 2028. That's a massive bet on retail. While most retailers are shrinking, Bass Pro is going big. They're betting that experience-driven retail can still move the needle. Aquariums. Displays. Interactive exhibits. They're creating destinations, not just stores. Retail isn't dead. But it's evolved. Experience matters. Location matters. The store has to be a destination. Bass Pro understands that. They're creating a mini-vacation in a shopping center. So what do these three signals tell us? They tell us capital is moving. Industrial is winning because it's essential. Manufacturing, logistics, defense. These are real businesses with real demand. Gaming is losing because it's not delivering returns. And retail is surviving, but only if it's experiential. Only if it's a destination. The lesson is clear. Own assets that deliver. Own assets that create experiences. Own assets that serve real demand. Everything else is getting reset.

Sponsor: Rise 48 Equity - Vertically integrated multifamily investing. rise48.com

 Three things are happening right now that tell you exactly where the market is heading.

First, builders are hitting pause. Housing construction is slowing down significantly. The pipeline is contracting. They built too much. Supply flooded the market. Now they're waiting for demand to catch up. When that happens, multifamily owners regain pricing power. Fewer new units means existing units become more valuable. Less competition. Rents can move again. Second, Houston. Office buildings are being demolished. Not converted. Demolished. Because land value now exceeds building value. Owners of debt-free properties are looking at the math and saying the land is worth more empty than the building is worth occupied. That's the reset. Office is broken in a lot of markets. Houston is just being honest about it. They're taking the land and starting over. Or holding it for something else. The point is the building has no value. Third, Miami. Office rents just hit an all-time high. Miami now has the highest office rents in the entire country. Houston is demolishing offices and Miami is setting rent records. That's the divergence. That's the market telling you something. It's telling you that office isn't dead. It's telling you that location matters more than ever. Miami has trophy towers. Business relocations. Capital flowing in. Houston has obsolete buildings that nobody wants. It's not about office. It's about which offices. Which markets. Which buildings. Quality matters now more than it ever has. If you own a trophy office in Miami, you're winning. You're setting records. You're attracting capital. If you own a mediocre office in Houston, you're demolishing it. You're taking the land value and moving on. So what does this mean for multifamily? It means the same thing. Builders are pausing. Supply is contracting. Owners of quality multifamily in strong markets are about to regain pricing power. Owners of mediocre multifamily are competing for capital that's increasingly selective. They're fighting for attention in a market that's moved on. The lesson is the same across all asset classes. Own quality. Own location. Own fundamentals. Everything else is getting reset. 

Sponsor: Rise 48 Equity - Vertically integrated multifamily investing. rise48.com

Amazon, Google, Microsoft, and Meta are spending $700 billion on data centers in 2026. But it's not going to chips. It's going to power infrastructure. Grid connections. Cooling systems. The backbone that runs these things. Power availability is the real bottleneck right now. Gartner projects 40 percent of AI data centers will be power-constrained by 2027. You can have all the chips you want. If you don't have power, you can't run them. While $700 billion is flowing into data centers, something completely different is happening in multifamily. Rents are moving again.

After a year and a half of getting crushed, occupancy is stabilizing. The bleeding has stopped. Nationally, we're looking at 0.5 to 2 percent rent growth. That might sound modest, but after near-zero growth, it's a signal. A signal that the supply wave is fading. New deliveries are down significantly. Absorption is picking up. The market is finding equilibrium. But not all multifamily is created equal right now. If you own quality multifamily in a strong market, you're stabilizing. You're seeing rent growth. You're in a good position. If you own mediocre multifamily in a weak market, you're still getting crushed. That divergence is happening because capital is being selective. Investors are rotating. They're holding quality multifamily. They're moving into data centers. They're avoiding weak assets entirely. Because the returns are clearer in data centers right now.

The math is simple. AI is the future. Data centers are essential. The capital flows there. But multifamily still works. It's just not a play for everyone anymore. You need the right asset in the right location. Real occupancy. Real cash flow. Real location. Those are the three things that matter. Everything else is noise. If you have those three things, you're fine. You're stabilizing. You're seeing rent growth. Capital will find you. If you don't, capital is moving past you. It's going into data centers. It's going into assets with clear fundamentals. It's not coming to you. The move is simple. Own good assets. Multifamily in strong markets. Data centers in power-rich regions. Industrial in logistics hubs. Own the stuff that actually works. Avoid everything else. Because capital is moving fast right now. And the people who understand where it's going, who position themselves in the right assets, they're the ones who win. 

Sponsor: Rise 48 Equity - Vertically integrated multifamily investing. rise48.com