🏭 7 of the top 25 industrial markets just flipped positive

👋 Hello, Best Ever readers!

In today’s newsletter, industrial wakes up, Netflix goes to the mall, Oracle goes big, the Sun Belt struggles, and much more.

🎁 Best Ever Conference has a special gift for you! Get 10% off conference tickets plus a $100 Visa gift card when you use the code HOLIDAY10 at checkout. It's the perfect way to invest in your 2026 success. But hurry, offer ends December 23! Claim your holiday gift now.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

🏛️ Housing Bill: House lawmakers introduced the bipartisan Housing for the 21st Century Act with 27 provisions streamlining federal requirements and easing zoning barriers to boost supply nationwide. The plan is to advance the legislation through regular order in 2026.

💻 AI Bombshell: Oracle disclosed $248 billion in data center lease commitments spanning 15-19 years, up 148% from three months earlier, as analysts called the filing a "bombshell" signaling the company is strapped for capital amid surging AI costs.

📦 Storage Resilience: Industrial outdoor storage has attracted surging institutional investment, as IOS rents grew 123% since 2020 while vacancy averaged 4.9% across top markets, less than half the 10.5% bulk warehouse rate, validating the sector's resilience.

🔄 Record Renewals: Multifamily renewal rates remain at historic highs entering 2026 as expensive homeownership keeps renters in place, giving operators crucial stability against uncertain new lease demand while supply pressures ease and fundamentals improve toward year-end.

🏙️ Rent Control Reckoning: St. Paul's 3% rent cap triggered a 79% drop in apartment permits and 6% property value decline before officials retreated, while next-door Minneapolis saw permits surge fourfold by rejecting regulation and embracing supply-side zoning reforms instead.

🏆 TOP STORY
THE TOP MARKETS DRIVING THE INDUSTRIAL RESET

The industrial boom is over, the correction is bottoming out, and the path to recovery is finally coming into view in America's biggest logistics hubs.

After three years of rising vacancy and plummeting construction, the nation's 25 largest industrial markets are showing the first clear signs of stabilization. Net absorption exceeded new supply in seven major metros over the past year, while another seven are approaching balance — proof that the post-pandemic supply shock has finally been absorbed.

The correction is sharp. Construction pipelines have collapsed 62% from their 2022 peak to just 270M SF, the lowest level since 2018. New deliveries dropped 41% YoY to 285M SF. And national vacancy, after rising for three straight years, increased just 4 bps in Q3 — the slowest quarterly gain since 2022.

These seven markets are leading the recovery:

• Indianapolis: Net absorption in Indy hit 9.8M SF over the past year as vacancy plunged 191 bps to 9.3%, down from a peak of 11.2%. Demand outpaced supply as the market absorbed pandemic-era overbuilding faster than nearly any major metro.

• Chicago: The Midwest giant posted 15M SF of net absorption despite continued new supply, with vacancy dropping 28 bps to 4.6%. Strong demand across all building sizes kept fundamentals tight even as competitors struggled.

• Dallas-Fort Worth: DFW absorbed 19.6M SF — the highest in the nation — while vacancy fell 24 bps to 9.3%. New supply dropped 63% YoY to 18.5M SF, creating the positive demand-supply balance that eluded the metro for two years.

• Kansas City: KC delivered 9.3M SF of absorption with vacancy rising just 61 bps to 5.7%, one of the tightest rates among major markets. Limited speculative development kept supply in check while logistics demand remained consistent.

• Minneapolis-St. Paul: The Twin Cities posted 3M SF of absorption as vacancy declined 29 bps to 4.4%, the lowest among the top 25 markets. Steady Midwest demand and minimal new construction created one of the nation's healthiest supply-demand balances.

• Charlotte and Denver round out the seven markets where demand exceeded supply. Charlotte absorbed 5.9M SF against 5.2M SF of new deliveries, while Denver's 4.9M SF of absorption outpaced 4.1M SF in new supply — both signaling tightening fundamentals as construction activity slows across Sun Belt and Mountain West metros.

The top 25 markets account for 76% of the nation's industrial base and two-thirds of all new supply, making their stabilization critical to the broader sector. Vacancy across these metros hit 7.2%, up 62 bps YoY but rising more slowly than secondary markets at 8%.

Rent growth has stalled. Warehouse/distribution rents in the top 25 markets were essentially flat YoY at $9.32 PSF, with 12 major metros posting declines. Greater Los Angeles saw the steepest drop at 11.4% to $14.87 PSF, while Columbus bucked the trend with 16.3% growth to $7.30 PSF. Coastal port markets continue commanding premiums — New York City metro ($16.78 PSF), South Florida ($16.59 PSF), and the San Francisco Bay Area ($14.78 PSF).

THE BOTTOM LINE

The industrial sector is shifting from pandemic-era extremes into sustainable equilibrium. With construction expected to bottom near 260M SF and net absorption forecast to exceed 220M SF in 2026, fundamentals are tightening. Markets with low vacancy, strong demand, and limited new supply will see speculative development return first as tenant competition and replacement-cost rents improve project feasibility.

👉 You can view the full breakdown of the top 25 markets here.

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💰 CRE BY THE NUMBERS
SUN BELT STRUGGLES, SONDER’S SELL-OFF, AND MORE

🏢 9% 

The South posted a 9% multifamily vacancy rate in Q3, the highest in the country, as years of aggressive Sun Belt building have outpaced absorption. National vacancy reached 7%, while the Midwest held at 6.6%, the Northeast at 5.2%, and the West at 5.7%, signaling growing geographic splits.

🏨 190 

Gordon Brothers is auctioning 190 leasehold interests from bankrupt hospitality operator Sonder across 17 states, with bids due December 30. The former short-term rental unicorn filed Chapter 7 bankruptcy in November, owing landlords $18.9 million in unpaid rent after its Marriott integration collapsed.

⚡ 266 GW 

Nearly 2,000 U.S. power projects totaling 266 GW of generation capacity have been canceled in 2025, with utility-scale solar (86 GW), energy storage (79 GW), and wind (54 GW) hit hardest. High grid interconnection costs, local opposition, and Trump administration policy shifts are driving $400 billion in lost investment amid surging data center demand.

🏠 25.1% 

Home flipping profits hit a 17-year low in Q2 2025, with gross ROI falling to 25.1% before expenses, down from 62.9% in 2012. Record-high median acquisition costs of $259,700 and fierce competition for lower-priced homes have squeezed margins to crisis-era levels, pushing some flippers toward ground-up construction or BRRRR strategies.

📺 CRE TRENDS
NETFLIX’S LATEST GAMBLE HITS SHOPPING MALLS

In lieu of a deal breakdown this week, we’re going to highlight something that has retail investors — especially mall owners and operators — a bit curious.

Netflix is betting big on experiential retail, and the company's latest gamble involves shopping malls. The streaming giant launched its first permanent "Netflix House" location last month, converting a shuttered Lord & Taylor department store at King of Prussia Mall outside Philadelphia into a 100K SF immersive entertainment complex.

Think escape rooms, restaurants, minigolf, a movie theater, and retail space — all themed around Netflix's content catalog. Admission is free, but the attractions inside are ticketed. Want to play pirate in a One Piece escape room? That'll be $39. Prefer battling demons in a Stranger Things VR experience? It’s $25 per person.

Netflix is rolling out three locations:

• King of Prussia Mall, Pennsylvania: Opened November 2024 in a former Lord & Taylor space

• Galleria Dallas, Texas: Opened in December 2024 in a former Belk department store

• BLVD Las Vegas: Scheduled for 2027

The concept extends Netflix's recent push into physical experiences, following its Stranger Things Broadway play and traveling Bridgerton balls. For malls, Netflix House represents a broader "experiential retail" strategy as landlords scramble to fill vacant anchor stores.

The numbers on malls aren’t pretty. Since peaking in 2013, enclosed mall count has declined steadily, with retail closures outpacing openings and 13M SF demolished through Q3 2024 alone.

The Netflix bet could signal a template for struggling retail centers — trading traditional shopping for entertainment-focused destinations that drive foot traffic through immersive experiences rather than merchandise. Whether streaming TV fans will repeatedly visit mall-based attractions remains unproven, but landlords facing darkened department stores have few alternatives, and the model's success could determine whether experiential retail rescues American malls or becomes another failed reinvention attempt.