🏆 7 wins for CRE in the Big Beautiful Bill

🇺🇸 Happy (almost) July 4, Best Ever readers! We hope you have a safe and happy holiday weekend.

In today’s newsletter, CRE wins with the Big Beautiful Bill, multifamily hits headwinds, lumber mills underproduce, Amazon builds a robot army, and more.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

🛝 Apartment Slide: Multifamily faces its steepest price drop since 2008, with prices falling 12.1% YoY and sales volume down 18% to $8.2 billion in May. Garden-style properties dropped 30% while oversupply continues to pressure rents for the 23rd straight month.

🏠 Cape Fear: Cape Coral, FL, has become America's worst housing market, with prices falling 11% over two years, the steepest decline of any metro. Nearly 8% of homeowners are underwater, 52% of homes have price cuts, and inventory has surged from 3,500 to 12,000 as investors flee.

🏭 Southeast Surge: The top five Southeastern industrial markets generated $1.1 billion in sales through April, matching 2024 levels despite a national slowdown. Savannah led with $397 million, followed by Charlotte at $252 million.

🚧 ICE’d Out: The Trump administration has revoked work visas for 500,000+ immigrants from Cuba, Haiti, Nicaragua, and Venezuela, threatening South Florida's construction workforce. Employers may lose one-third of workers while the industry already needs 430,000 additional workers for 2025.

💸 Kids Aren’t Alright: Young adults aged 22-27 face economic headwinds that threaten CRE, as wages rose only 5.9% over the last 34 years while inflation surged 136%. With 41.2% underemployed and 5.8% unemployed, this segment’s struggles could impact retail and office demand.

🏆 TOP STORY
7 WINS FOR CRE IN TRUMP’S BIG BEAUTIFUL BILL

President Trump's Big Beautiful Bill narrowly passed the Senate in a dramatic 51-50 vote this week, with Vice President JD Vance casting the tiebreaking vote. The 887-page tax and spending package now heads back to the House, where lawmakers are racing against Trump's July 4 deadline to pass the bill.

For CRE investors, the legislation would deliver major victories that could reshape the investment landscape. 

🏭 100% Bonus Depreciation Extended Through 2029: Property owners would be able to immediately deduct the full cost of qualifying improvements and equipment in the purchase year, plus deduct physical real estate used for manufacturing in a single year. This represents over $200 billion in potential tax breaks to encourage factory construction.

🔄 1031 Like-Kind Exchanges Survive Intact: This critical tax-deferral tool for CRE portfolio optimization would remain untouched, allowing investors to continue rolling proceeds from one investment property into another without immediate tax consequences.

🔬 Immediate R&D Expense Deduction: Companies would be able to immediately deduct domestic research and development expenses rather than capitalizing them over several years, potentially driving demand for laboratory space and specialized facilities in innovation corridors.

💰 Enhanced Business Interest Deduction Made Permanent: EBITDA-based interest deductibility would become permanent, helping highly leveraged CRE investments offset pressure from higher interest rates.

📈 Pass-Through Entity Tax Benefits Enhanced: The 20% Qualified Business Income (QBI) deduction would be extended with a broader phase-in range, potentially saving partnerships $40K-$50K annually on every $1 million in income.

🌍 "Revenge Tax" and SALT Passthrough Limitations Eliminated: The proposed 5% tax on foreign investors (potentially rising to 20%) has been removed from the Senate bill, preserving access to international capital. The SALT cap would be temporarily raised to $40K with income-based phase-outs.

🎯 Opportunity Zones Made Permanent and Expanded: The opportunity zone program would gain permanent status with expanded criteria, removing investment uncertainty and providing long-term clarity for developers in designated areas.

THE BOTTOM LINE

With the Big Beautiful Bill now heading to the House for potential passage on July 4, CRE industry leaders are cautiously optimistic, citing that the bill balances support for housing and low-income communities with fair treatment of business investments, positioning it to drive capital into commercial properties nationwide. After a turbulent few years, this bill — and the wins for CRE within it — could provide the foundation for CRE to turn a corner.

💰 CRE BY THE NUMBERS
LUMBER OUTPUT, AMAZON’S ROBOT ARMY, AND MORE

🪵 64.4%

U.S. sawmills are operating at only 64.4% capacity despite potential tariffs on Canadian lumber doubling this fall. Mills could produce 35% more but choose not to, creating artificial scarcity that will drive construction costs higher regardless of demand.

🤖 1,000,000+

Amazon has deployed over one million robots in warehouses, approaching parity with human workers, as 75% of global deliveries now use robotic assistance. Productivity has surged, with packages per employee rising from 175 to 3,870 annually since 2015, while employee count per facility has hit a 16-year low.

📉 33,000 

The private sector lost 33,000 jobs in June, badly missing expectations for a 100,000 gain and marking the first decline since March 2023. Service roles were hit hardest with professional/business services down 56,000 and health/education losing 52,000 positions.

💰 $720 Billion 

Global reinsurance capital hit a record $720 billion in Q1 2025, outpacing demand as the catastrophe bond market posted record issuance, including two $1.5+ billion transactions. Insurance-linked securities capital remained stable at $115 billion despite an active natural catastrophe season.

💵 $1 

President Trump's daily attacks on Fed Chair Jerome Powell are effectively weakening the dollar to boost exports as he seeks Powell's resignation before his May 2026 term ends. U.S. Treasury Secretary Scott Bessent is lobbying for the role while Fed Governor Christopher Waller positions himself as the likely replacement.

🏘️ DEAL OF THE WEEK
2X PROPERTY VALUE AND 16% QUARTERLY DISTRIBUTIONS

Arn Cenedella and the team at Spark Investment Group have doubled the value of this property in four years and are paying out 9–10% cash-on-cash in quarterly distributions.

Here's how they’re doing it. 👇

🏢 Property Details: This 43-unit Class B multifamily property was built in 2006 and is located in Greenville, South Carolina. It was purchased in 2021 at 91% occupancy. All units are 1 bed/1 bath and 610 sq. ft.

💸 Finances: Purchase price was $2,795,000 with $1.5 million in capital raised. The team secured a $1,961,000 loan with 3.86% interest, a seven-year term, and a one-year interest-only step-down prepayment penalty.

💼 Business Plan: This property required $156,000 in CapEx improvements. Interior renovations included new flooring, paint, fixtures, countertops, and washer/dryers. Exterior renovations included improved landscaping, a new dog park, new picnic tables, and gazebos. The team replaced the third-party property management team and brought those operations in-house.

The plan is to continue to increase the rent roll and NOI. When the loan matures in four years, Arn's team will consider a refinance to return all capital to LPs and continue a long-term hold.

🍾 Results: The current property value is $5.35 million at a 5.75% cap. The team is paying 16.14% in cash on cash returns to LPs and projects a 17-18% IRR when the property is refinanced. The estimated NOI for 2025 is $325,000, up from $164,529 at the time of purchase.

👉 If you have a deal you'd like us to feature, share it with us!

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