⚓️ Anchor stores are saving dying malls. Here's how.

👋 Hello, Best Ever readers!

In today’s newsletter, new anchors save the day, hurricane season arrives, office strikes an imbalance, OpEx moderates, and more.

Today’s edition is presented by Capital Gains Tax Solutions. Selling a property shouldn't mean losing 20-50% to taxes. Let Capital Gains Tax Solutions create your personalized exit plan and calculate your savings today.

Also, join Pascal Wagner for our next FREE live webinar, The 3-Step Buy Box: How to Build a $100K/Year Passive Income Portfolio, on Thursday, June 12 at 7 pm EST.

👉 Register now to save your seat.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

Rent Report: National rent growth slowed to 0.4% in May despite entering peak moving season, with YoY growth falling to -0.5% as vacancy rates hit a record 7%. Austin leads rent declines at -6.3% annually due to new supply, while Fresno posts the highest growth at 5.9% YoY.

Hurricane Risks: New data shows that previously safe markets like Virginia Beach, Charleston, and Wilmington are now in hurricane danger zones. These markets see properties sitting 19-32% longer due to rising insurance costs, with 33 million homes worth $11.7 trillion facing wind and flood risk.

Modular Mission: Disaster-hit homeowners are turning to modular and 3D-printed homes that cost less and build twice as fast as traditional construction. Companies are targeting wildfire and hurricane zones where insurance payouts fall short, though they face scaling challenges and reputational issues from past failures.

Millionaire Renters: Millionaire renters have tripled since 2019 to 13,700 households, with one in 11 millionaires now renting vs. owning. Houston leads with 25-fold growth in millionaire renters, while Southern metros like Dallas, Miami, and Atlanta are seeing 6- to 12-fold increases.

Rent Control Results: Rent control has yielded mixed results, with NYC seeing 30% multifamily value drops and a surge in vacant units since 2019. Minneapolis achieved 12% housing growth with 1% rent increases through market approaches, while St. Paul's rent control slashed new construction from 1,000 to 300 units annually.

🏆 TOP STORY
HOW NEW ANCHOR STORES ARE RESCUING DYING MALLS

The traditional mall anchor formula is dead. Department stores like JCPenney and Sears once anchored shopping centers with their broad appeal, but their closures and bankruptcies left behind massive traffic drops and vacant eyesores. Today's mall operators have changed the model, according to a report from The Anchor, prioritizing engagement over square footage.

• Experiential Retail Wins: Scheels, known for its immersive in-store experiences, is a prime example of the power of experiential retail. At Towne East Square Mall in Wichita, KS, Scheels expanded long-distance mall visits from 35.8% to 41.9% while drawing 42% of visitors from over 50 miles away. Looking abroad, H&M's Barcelona store is experimenting with holographic mannequins in social fitting rooms that encourage Instagram sharing.

• Niche Brands Are Back: Specialized retailers consistently outperform traditional anchors despite smaller footprints. Barnes & Noble captured 7.9% of visits at Coronado Center in Albuquerque, NM, surpassing Macy's and JCPenney while attracting more affluent shoppers. Meanwhile, Bass Pro Shops at Alton Marketplace in Irvine, CA, attracts visitors with a $122.6K median household income compared to the previous Walmart's $116.3K.

• Dining Drives Engagement: Food-focused tenants deliver anchor-level performance through consistent traffic. Porto's Bakery commands 15.6% of visits at Northridge Fashion Center in Los Angeles, while In-N-Out captures 8.6% at Glendale Galleria in Glendale, CA, both outperforming traditional anchors and generating reliable daily traffic.

• Strategic Pop-Ups: Temporary activations also deliver anchor-level impact. The Barbie Dreamhouse Tour boosted mall visits by 11.5% on event days, while collaborative tenant strategies like Aldi's arrival at Green Acres Commons in Valley Stream, NY, increased adjacent BJ's visits by 45%.

THE BOTTOM LINE

American malls are coming full circle. In the 1990s, malls were cultural epicenters where teens congregated to both shop and socialize, creating community around shared experiences. After decades of decline, today's operators are recreating that social energy through experiential anchors, immersive dining, and Instagram-worthy activations, transforming the mall from transactional back into the must-visit destination it once was.

💰 CAPITAL GAINS TAX SOLUTIONS
A BETTER WAY TO SAVE ON CAPITAL GAINS TAXES

Selling a property shouldn't mean losing 20-50% to capital gains taxes. And while most investors think their only option is the outdated, restrictive 1031 exchange, there is a better way.

Capital Gains Tax Solutions has helped countless investors preserve wealth through deferred sales trusts. With over half a billion dollars in closed trusts across real estate, businesses, and even Bitcoin, their results speak for themselves:

• A San Diego business owner selling for $13M kept an extra 40% by deferring taxes

• A dental practice owner selling for $16M saved 30% on taxes

• Multiple clients rescued failing 1031 exchanges with Capital Gains Tax Solutions’ specialized exit plans

Don't settle for outdated strategies. The Deferred Sales Trust advantage gives you flexibility, time, and control while allowing your wealth to compound as you slowly pay taxes over time.

But don’t wait! You must act before closing escrow. So, if you have an upcoming sale with at least $1M in proceeds or gains, let Capital Gains Tax Solutions create your personalized exit plan and calculate your savings today.

💰 CRE BY THE NUMBERS
OFFICE IMBALANCE, OPEX MODERATES, CRE PRICES TUMBLE, AND MORE

25 Years

Office conversions and demolitions will exceed new construction for the first time in at least 25 years, with 23.3 MSF being removed versus 12.7 MSF of new supply across major markets. The net reduction could lower vacancy rates from the current 19% levels, while 85 MSF of additional conversions are planned for the coming years.

39%

Multifamily operating expenses moderated significantly last year but remain 39% above pre-pandemic levels nationwide, with costs per unit growing $445 or 24.4% since Q1 2021. Insurance cost growth fell dramatically from 33.5% to 7% annually, while tax growth dropped from 4% to negative 0.5%, providing budget relief amid economic uncertainty.

$5.3 Billion

Commercial property prices declined in April as tariff uncertainty halted some deals, but high-value investment-grade sales rose $5.3 billion MoM, signaling potential price stabilization. Multifamily leads recovery with 4% YoY price gains, serving as an industry bellwether after climbing nine of the past 12 months.

70,000

Office-to-residential conversions nearly doubled last year, with a record 70,700 units expected in 2025, as cities offer tax abatements and streamlined approvals to address vacant office space. New York leads with 8,310 units in pipeline, while Chicago's LaSalle Street initiative and Boston's conversion program provide millions in incentives for affordable housing requirements.

50

Renting is cheaper than buying in all 50 of the largest U.S. metros in 2025, with mortgage payments averaging 38% more than rent nationwide. The cost gap widened in 38 metros since last year, with tech hubs like San Francisco and San Jose showing the biggest differences, while Rust Belt cities like Detroit and Cleveland have the smallest gaps.

8.8%

National industrial vacancy hit 8.8% in April but is expected to stabilize as new supply tapers after doubling recently. In-place rents rose 6.7% YoY to $8.49 PSF, while e-commerce sales posted their worst quarterly growth since 2021, and data center construction may slow despite AI investment surges.

🌎 FREE LIVE EVENT
HOW TO BUILD A $100K/YEAR PASSIVE INCOME PORTFOLIO

Join us for our next FREE live webinar, The 3-Step Buy Box: How to Build a $100K/Year Passive Income Portfolio, on Thursday, June 12 at 7pm EST.

If you're investing deal-by-deal without a system — or you're unsure if your current strategy is actually moving you toward financial freedom — this session is for you.

In just one hour, you'll learn:

✅ A 3-step filtering system used by top LPs to avoid costly “deal regret”
✅ How to build a personalized Buy Box based on your goals
✅ How to match asset classes to outcomes like cash flow, equity, or tax reduction
✅ The red flags to watch for when evaluating deals and operators

Your host, Pascal Wagner, is a full-time LP investor, founder of Grow Your Cashflow, and host of The Passive Income Playbook on the Best Ever CRE Podcast.

Before building his own six-figure passive income portfolio, Pascal managed over $150M in early-stage capital at Techstars and reviewed 2,000+ deals.

🎟 Can't make it on June 12? Register anyway, and we'll send you the replay.

🏘️ DEAL OF THE WEEK
2 YEARS, 1 FIRE, 42% VALUE INCREASE, AND 28% IRR

The team at XSITE Capital Investment increased the value of this property by 42% and delivered a 28% IRR in less than two years despite a fire in the first month of ownership.

Here's how they did it 👇

🏢 Property Details: This 132-unit Class C multifamily property is located in Columbia, South Carolina, and was purchased in April of 2021.

💸 Finances: The property was purchased for $12.55 million. The team raised $5.3 million in capital and secured a $7.2 million Fannie Mae loan at a 3.655% fixed interest rate.

💼 Business Plan: The team executed a comprehensive value-add strategy, focusing on exterior renovations, including re-painting, roofing, and landscaping upgrades, as well as LED lighting installation. The community was fully rebranded from Churchill at St. Andrews to The Vue at St. Andrews, complete with updated signage and marketing materials. They upgraded community amenities by renovating the clubhouse, adding a fitness center, improving the pool area, and installing a playground and grilling station.

Interior units were modernized with new flooring, countertops, appliances, and fixtures. They also partnered with a top-tier property management company to improve operations and implement effective asset management practices.

🍾 Results: The team increased the value of this property by 42%. They netted an IRR of 28.8%, CoC of 7.1%, and equity multiple of 1.5X. The property was sold in December 2022 for $17.8 million.

💪 Takeaways/Learnings: "We bought this deal during the COVID-19 pandemic,” a member of XSITE’s team said. “We had issues executing our business plan due to the supply chain issues. However, we still managed to revamp the overall community to include renovating the pool area, adding a grill station and playground, and renovating 33 units. Within the first month of ownership, there was a fire in one of the units. So, we used that unit as the first renovation.”

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