🏙️ Coworking is back. But it looks different.

👋 Happy Sunday, Best Ever readers! As AI and new tenant screening technologies emerge, Greystar reports that in some markets, 50% of its applicants are fraudulent. Be diligent out there.

In today’s newsletter, coworking is back, a landlord locks out an NBA star, multifamily markets set the pace, a new strategy emerges, and much more.

🎉 Best Ever Conference X tickets are live! Join our 10-year anniversary celebration in Salt Lake City, Feb 18-20. Grab your early bird pricing before October 1.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

🏀 Locked Out: Former Houston Rockets star James Harden's Houston restaurant was locked out by its landlord over $2.2 million in unpaid rent, with the landlord also suing for over $1 million in damages for failing to meet rental obligations and maintenance requirements.

📉 Rent Reversal: U.S. apartment rents fell 0.2% YoY in August to $1,882, marking the first annual decline since March 2021. Occupancy softened to 95.4% and supply-heavy markets in the South and West drove cuts, while tech-heavy coastal cities posted 3-7% gains.

🏨 Hotel Have-Nots: Luxury hotels posted 3% gains in both ADR and RevPAR through July, while economy hotels declined 0.8% in ADR and 1.9% in RevPAR as affluent travelers plan more annual trips and middle-market consumers cut back.

🚨 Distress Test: Minneapolis leads U.S. CRE distress at 56.7% among $341.1 billion in loans reviewed, followed by Rochester at 44.3% and Portland at 42.8%. Stockton posted 0% distress, and Columbus just 0.2% as regional divides widen.

📦 Storage Slump: Self-storage construction starts fell 12.8% through mid-2025 as the development pipeline contracts, with Yardi forecasting new supply declining to 46.1M SF in 2026 and 42M SF in 2027 amid high rates and weak demand.

🏆 TOP STORY
WHY BIG CITIES ARE QUIETLY LOSING WORKSPACE

The U.S. coworking industry hit a strategic inflection point in Q2, marking the first location count decline in the post-COVID era as operators shifted from aggressive expansion to portfolio optimization. After adding nearly 4M SF in Q1 with 3% growth, the sector slowed dramatically to just 0.4% expansion in Q2, while total locations dropped 1% to 7,748 nationwide. This signals a maturing industry prioritizing profitability over raw growth as hybrid work demands stabilize.

The consolidation story varies geographically. Manhattan saw its footprint shrink 4% and location count drop 5%, but average space sizes increased, indicating a strategic pivot toward fewer, premium venues. Meanwhile, secondary markets drove growth, with Long Island posting an 11% increase, Birmingham up 10%, and West Palm Beach-Boca Raton gaining 9%. The trend reflects operators' growing appetite for less-saturated markets offering better unit economics than oversupplied urban cores.

Market dynamics reveal the recalibration is strategic:

• Size over Scale: Average coworking location size increased 2% nationally to 18,236 SF, with operators focusing on amenity-rich hubs rather than location proliferation.

• Geographic Rotation: Traditional powerhouses like Manhattan, Dallas-Fort Worth, and Denver contracted while emerging markets in Alabama, Florida, and suburban New York accelerated.

• Pricing Stability: Manhattan maintained its premium at $339 monthly membership, while virtual office rates peaked in New Jersey ($215) and Central Valley, California ($204).

• Operator Consolidation: Top five players (Regus, HQ, Industrious, Spaces, WeWork) grew 6% to 1,938 locations, with Regus adding 68 sites and HQ posting 14% growth.

• Suburban Momentum: Brooklyn gained 5% while Chicago extended momentum with 2% growth, demonstrating demand flowing toward neighborhood-level accessibility over central business districts.

The shift reflects broader hybrid work maturation, where location intelligence and operational efficiency matter more than sheer scale.

THE BOTTOM LINE

Coworking's consolidation phase marks a healthy evolution from growth-at-all-costs to sustainable portfolio management. Operators are betting on fewer, larger, better-located spaces in markets with favorable economics rather than blanket urban expansion. This strategic recalibration should strengthen the sector's fundamentals while creating opportunities in secondary markets that offer better risk-adjusted returns than saturated primary metros.

🎟️ BEST EVER CONFERENCE
GENERAL ADMISSION TICKETS NOW AVAILABLE

🎉 Ten years. One massive celebration. Best Ever Conference X (Feb 18-20, Salt Lake City) is going to be our biggest event yet.

Why This Year Hits Different:

✅ Expanded Programming with more speakers and opportunities

✅ Milestone Moments, including special 10th anniversary programming

✅ Strategic Connections through redesigned networking that actually works

✅ Industry Titans sharing insights you won't hear anywhere else

Early bird tickets are $695 (regularly $995) — seriously the best deal we'll ever offer.

Here's the insider advantage: Early bird holders get first dibs on Conference Plus and VIP packages. Wait too long, and those premium spots could be gone.

⌛ PRICES GO UP OCTOBER 1

💰 CRE TRENDS
MULTIFAMILY MARKETS SETTING GROWTH PACE FOR 2025

A surprising group of markets is leading multifamily rent growth in 2025, with Chicago topping the list at 8.1% YoY increases to reach $2,187 average rents. Berkadia's mid-year report reveals that Midwest and secondary markets are outpacing traditional high-growth regions, as Lexington, Omaha, and Cincinnati all posted rent gains exceeding 6%, while Madison, Cleveland, and Wichita delivered increases above 5%.

The standout performance comes alongside remarkably high occupancy rates, with many markets achieving the rare combination of strong rent growth and resident retention. Northern New Jersey, New York, and West Michigan report occupancy above 97%, while Chicago, Omaha, Lexington, and Ventura County maintain occupancy at or near 97%. Nationally, occupancy reached 95.7% — the highest average in nearly three years — while the vacancy rate for stabilized properties sits at just 4.3%.

• Rent Growth Leaders: Chicago (8.1%), Lexington, Omaha, and Cincinnati (6%+), with San Jose and Reno maintaining momentum at 5% and 4.9% respectively.

• Supply Pipeline Concentration: Dallas-Fort Worth leads construction activity nationally, followed by Austin, Denver, Phoenix, New York, and South Florida delivering thousands of new units.

• Class A Premium: Higher-end units posted 3.1% rent growth but remain $264 below average monthly mortgage payments, highlighting the rental advantage.

• Economic Drivers: Strong labor market trends in healthcare and private education support absorption as Baby Boomers age and demand medical services.

This performance occurs despite significant new supply in major metros, with elevated mortgage rates and affordability barriers continuing to channel demand toward rentals.

The data reveal a resilient and geographically diverse multifamily market where Midwest and secondary markets are challenging traditional growth leaders, signaling solid underlying demand dynamics that should encourage investor confidence heading into the second half of 2025.

🎙️ THE BEST EVER CRE SHOW
THE PLAYBOOK FOR LAND-HOME PACKAGE DEALS

While traditional homebuilders struggle with $600,000+ price points and lengthy construction timelines, Beyond Multifamily co-host Amanda Cruise has carved out a profitable niche delivering homeownership at half the cost through her land home package strategy. Amanda joined Ash Patel on the Best Ever CRE Show this week to share her playbook for pairing manufactured homes with private land parcels.

The strategy capitalizes on a regulatory arbitrage between city and county zoning. Cities with public utilities typically restrict manufactured housing, while county areas requiring well and septic systems embrace it. This creates opportunity gaps where Amanda can deliver legitimate homeownership at compelling price points.

This strategy just delivered a $325,000 sale outside Raleigh for a brand new home on nearly an acre:

• Property: New manufactured home on 0.9 acres

• Sale Price: $325,000

• Market Comps: Townhomes at $325,000 (no land), new construction $600,000+

• Buyer Value: Private land ownership + $275,000 savings vs. stick-built

The execution requires four critical elements:

• Targeting county zoning areas that welcome manufactured housing.

• Planning for well and septic infrastructure as standard buyer expectations.

• Selecting markets where traditional construction significantly outprices manufactured alternatives.

• Sourcing quality new manufactured homes that eliminate financing and stigma issues.

Amanda's Thesis: Modern manufactured housing quality now rivals site-built construction, while the affordability crisis prices out middle-class buyers from traditional new builds. County regulations offer flexibility that cities don't, and buyers achieve real property ownership versus manufactured home community rental models.

This represents a systematic approach to addressing housing affordability through regulatory arbitrage rather than hoping for market corrections — creating genuine value for buyers while generating consistent returns for operators willing to navigate zoning complexities.

🎙️ Listen to Amanda’s full episode here.

▶️ FEATURED REPLAY
FROM CRE EXPERT TO AUTHOR

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