🌀 The insurance squeeze reshaping CRE valuations

👋 Happy Mother’s Day, Best Ever readers! Shout out to all the moms out there, past and present. Let’s celebrate them today.

In today’s newsletter, insurance eats away at CRE, lending spikes, deals dry up, seniors love multifamily, and much more.

💡 One member raised $3.3M from podcast listeners. Another negotiated through lender pressure on a struggling 70-unit deal. Another unlocked $11M in capital through RIAs. These are the kinds of conversations happening every week inside the Best Ever Inner Circle. Learn more.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

🏦 Lending Spike: Commercial and multifamily mortgage originations jumped 52% YoY in Q1, driven by a 209% spike in healthcare lending, a 148% surge in retail, and an 85% rise in hotels, even as volume dipped 30% from Q4 2025.

🏠 Occupancy Climbs: U.S. apartment occupancy has risen back above 95% for the first time in seven months, reaching 95.2% in April after four consecutive months of gains, according to RealPage, though rents remain 0.4% below year-earlier levels amid persistent Sun Belt supply pressure.

📦 Industrial Recovery: U.S. logistics demand has strengthened to expansion territory as net absorption has reached 45M SF, new deliveries are set to hit a decade low of 190M SF, and rent growth has turned positive for the first time since 2023.

🏗️ Deal Drought: U.S. apartment transaction volume fell 42% QoQ to $32 billion in Q1 with deal count dropping 33%, though average pricing held firm at $204,061 per unit and cap rates remained the lowest among major CRE asset classes.

📊 Demand Rebounds: U.S. multifamily absorption has reached 78,100 units in Q1, surpassing 58,100 completions and pulling the national vacancy rate down to 4.8%, with 63 of 69 tracked markets posting positive net absorption.

🏆 TOP STORY
THE INSURANCE SQUEEZE RESHAPING CRE VALUATIONS

Insurance costs have risen steadily across multifamily, office, industrial, and retail for the better part of a decade. What's changed is the magnitude. Between 2017 and 2024, premiums compounded at 14.3% annually — more than three times the 4.6% average of the prior 17 years — and the effects are now showing up directly in valuations.

The clearest signal of where this is heading is in the valuation data. Properties in high-risk markets — those exposed to hurricanes, wildfires, and flash floods — trade at a 16.9% discount to comparable assets in low-risk areas, according to a new analysis from climate risk firm First Street. For multifamily specifically, that discount widens to 25%.

The numbers behind that gap tell the story at the asset level:

• The Multifamily Squeeze: Insurance costs for apartment owners rose from $285.83 per unit in 2017 to $878.91 per unit in 2024, a 207.5% increase. In 2024, insurance consumed 6.6% of multifamily NOI nationally — up from well under 2% less than a decade ago. Unlike other expense categories, operators can't pass insurance costs directly to tenants without raising vacancy risk.

• Industrial Taking the Hit: Insurance rates on industrial properties in high-risk markets have risen at three times the rate of those in low-risk markets. Insurance now consumes 5.9% of industrial NOI in high-risk areas, compared to 2.4% in low-risk ones — a spread that directly affects underwriting assumptions on acquisitions.

• The Reinsurance Signal: Premium increases at the property level have tracked reinsurance rates almost directly since 2017, when natural disaster payouts exceeded $300 billion. Hurricane Ian's $112 billion in damages in 2022 triggered another spike. The reinsurance market is softening slightly in 2026 after a hurricane-free 2025, but First Street's data suggests each hardening cycle raises the baseline permanently — rates dip but don't reset.

The counterintuitive wrinkle in all of this is that high climate risk and high investor demand aren't mutually exclusive — yet. In several of the country's most active investment markets, economic tailwinds have been strong enough to absorb rising insurance costs without meaningfully dampening returns. 

What the data makes clear is that the cushion is shrinking. Each hardening cycle raises the permanent baseline, and the NOI math in high-risk markets gets harder to close with every renewal.

THE BOTTOM LINE

Insurance is no longer a line item to optimize at close — it's an underwriting variable that affects hold period assumptions, refinancing risk, and exit valuations. Operators in high-risk markets who haven't stress-tested their NOI against continued premium increases are working with an incomplete model.

💰 CRE TRENDS
HOW SENIORS ARE DRIVING MULTIFAMILY MIGRATION

Senior renters are reshaping multifamily demand in ways that don't show up in the headline occupancy numbers. More than half (54.4%) of senior renter households now live in multifamily properties, and their preferences skew toward larger buildings at a rate that significantly outpaces the broader renter population.

• Thinking Big: Senior renters choose large multifamily properties (50+ units) at nearly double the rate of all renters — 26.3% versus 17%. The driver appears to be lifestyle fit: proximity to amenities, healthcare, and transit matters more at this life stage than square footage.

• Established vs. Emerging Markets: Las Vegas and North Port-Sarasota lead as senior renter destinations with both a large existing base and continued inbound demand. Boise, Greenville, Knoxville, and Charleston are the emerging markets to watch — smaller footprints today but strong in-migration momentum.

• The Key Driver: The markets attracting senior renters share a common profile: secondary metros with lower taxes, relative affordability, and walkable amenities. Gateway cities like New York and Boston have large senior renter populations but limited new inflows, suggesting aging in place rather than active migration.

For multifamily investors, the senior renter signal is less about today's occupancy and more about where demand is building. The markets drawing new senior renters — not just retaining existing ones — are the ones worth underwriting.

🎙️ THE BEST EVER CRE SHOW
THE REAL COSTS OF SCALING A MHP SYNDICATION

Most CRE investors think about the economics of a deal. Fewer think about the economics of running the firm that does the deals.

This week on the Best Ever CRE Show, Leo Young joined Amanda Cruise and Ash Patel to break down what it actually costs to build a mobile home park syndication business, and why the operators scaling fastest aren't necessarily the ones building it right.

Leo's firm has closed 10 communities totaling over 500 units in roughly two years. The firm carries over six figures in annual overhead, and acquisition fees only partially cover it. That gap forces a choice most emerging GPs don't talk about publicly: chase deal volume to cover payroll, or build slower and stay aligned with investors.

• The Fee Math Nobody Talks About: The standard GP fee structure incentivizes transactions, not outcomes. Acquisition fees come in at close; GP upside comes at exit. For operators running lean teams with real overhead, the pressure to keep doing deals regardless of market conditions is structural, not personal.

• Longer Holds, Better Alignment: Rather than targeting the standard five-year exit, Leo is structuring deals around cash-out refinances that return investor capital without triggering depreciation clawback. It requires patience on the GP side and a willingness to wait longer to get paid than most operators are comfortable with.

• Infill Is Harder Than It Underwrites: His team projected four unit fills in one year, hit eight, then filled zero the following year. Township approvals, not market demand, drive the variance. Leo flags it as one of the most abused line items in mobile home park underwriting.

The market underneath all of this is getting crowded. PE-backed capital is entering from above, inexperienced operators from below, and off-market deal flow that used to come easily now requires more work for fewer results. Leo's read is that the window is closing, and the operators who built disciplined processes before it does are the ones best positioned when it shuts.

🎙️ Listen to Leo’s full episode here.