💰 How these 6 markets are defying rent trends

👋 Hello, Best Ever readers! It’s Hump Day +1. Let’s finish out the week strong.

In today’s newsletter, rent trends be damned, landlords get the green light, apartments get smaller, CRE and housing prices diverge, and more.

Today’s edition is presented by Grow Your Cashflow. Join founder Pascal Wagner for our next free live webinar, The 3-Step Buy Box: How to Build a $100K/Year Passive Income Portfolio, tonight at 7 pm EST.

👉 Register now to save your seat.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

👨‍⚖️ Suing Uncle Sam: A federal appeals court has ruled 7-3 that landlords can sue the government for compensation over pandemic eviction moratoriums, rejecting the government's appeal. The decision could expose the federal government to billions in claims and is likely headed to the Supreme Court.

💸 Starwood Woes: Starwood's $8.8 billion real estate fund faces $850 million in pending withdrawal requests after imposing strict redemption limits. The fund sold $1.6 billion in properties while limiting withdrawals to 1.5% quarterly, causing concerns about liquidity restrictions.

🏘️ Tiny Apartments: Seattle and Boston lead micro-apartment construction with 66% and 56% of their pipelines featuring units under 441 square feet. Both cities loosened zoning restrictions to boost affordability, while San Francisco maintains the highest existing micro-apartment share at 14% of inventory.

💪 Power Shift: Over half of global industrial markets now favor tenants amid widespread oversupply, with U.S. vacancy alone hitting 7.8%. New construction plummeted to 330.7 MSF by November 2024, a trend that could reverse by 2028 as supply constraints drive rent growth.

🤖 Data Center Pivot: AI demand for smaller "edge" data centers near cities is reviving adaptive reuse after years of ground-up construction dominance, with some companies converting factories into 24-96 megawatt facilities as AI inference computing requires proximity to users rather than massive centralized clusters.

🏆 TOP STORY
HOW THESE 6 MARKETS ARE DEFYING RENT TRENDS

While the national apartment market endured brutal rent cuts through 2024, with new lease rates slashed by as much as 4.4% annually during the supply wave peak, six major markets managed to buck this trend entirely, according to RealPage.

• The Resilient Six: Anaheim, Columbus, Kansas City, New York, Philadelphia, and Virginia Beach posted flat to modest growth in new lease rates while cities like Austin and Denver were cutting rents by roughly 10%.

• This divergence reveals how supply discipline and development restraint created pricing power even during one of the most challenging periods for apartment operators in recent memory.

The secret to their success? Avoiding the development boom that crushed other metros. 

• Each market posted inventory growth rates well below the national average of 3% in 2024. Anaheim managed just 0.7% growth, New York hit 1%, and Kansas City reached 1.9%. This supply discipline created favorable supply-demand imbalances that allowed operators to maintain pricing power.

• Even at their worst points in late 2024, these markets demonstrated rent resilience by maintaining positive or flat new lease trade-out. Anaheim led at 1.4% growth, Columbus and Kansas City posted 0.8-0.9%, and New York managed 0.6%.

The Outlier: Despite maintaining positive rent growth, Columbus faces a steady supply wave that isn't expected to peak until late 2025, suggesting its resilience may face future pressure as new inventory continues flowing into the market.

THE BOTTOM LINE

These six markets demonstrate that supply timing trumps demand fundamentals in determining rent performance. As the national supply wave begins to ebb, understanding which markets exercised development restraint provides a roadmap for identifying future rent growth leaders.

🌎 FREE LIVE EVENT TONIGHT!
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, TONIGHT, June 12, at 7 pm 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 tonight? Register anyway, and we'll send you the replay.

💰 CRE BY THE NUMBERS
CRE VS. HOUSING PRICES, OFFICE DEMAND, AND MORE

📊 2.8% vs. 3.4%

CRE and housing prices diverged after 2023, with CRE declining nearly 20% while home prices hit records despite rising rates. CRE returns turned positive in Q4 2024 and accelerated to 2.8% in Q1 2025, while housing slowed to 3.4%, suggesting CRE will outpace housing going forward.

📈 24.9 Million

Office demand continues rising with 24.9 MSF of net absorption forecast for 2025 despite recession risks. The market posted its fourth consecutive quarter of positive absorption in Q1, driven by employer return-to-office mandates, though long-term demand remains below pre-pandemic levels.

🚧 +29.3%

Multifamily construction surged in low-density areas, jumping 29.3% in micro counties and 18.5% in small metro outlying areas in Q1 2025. Meanwhile, large metro core counties saw their multifamily market share drop 4.8 percentage points as developers expand into suburbs and smaller markets.

🏠 1 Million

For-sale homes topped one million for the first time since 2019, growing 31.5% year-over-year in May despite remaining 14% below pre-pandemic levels. Western markets led inventory growth at 41%, while homes take nearly a week longer to sell as affordability challenges persist.

📉 0.74%

Apartment operators are pulling back on rent growth despite strong fundamentals, with YoY effective rent growth easing from 1.05% to 0.74% during prime leasing season. Even lower-supply markets like Washington D.C. are seeing deceleration as nervous operators prioritize occupancy over aggressive pricing amid weak consumer sentiment.

🏘️ DEAL OF THE WEEK
HOW $930K DOWN TURNED INTO $7 MILLION OF EQUITY

The team at Breneman Capital has turned a $930,000 initial down payment into $7 million in equity over the past 15 years.

Here's how they did it 👇

🏢 Property 1: In 2009, they purchased Eagle Point II — a 30,578 square foot Class A office building — for $4.65 million with $930,000 down. They secured two high-value tenants with long-term leases and sold the property in 2015 for $5.35 million, realizing a 21% IRR and 2.5X equity multiple.

🏢 Property 2: They did a 1031 exchange with the proceeds from that sale into Park Commons, which they bought in 2015 for $7.1 million and sold in 2019 for $7.85 million.

• Park Commons is a 34,400 square foot 3-building shopping center with national tenants such as Petco, Chipotle, Panda Express, Fantastic Sams, and more. At acquisition, the property was 89% occupied and had deferred maintenance.

• The business plan was to expand to 100% occupancy, repaint the building, redo the parking lot, improve lighting, and add an exterior pylon sign for better tenant visibility. Breneman Capital increased NOI by 22% and realized a 21% IRR with 1.9X equity multiple upon sale.

🏢 Properties 3 and 4: They did another 1031 exchange with the proceeds from that sale into Ridgedale Plaza and Coon Rapids, which they bought in 2019 for a combined $17 million.

• Ridgedale Plaza is a 15,949 square foot retail center in Minnesota with tenants such as Mattress Firm, Bank of America, and AT&T. Breneman Capital replaced the roof, secured long-term lease renewals with two tenants, and moved rents to market rates.

• Coon Rapids is a 3-building retail deal with Panera Bread, Wellhaven Pet Health, Mattress Firm, and Aspen Dental as tenants. It was purchased off-market for $7.9 million, had great cash flow going in, and is in one of the best retail pockets in Minnesota.

🍾 Results: On average, Ridgedale and Coon Rapids have gone up in value ~2% per year, which means Breneman Capital now has $18.8 million in property ($17 million + 2% per year for 5 years) with a combined loan balance of $11.8 million today, which is locked in for 10 years at 3.28% interest. That’s $7 million in equity, all from a $930,000 initial down payment. Plus, they’ve been paying out significant cash flow to investors for the past 15 years.

💪 Takeaways/Learnings: "Usually, numbers that look too good to be true are,” Drew Breneman says. “But sometimes, they really are true. Yet another reason to invest long term. The equity you build up just might surprise you (like it did to me this tax season).”

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

🎓 EXPERT RESOURCES
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