🏥 How this sector is crushing all others

👋 Hello, Best Ever readers! It’s 9/11. Never forget.

In today’s newsletter, MOBs dominate, lux retail expands, prisons re-emerge, lumber futures tumble, and much more.

🎟️ Want to win a FREE ticket to Best Ever Conference X? Be the FIRST to refer 50 new subscribers to our newsletter, and the prize is yours! See details below.

⛽ Plus, smart money is quietly moving back into oil & gas while others chase trends. Don't miss our live session on September 18 at 1 pm ET on why this undervalued sector could be the contrarian play of the decade.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

🏪 Deepest Discounts: Austin leads rent discounts with 30.5% of apartments offering concessions averaging 12.9%, followed by San Antonio at 29.9%, as Texas markets dominate deep discounting strategies amid surging construction and supply pressures nationwide.

💎 Lux Resilience: Luxury retail expansion continues despite economic headwinds, with H1 openings exceeding last year by 65.1% as brands target younger demographics, with Coach achieving 14% sales growth and Miu Miu surging 49% by appealing to Gen Z consumers.

💰 Midcap Momentum: CRE transaction volume hit 2025 highs in July with midcap deals ($50-100 million) climbing to 72 transactions, up from 58 in June, as investors favor manageable assets with clearer pricing and easier financing in the current environment.

🏢 Detention Demand: Private prisons are seeing renewed investor interest as Trump's mass deportation push drives record immigration detention capacity expansion, creating opportunities in this exceptionally niche alternative asset class.

🏗️ Construction Outliers: Ten apartment markets defy national cooling with Los Angeles nearly doubling its pipeline to 15,500 units, Detroit up 77.5%, and Fort Worth the only Southern market expanding construction despite widespread pullbacks.

🏆 TOP STORY
HOW MOBs ARE DOMINATING OTHER ASSET CLASSES

While traditional office buildings wrestle with record-high vacancies and multifamily faces oversupply headwinds, medical office buildings are quietly delivering the stability and growth that investors thought had vanished from the market. MOBs have evolved from a niche specialty play into one of the most compelling asset classes in CRE, and the fundamentals suggest this isn't just a fad.

Medical office vacancy rates have barely budged since 2020, sitting just 50 bps above pre-pandemic levels, while traditional office vacancy has exploded by 500 bps. Rent growth in medical offices has outpaced most other commercial property types since 2020, while ambulatory healthcare job growth maintains a steady 4% clip compared to just 0.5% for traditional office-using industries.

There are three structural advantages driving medical office outperformance:

• Demographics as Destiny: An aging population creates non-discretionary demand for outpatient care, diagnostics, and specialty services that can't be outsourced or delayed during economic downturns.

• Tenant Stickiness: Medical practices invest heavily in specialized buildouts and equipment, creating high switching costs that translate to longer lease terms and lower turnover rates.

• Supply Discipline: Medical office development requires strategic locations near hospitals or in high-traffic retail corridors, constraining the universe of suitable sites and keeping new supply largely pre-leased or build-to-suit.

Case Study: Chicago exemplifies the rise of MOBs, leading the nation with 912,000 SF of medical office space delivered over the past four quarters and eclipsing 1M SF of net absorption. Powerhouse health systems like Northwestern, Rush, and Advocate are expanding their footprints to meet outpatient demand, while adaptive reuse projects convert former retail and industrial spaces into medical facilities.

Recent investment activity reflects growing institutional confidence, with more medical office properties hitting the market in 2025 than in 2024, and they're higher-quality assets as buyers grow comfortable with pricing. Meanwhile, healthcare job growth is outpacing other sectors, signaling continued industry growth that is sure to attract more investors.

THE BOTTOM LINE

Medical office buildings’ predictable and growing income streams backed by non-discretionary demand are driving the sector's surge. And with outpatient spending projected to jump 31% by 2030, medical offices represent one of the few sectors where demographic trends and supply constraints align to create sustained outperformance.

💰 CRE BY THE NUMBERS
LUMBER FUTURES, INDUSTRIAL DEMAND, AND MORE

🪵 -24% 

Lumber futures have dropped 24% since early August to $526.50 per thousand board feet as tariff uncertainty and housing market deterioration create oversupply concerns. Major producers Interfor and Domtar announced production cuts while residential building permits fell to 1.4 million units, the lowest since June 2020.

🏠 3,000

NYC's Airbnb crackdown reduced short-term rentals from an estimated 38,500 units in early 2023 to about 3,000 legally operating today, but apartment rents hit all-time highs at $4,700 monthly while vacancy remains near record lows at 2.45%, suggesting minimal housing supply impact.

📉 -11.3M SF 

Industrial space demand fell by 11.3M SF in Q2, marking the first quarterly drop since 2010 as economic uncertainty and tariff policy changes weigh on the previously hot warehouse sector. Just 27M SF was absorbed in H1 2025, with NAIOP predicting recovery starting in Q2 2026.

🏥 18.2 Million 

Healthcare employment reached 18.2 million jobs in August 2025, up 13.2% since February 2022, with the sector adding 31,000 positions last month and accounting for nearly half of all private-sector job growth this year as demographic forces drive demand.

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🏘️ DEAL OF THE WEEK
$2.5M VALUE INCREASE | 31% EQUITY GROWTH

Paul DiVincenzo and the team at RealWealth have increased the value of this portfolio by $2.5 million with a 31.25% increase in equity value over two years.

Here's how they’re doing it 👇

🏢 Property details: This 73-unit portfolio is comprised of single-family and duplex homes in the Dallas, TX, area. Fifty-four of the units were purchased in 2023, and an additional 19 were purchased in 2025.

💸 Finances: The total portfolio was purchased for $8 million, at a cost of about $140,500 per home. The team initially paid cash for the deal and then refinanced upon stabilization at 50% LTV for a total loan amount of $4.5 million.

💼 Business plan: RealWealth Developments initially acquired 54 distressed properties for comprehensive rehab and repositioning at market rental rates. Renovations were different on each property — some required a full rehab (complete gut), and some were just cosmetic.

Following a successful stabilization above 90% occupancy, the fund strategically refinanced in May 2025 at 50% LTV to acquire an additional 19 units, bringing the total portfolio to 73 fully-stabilized, cash-flowing properties. The portfolio is currently generating strong rental income and appreciation, with a planned 3-4 additional year hold period before initiating strategic sales to maximize investor returns.

🍾 Results: The original 54 units were appraised at the time of refinance for $10.5 million, creating $2.5 million in unrealized appreciation, which is a 31.25% increase in equity value. The target AAR is 9.5%.

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

📚 EXPERT RESOURCES
THE ‘BORING’ INVESTMENT THAT’S CRUSHING IT

While everyone is chasing sexy deals, savvy investors are generating massive returns from something you see every day but never think twice about: parking lots.

🚗 Cities are banning new parking construction while 285 million cars need somewhere to park. The result? Massive supply-demand imbalance creating outsized returns.

The Passive Investor's Guide to Parking Lot Profits reveals:

✅ Why parking beats stocks and apartments for risk-adjusted returns
✅ Tax benefits that can eliminate taxes on your returns
✅ Why autonomous vehicles won't kill this opportunity for 25+ years

Based on $150M+ in actual deals. This won't stay secret forever.