🏗️ Workers are fleeing job sites. Here's why.

👋 Happy Sunday, Best Ever readers!

In today’s newsletter, workers flee job sites, rent growth slows, jobs tick up, “professional tenants” game the system, and more.

Today’s weekend 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, on Thursday, June 12 at 7 pm EST.

👉 Register now to save your seat.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

Rent Growth Slows: U.S. apartment occupancy held steady at 95.7% in May while monthly rent growth slowed to 0.26%, half the rate from a year ago. Southern markets dragged performance with Austin posting 8% annual losses, while gateway cities like San Francisco and New York showed strength with 1%+ monthly gains.

Warehouse Woes: More than half of new warehouse space delivered in Q1 came online vacant as 73 MSF hit the market with 71% built speculatively. Industrial vacancy reached 7% while manufacturing shed 30 MSF and large deals over 1 MSF dropped from 9% to 5% of transactions.

Tariff Trouble: Trump doubled steel and aluminum tariffs from 25% to 50% this week, creating fresh uncertainty for construction projects already facing 5.9% steel cost increases. Nearly 22% of contractors reported tariff-related delays or cancellations in April as investors pull back from industrial development amid unpredictable pricing.

Office Momentum: Major office landlords report leasing hitting post-pandemic highs with new leasing volume in Q1 nearing 2019 levels, prompting landlords to boost outlooks despite national vacancy remaining at record 14%.

Syndicator Sued: Starwood Capital sued multifamily syndicator Alan Stalcup for $110 million in personal guarantees after his GVA Real Estate Group defaulted on loans for three Sunbelt properties. The lawsuit follows similar cases against flip-focused operators who relied on floating-rate loans and struggled amid rising rates.

🏆 TOP STORY
ICE RAIDS HAVE WORKERS AND DEVELOPERS ON EDGE

The construction industry is feeling the heat as President Trump's immigration enforcement agenda shifts into high gear. U.S. Immigration and Customs Enforcement raids are targeting job sites nationwide to fulfill campaign promises of removing undocumented workers, with multiple raids executed in just the last few weeks.

• Tampa/Wildwood, FL: On May 13, ICE arrested 33 workers, with more than 30 workers seen fleeing as federal officers arrived.

• Tallahassee, FL: More than 100 workers were arrested in a May 29 raid at a $100 million student housing development near Florida State University involving multiple federal agencies.

• South Padre Island and Brownsville, TX: Federal agents arrested 25 undocumented immigrants on June 4 at two construction sites, with assistance from the Texas Department of Public Safety and U.S. Marshals.

As word spreads through construction communities, raids are becoming more frequent, leaving many workers afraid to show up to job sites and forcing developers to rethink operations and diligently prepare for potential raids and the slowdowns that come with them as they race to meet project deadlines.

• Preparing for the Worst: Industry groups like the Associated General Contractors have been sounding the alarm for months, hosting webinars and advising members to expect enforcement visits. Smart contractors are doubling down on E-Verify systems and documentation protocols. Because when ICE comes knocking, there's no time for paperwork scrambles.

• Immediate Jobsite Chaos: Beyond the human cost, raids create instant operational nightmares. Florida sites shut down the day after Tallahassee, and the "chilling effect" is already spreading as skilled workers — documented or not — think twice about showing up to potentially volatile worksites.

• Long-Term Labor Crisis: With an estimated one-fifth of construction workers potentially undocumented, continued raids could devastate an already labor-starved industry. Trade groups are desperately calling for comprehensive immigration reform and legal pathways for foreign-born workers, but political solutions remain elusive.

THE BOTTOM LINE

This ICE enforcement surge comes at the worst possible time for developers. Already facing tariff threats and pipeline strain, the industry now risks losing significant chunks of its workforce in waves like we’ve seen in recent weeks, leaving developers scrambling to reassess project timelines and labor costs as the message becomes clear: The era of documentation blind spots is over.

🌎 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.

💰 CRE TRENDS
U.S. ADDS 139,000 JOBS IN MAY, BEATING PROJECTIONS

The U.S. added 139,000 jobs in May, slightly exceeding economists' forecasts of 125,000 and close to the 12-month average of 149,000. The unemployment rate held steady at 4.2%.

Healthcare led job growth with 62,000 new positions, followed by leisure and hospitality (+48,000) and local government (+21,000). However, the federal government cut 22,000 jobs as part of the Trump administration's efficiency efforts through the Department of Government Efficiency (DOGE), bringing total federal job losses to 59,000 since January.

The Bureau of Labor Statistics also revised March and April employment figures downward by a combined 95,000 jobs. Wages increased 0.4% monthly and 3.9% annually, while Treasury yields rose, with the 10-year hitting 4.47%. Despite the solid job growth, analysts suggest the report may be too strong to prompt Federal Reserve rate cuts, with the central bank expected to maintain current interest rates.

A Mixed Bag: While strong employment in healthcare and hospitality supports demand for related properties, rising Treasury yields increase borrowing costs and may pressure property valuations downward. The next Fed meeting is scheduled for June 17-18.

🎙️ BEST EVER PODCAST
THE MURKY FUTURE OF SECTION 8 HOUSING

Mike Bonadies, founder of TerraVestra Property Management, recently joined Matt Faircloth on the Best Ever CRE Show. In this episode, Bonadies discusses the current administration's investigation into Section 8 housing and whether the program should continue. With 45% of his 700-unit portfolio consisting of Section 8 properties, Bonadies offers a unique perspective on concerns about professional tenants gaming the system versus legitimate need among disabled and low-income residents.

Here are the issues Bonadies has observed from managing 700+ units:

• Rent Inflation Driver: "As someone who's a benefactor of Section 8, it's totally jacking rent prices up," Bonadies explains. Section 8 vouchers are artificially inflating market rents by $200-$300 above what cash tenants can afford, he says, with investors pricing properties to voucher levels rather than actual local income capacity.

• Broken Incentive Structure: The program creates dependency rather than promoting independence. Tenants face abrupt 90-day terminations when their income rises, often forcing them to reduce work hours to maintain benefits—"the opposite of what anybody would think should happen," according to Bonadies.

• Administrative Problems: Underpaid, undertrained caseworkers often show bias against landlords, creating adversarial relationships. "You've got a lot of the scenario of the blind leading the blind when it comes to the program," he noted.

Reform Over Elimination: Despite acknowledging widespread abuse, Bonadies advocates for gradual benefit reductions rather than program elimination. "Let's not burn the whole house down and throw people out like the disabled man or woman that's on Section 8," he suggests. As the program faces scrutiny under the current administration, markets with high Section 8 concentrations may experience rent corrections. Investors should evaluate their tenant mix diversification and consider how potential program changes might impact cash flows in lower-income markets.

🎙️ Listen to Mike’s full episode here.

🎓 BEST EVER TIPS
BEWARE THE DRY CLEANER DEATH TRAP

YOUR COMMERCIAL PROPERTY’S HISTORY MATTERS

In his recent book, Value Over Volume, investor Tanh Truong uncovers a huge environmental villain — dry cleaners — largely due to tetrachloroethylene (PCE), a cancer-causing solvent that contaminated strip malls nationwide. PCE doesn't break down easily. Even small spills create long-lasting contamination that seeps into soil, groundwater, and indoor air.

Former dry cleaner locations from years ago can still contaminate buildings. Cleanup often requires full excavation, potentially destroying properties in the process, with hefty costs and limited success. Many property owners who discover PCE contamination avoid selling or refinancing entirely, trapping themselves with unsellable assets. Checking tenant history should be part of your due diligence process.

📚 For more tips and stories like these, Value Over Volume is available now.