🧊 If rents are up, why is borrowing harder?

👋 Hello, Best Ever readers! The Fed held rates steady in a 9-3 vote Wednesday, but three dissents and a Treasury sell-off that pushed the 30-year yield to 5.23%, its highest since 2007, suggest more turbulence ahead. So buckle (back) up.

In today’s newsletter, lenders pull back, wildfires rage, HUD gets sued, the OZ tax bill comes due, storage rebounds, and much more.

Today’s edition is presented by AI for CRE Collective. AI is moving fast across commercial real estate. The hard part is knowing where to start and which tools are worth your time. The AI for CRE Collective brings together 800+ brokers, investors, developers, owners, lenders, asset managers, and property managers using AI to underwrite deals, build BOVs and OMs, research markets, analyze sites, abstract leases, and automate repetitive work. Learn more.

⏰ Just 48 hours remain to lock in today's Inner Circle pricing before our August 1 price increase. Schedule your intro call.

🎓 Join us on August 6 at 1 pm ET for The Unfair Advantage: How AI Is Separating the Best Operators From the Rest (And What This Means For Investors), presented by Justin Spillers of Real Estate Alpha. Save your spot.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

🏛️ HUD Sued: Two fair housing nonprofits have sued HUD over a funding overhaul that would route $46 million of the program's $56 million total to just five awards, arguing the shift would gut local enforcement capacity across multifamily-heavy markets and sideline the grassroots groups that conduct testing.

🏗️ Conversion Woes: New York City stopped construction at 222 Broadway, a 32-story conversion delivering nearly 800 units, after inspectors flagged cracked concrete beams on a newly added top floor — the second conversion halted this month following the former Pfizer tower's buckling columns.

🔐 Storage Rebound: Self-storage investment has climbed off its Q2 2025 trough, with average pricing up 26% YoY to $123 PSF and Public Storage closing a record $10.5 billion acquisition of National Storage Affiliates, though expected yields have settled into the 10% to 12% range.

💰 Tax Reckoning: Opportunity Zone investors face taxes on up to $75 billion in deferred capital gains when the deferral window closes December 31, with roughly 41,000 participants reporting average adjusted gross income of $738,000 ahead of a new rural-weighted framework in 2027.

📦 Mega Leases: The top 100 industrial leases totaled 93.6M SF in H1 2026, up 26% YoY, with 1M SF deals more than doubling to 38 from 16 as food and beverage occupiers tripled their leased footprint and average terms stretched to 89 months.

🏆 TOP STORY
RENTS ARE RECOVERING FASTER THAN THE MONEY

Apartment owners spent two years waiting for the supply wave to crest, and this summer it finally did. Fewer deliveries and steady hiring have handed landlords their first real pricing leverage in a year. The capital markets picked the same quarter to tighten.

The NMHC's July survey put its Market Tightness Index at 57, the first reading above the neutral 50 mark in a year and the highest since spring 2022. Among the 158 apartment executives surveyed between July 1 and 17, 29% saw tighter conditions in the markets they watch, against 15% who saw them loosen. NMHC's chief economist tied the shift to stronger job growth and a thinner delivery pipeline. Every other index in the survey moved the other way.

• Borrowing Conditions Turned in Two Quarters: The Debt Financing Index sat at 75 in January and 51 in April before landing at 46 in July. The share of executives calling this a better time to borrow fell from 53% to 17% over those two quarters, while the share calling it a worse time climbed from 3% to 26%.

• Equity Has Quietly Pulled Back: The Equity Financing Index dropped to 44 from 49 in April. Only 7% of respondents found equity more available than three months earlier, against 19% who found it harder to source. For operators raising a gap or a recap, the money is still there — it costs more and asks more.

• Deals Still Aren't Clearing: Sales volume slipped to 46 from 52, with 27% reporting fewer transactions and just 19% reporting more. Buyers and sellers continue underwriting different assumptions about rates, exit caps, and forward cash flows, and improving fundamentals have not closed that gap.

The split matters most for anyone with a clock running. Floating-rate paper and 2026–27 maturities now meet a lender base that has grown more cautious over two consecutive quarters, and a thin transaction market gives sponsors fewer clean exits. Rising NOI helps a debt service coverage test. It does not restore proceeds on a refinance sized against today's rates.

THE BOTTOM LINE

Operating performance and capital availability have decoupled, and the operators who fare best over the next several quarters will be the ones who treat improving fundamentals as leverage in a lender conversation rather than as a reason to wait. Occupancy and rent growth strengthen a refinancing package now. They do not guarantee one will be available later.

🤝 TOGETHER WITH AI FOR CRE COLLECTIVE
GET YOUR FIRST AI WIN IN CRE

Join 800+ CRE professionals using AI to underwrite deals, build BOVs and OMs, research markets, screen sites, abstract leases, review operating reports, and automate repetitive work with AI for CRE Collective.

Inside, you get:
✓ AI for CRE Certification and role tracks for every CRE seat
✓ 500+ hand-tested tools with member-only discounts
✓ 300+ workflows, 500+ prompts, and CRE AI skills
✓ Live workshops, monthly member huddles, and weekly office hours
✓ Advanced masterclasses, including the $599 Claude for CRE course
✓ A community sharing what works on active deals and assets

Start free for 7 days and get full access. Bring one task that is eating your time, find the workflow built for it, and use the community or office hours when you get stuck.

Underwrite a live deal, draft the BOV, abstract the lease, research the market, or automate the report before the trial ends.

Finish the Certification in your first 30 days. If you don't get your first win, we refund your entire first month. Cancel anytime.

🌟 BEST EVER INNER CIRCLE
48 HOURS LEFT TO LOCK IN CURRENT PRICING

On August 1, membership pricing for the Inner Circle increases.

If you've been curious...

If you've been meaning to learn more...

If you've wondered whether it's the right room for your business...

Don't let the price increase be the reason you wait.

☎️ Book your intro call with AJ by tomorrow, and you'll lock in today's pricing for life, even if you decide to join after the deadline.

The room will continue to grow. The membership will continue to evolve.

But this pricing won't be available after July 31.

💰 CRE BY THE NUMBERS
WILDFIRES RAGE, CAT INSURANCE DIPS, AND MORE

🔥 95

Firefighters are battling 95 large wildfires nationwide, with more than 25,700 personnel assigned as the U.S. sits at National Preparedness Level 5, the highest readiness tier. More than four million acres have burned this year, and Pacific Northwest smoke now stretches to the Mid-Atlantic.

Still, Protection Softens: Property catastrophe reinsurance rates have fallen 16% globally in 2026, the steepest annual decline since the late 1990s. Abundant reinsurer capacity and benign losses drove the softening, giving owners leverage on renewals for the first time in years.

🏢 16.9M SF

Net office absorption reached 16.9M SF in Q2, the strongest quarterly total in seven years and the eighth consecutive quarter of positive occupancy growth. Limited new construction and the repurposing of obsolete buildings pushed vacancy down 50 bps YoY to 18%.

Shadow Supply: Sublease availability fell to 153.5M SF at midyear, down 18.3% YoY and lower every quarter since peaking at 234.9M SF in mid-2023, as conversions pulled obsolete Class B and C space off the market.

🏘️ $36.7 billion

Apartment sales rose 1% YoY to $36.7 billion in Q2, though volume would have fallen 8% without the $3.4 billion Veris Residential privatization. Prices slipped 1.7% YoY, extending two full years of negative readings, with cap rates for garden and mid- and high-rise assets averaging 5.9%.

Garden Gap: Garden-style sales dropped 21% YoY to $17.7 billion while mid- and high-rise trades rose 36% to $19 billion, erasing the 30 bps cap rate discount mid- and high-rise assets carried a year ago.

⚽ 60%

Short-term rental income climbed 60% YoY across 11 World Cup host markets in June, with Miami operators up more than 709%, while hotels captured less of the surge after FIFA canceled room blocks across every U.S. host city, with Philadelphia alone giving back 2,000 of 10,000 booked rooms.

Rules Matter: Income in host markets where short-term rentals are broadly permitted jumped 421% YoY, compared with 75% in moderately restricted markets and 18% in tightly regulated cities including New York, Los Angeles, and Boston.

🎓 LIVE EDUCATION
THE AI GAP IN REAL ESTATE IS WIDENING. WHICH SIDE ARE YOU ON?

Most real estate operators are still running their business the same way they did 10, even 20 years ago. A small number aren't. And the gap between them is growing fast.

On August 6 at 1 pm ET, Justin Spillers opens up Real Estate Alpha's operation to show exactly how AI is being used across leasing, operations, and performance management in ways most operators haven't considered yet, including the one integration that 4x'd their conversion rates.

Whether you're an investor evaluating operators or an operator looking to build a genuine edge, this session is a full inside look at what's actually possible.

You'll walk away knowing:

📌 Why the gap between AI operators and everyone else is widening, and what it means for your capital

📌 How to use AI to evaluate any investment opportunity and stress-test operators

📌 The one change that 4x'd Real Estate Alpha's conversion rates

🎙️ THE BEST EVER CRE SHOW
WHY A 10-YEAR HOLD IS NOTHING MORE THAN A GUESS

Multifamily deals used to run on a clock. Buy an apartment complex, spend three to five years pushing renovations and rents, then refinance or sell and return investor capital.

That timeline has stretched. Some funds now write 10-year terms into the offering, and more sponsors describe their holds as long-term or generational — part conviction, part necessity for buyers who paid too much in 2021 and can't exit today without booking a loss.

On a recent episode of the Best Ever CRE Show, Jeffrey Rosenberg joined Ash Patel to break down his resort-retail portfolio, including how long he thinks a deal should actually run. Rosenberg — who owns apartments only as a third-party LP — says what sponsors raising decade-long funds can't afford to.

• A 10-Year Return Is a Guess: An expected return rests on an outcome, and an outcome a decade out can't be modeled when five-year projections rarely land where the underwriting promised. "It's hard enough to predict an outcome that's five years in the future," he says. Across a long hold, the only figure he trusts is annual cash-on-cash.

• Liquidity After the Lockup: Last year, Rosenberg rolled seven properties worth about $1.1 billion into a core fund where the group holds long-term, but investors can request redemption once the lockup ends, priced off a third-party valuation done yearly and subject to available cash. That solves an investor's need for liquidity. "Rolling up does not solve a capital issue," he says — a distinction that matters for operators who bought apartments at cap rates below 4% in 2021 and 2022 and now face softer rents, higher cap rates, and looming maturities.

• The Discipline Lives at Entry: His retail buys from the low-rate years look strong today because the basis was right — bought well, priced well, financed well. Time didn't rescue the aggressive apartment entries from the same window, and it won't. A longer hold only defers the reckoning a weak basis guarantees. His portfolio runs at 97% occupancy, though he notes that above 95%, lenders credit no added value on a refinance, since most underwrite a 5% vacancy factor.

Rosenberg isn't arguing against long holds. He tells his own investors that many of his properties are generational and that he'll keep them longer when the opportunity allows. The difference is that he bought them right, financed them right, and never needed the years to bail him out.

👉 Listen to Jeffrey’s full episode here.