💎 Is this niche the next big CRE play?

👋 Happy December, Best Ever readers! There are only 27 days left in 2025. Time is moving fast. Let’s keep up!

In today’s newsletter, institutional money bets big, Section 8 stalls, conversions boom, delinquencies soar, and much more.

🚨 Breaking News: We've just launched a special Accredited LP Ticket for the Best Ever Conference, priced lower than General Admission and exclusively for limited partners ready to connect with active operators. Claim yours now!

📩 Also, TODAY at 12 pm ET, Peter Neill of GSP REI is showing us how to control and entitle residential land in high-demand markets, and sell to institutional buyers at a significant profit. Save your seat here and join us! Can’t make it live? Register anyway, and we’ll send you the replay.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

🏘️ Payment Delay: HUD has delayed December Section 8 payments to thousands of landlords nationwide following government shutdown complications. Housing authorities in New York, Boston, and Boca Raton are tapping reserves to make partial payments of around 25% while awaiting federal funding.

📦 Micro Fulfillment: Amazon has launched 30-minute delivery from smaller urban warehouses in Seattle and Philadelphia, leveraging specialized facilities near city centers as everyday item orders grow at twice the rate of its broader business, potentially fueling fresh demand for infill industrial space.

🔄 Conversion Boom: Office-to-residential conversions have surged to 70,700 units nationally, up from 23,100 in 2022. Manhattan leads with architectural breakthroughs like cut-through notches and carved light wells, enabling wider buildings to overcome design challenges.

🏭 Baby Industrial: Industrial properties under 100,000 SF have recorded 4% vacancy rates and 40% rent growth since 2020, significantly outperforming large-scale facilities that are at 7.4% vacancy. Reshoring, last-mile logistics, and construction costs have driven development starts up 16% YoY through Q3.

🏢 Hybrid Era: Hybrid work has reshaped office performance across major metros as Class A buildings experience positive absorption while Class B and C properties face continued tenant departures. Prime Class A rents now surpass pre-pandemic levels in gateway cities, creating two parallel markets.

🏆 TOP STORY
INSTITUTIONAL MONEY IS BETTING BIG ON CHILD CARE

If you've been waiting for the next senior housing or medical office to emerge — that niche CRE sector poised to go institutional — early education real estate might be it. To a growing number of institutional players, the sector is starting to look a lot like other niches did before they became billion-dollar asset classes — undersupplied, essential, and ripe for consolidation.

The U.S. childcare market is projected to grow from $65.2 billion today to $109.9 billion by 2033, and the real estate side of the equation is finally getting attention from serious capital. Fortec recently launched a $100 million early education real estate fund with Equiturn to institutionalize a fragmented sector that's been mostly mom-and-pop operations until now.

• The Supply-Demand Imbalance: Of 14.7 million U.S. children under six needing daily care, only 8.7 million are enrolled in formal programs — leaving a six million child shortfall. Child-care deserts represent 51% of U.S. areas where demand exceeds supply by three-to-one, and waitlists average six months.

• Triple-Net Lease Appeal: National chains like KinderCare use long-term net leases with built-in annual escalations, shifting property expenses to tenants while offering landlords inflation-hedged returns. Large centers generate millions in annual revenue with double-digit profit margins once occupancy stabilizes.

• Growing Inventory Pipeline: Properties for sale increased 14% since late 2024 to 158 facilities, with properties carrying 10+ year lease terms up 12% in 2025. Banks favor lending on these assets due to their stability and creditworthy tenants.

• Return-to-Office Momentum: Pandemic migration to rural areas created new child-care deserts precisely where facilities are scarcest. Government funding increases — particularly for single and working mothers — alongside educational technology advances are fueling sector growth.

THE BOTTOM LINE

Early education real estate is following the institutional maturation playbook of senior housing and medical offices, but the window is narrow. As institutional players formalize the sector and competition for quality assets intensifies, the fragmented mom-and-pop landscape that made entry accessible is rapidly consolidating. The question isn't whether this becomes the next senior housing — it's how long before pricing soars to reflect institutional demand.

🎉 BEST EVER CONFERENCE
AN EXCLUSIVE TICKET JUST FOR ACCREDITED LPS

We're excited to announce a brand new ticket option created specifically for accredited limited partners.

🎟️ Introducing: The Accredited LP Ticket

This is your opportunity to attend the Best Ever Conference at a special rate that's LOWER than our General Admission rate and available ONLY to accredited LPs.

You'll get the same incredible access as General Admission — three days of pure education and networking with 95% of attendees who've closed deals in the past nine months.

👉 Why this matters: While all other ticket prices just increased, we wanted to create a path for serious LPs to join us at a rate that rewards your commitment to building relationships and finding the right operators.

📩 YOU’RE INVITED
TODAY AT 12 PM ET: LAND ENTITLEMENT TRAINING

The real bottleneck contributing to the housing shortage crisis in many markets isn’t construction — it's entitled land ready for development. This 2-3 year process of navigating permits, zoning, and engineering is where experienced operators generate exceptional returns without construction risk, debt, or long-term ownership.

🗓️ Join us alongside Peter Neill of GSP REI on TODAY at 12 pm ET for Land Entitlement: The Little-Known Strategy Creating the Highest Returns in Development.

In this session, you’ll discover:

✅ Why land entitlement delivers some of the highest risk-adjusted returns in development

✅ How to create massive value before breaking ground

✅ Why national homebuilders pay a premium for entitled properties

✅ The complete roadmap from raw land to profitable exit

Expert Peter Neill from GSP REI will show you how to control and entitle residential land in high-demand markets — and sell to institutional buyers at a significant profit.

💰 CRE BY THE NUMBERS
DELINQUENCIES + LISTINGS SOAR, APARTMENT SALES FALL

📈 7.12% 

Multifamily CMBS delinquencies hit 7.12% in October, topping 7% for the first time since December 2015 and nearly doubling the 3.24% rate from six months ago. Office delinquencies jumped 63 bps to an all-time high of 11.76% as all five major property types experienced increases.

💻 $815.6 Billion 

Crexi's active property listings reached $815.6 billion through November, up 16.7% YoY, as monthly active users grew 6.3% and transaction volume surged. The digital adoption signals pent-up deal demand returning as market participants regain confidence despite the broader $20 trillion CRE market remaining relatively flat.

🏢 -28% 

Apartment sales dropped 28% YoY to $8.5 billion in October as lenders continue modifying and extending loans to avoid distress. Cap rates held steady at 5.5% while prices ticked up 0.5% YoY, keeping transaction volumes well below pre-COVID levels despite rising delinquencies.

📊 5.5M SF 

Retailers occupied 5.5M SF more than they vacated in Q3, reversing negative demand from the first half as discount chains like Dollar General, Dollar Tree, and Burlington Stores expanded despite bankruptcies. National vacancy stood at 4.3%, with construction near historic lows keeping supply tight.

🏘️ DEAL OF THE WEEK
INFINITE COC RETURN WITH $3.5M IN SWEAT EQUITY

Sunrise Capital Investors turned two tired mobile home parks into a $10M+ portfolio, returning all investor capital in just two years while investors retained 100% equity.

Here's how they did it 👇

🏢 Property details: Cedarhurst & Walston Mobile Home Parks are all-ages, affordable communities totaling 180 spaces in Salisbury, MD, along Maryland's Eastern Shore. The properties were acquired off-market in October 2017 from legacy owners who had kept lot rents at $250 despite market rates exceeding $400.

💸 Finances: The combined purchase price was $2.6 million. Sunrise raised $1.1 million in investor capital. In June 2019, they executed a cash-out refinance and returned 100% of investor capital within two years of acquisition.

💼 Business plan: The properties were plagued by abandoned homes, deferred maintenance on well and septic systems, and general neglect that attracted crime. Sunrise replaced on-site management, pumped septic tanks, demolished unsalvageable homes, renovated salvageable park-owned homes, power washed units, and systematically increased lot rents toward market rates as the property improved.

🍾 Results: Within two years, Sunrise created over $3.5 million in sweat equity on a $1.1 million investment:

• Infinite cash-on-cash return (all capital returned while retaining equity)

• Property appraised at $6M+ at refinance (2019)

• Portfolio valued at $10M+ by 2022

• More than 4X value increase from acquisition

👉 If you have a deal you’d like to share with us, please email us here.