🏗️ One city is building its way to affordability. Here's how.

👋 Hello, Best Ever readers!

In today’s newsletter, the development playbook gets a rewrite, PMs prep for hurricane season, occupancy holds, low-income renters suffer, and much more.

Today's edition is presented by Sunrise Capital Investors, which has a track record of over $1 billion in transactions and zero investor losses. Learn more about their latest fund today.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

⛈️ Weather Warnings: NOAA cuts of 800-plus employees have forced property managers to stockpile supplies, expand generator access, and pre-contract emergency vendors as hurricane season approaches with reduced federal forecasting capabilities and potential FEMA elimination threats.

🏠 LIHTC Boost: U.S. Federal Housing has doubled Fannie Mae and Freddie Mac's LIHTC investments from $2 billion to $4 billion annually alongside the Big Beautiful Bill, with half reserved for underserved markets and 20% targeting rural communities.

💸 Fed Up: CRE investors have stopped waiting for Fed cuts, driving 25% higher investment volume in H1 as attitudes have shifted from uncertainty to "if numbers work, let's deal" despite the Fed maintaining elevated interest rates.

⚡ Power Surge: Data center growth drove Mid-Atlantic grid capacity prices from $29 to $329 per megawatt-day, forcing ratepayers across 13 states plus D.C. to absorb $9.3 billion in additional costs as AI demand strains electrical infrastructure.

💰 Lending Leap: CRE loan originations jumped 66% YoY in Q2, led by the office sector's 140% surge and renewed bank participation, though multifamily and hotel lending declined 35% and 30%, respectively.

🏆 TOP STORY
HOW ONE CITY IS BUILDING ITS WAY TO AFFORDABILITY

One New York suburb is out to prove that you can actually build your way to affordability — and it's working. 

New Rochelle has completed over 4,500 new housing units in the past decade with another 6,500 in the pipeline, representing a 37% increase in total apartments. The result? Median rents are only 1.6% higher than 2020 levels, while New York City and nearby markets like Newark saw 25% or higher increases. New Rochelle's rents actually declined 2% from 2020 to 2023 while national rents surged at double-digit rates. 

The secret sauce has been silencing the NIMBYs through smart policy and community engagement, all while deploying a development strategy that includes:

• Strategic Planning and Engagement: City officials selected RXR as master developer in 2014, met with residents to address concerns about public services, and used developer fee revenue for infrastructure repairs and down-payment assistance programs.

• Streamlined Approval Process: Projects meeting certain criteria get guaranteed 90-day approvals, a dramatic improvement over typical New York-area timelines. RXR's redevelopment plan was approved within a year instead of the 10-15 years the firm typically waits in other metros, helping attract $2.5 billion in downtown development.

• Developer-Friendly Policies: The city streamlined environmental reviews, offered tax incentives, and created standardized zoning rules to make building easier and cheaper.

• Bulk Approvals: New Rochelle approved thousands of units at once, rather than the typical approach of rezoning individual apartment buildings one project at a time over many years.

• Community Investment Requirements: Developers must designate at least 10% of units as affordable housing. RXR also built a 10,000-square-foot theater where it holds competitions for local artists to live in new buildings rent-free for a year to win community support.

This developer-friendly approach is spreading as housing shortages intensify nationwide. California Governor Gavin Newsom recently loosened environmental laws that stalled projects for decades, Oregon enacted new laws for easier duplex and townhome construction, and a bipartisan housing package with developer incentives is advancing in the Senate.

THE BOTTOM LINE

New Rochelle is proving that aggressive pro-development policies can actually bring rents down, but growing pains persist. Construction disruption, parking shortages, and concerns about newcomers pricing out locals are creating pushback. The mayor is now considering rent control measures despite the development success, showing that even winning strategies face political pressure as communities grapple with rapid change. Still, the blueprint appears to be changing, with New Rochelle leading the way.

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💰 CRE BY THE NUMBERS
OCCUPANCY HOLDS, LOW-INCOME RENTS RISE, AND MORE

🏘️ 95.5% 

National apartment occupancy held firm at 95.5% in July, according to RealPage, staying above the five-year average despite annual rent growth slowing to just 0.2%, the smallest increase in 10 months. Record absorption of 794,000 units year-ending Q2 shows operators prioritizing occupancy over pricing power amid declining construction activity.

📈 10.3% 

Rents surged most in the lowest-income zip codes from 2017 to 2024, with the highest increases reaching 10.3%. Cities boosting housing supply by 10% saw rent growth slow by 1.4 percentage points, while metros like Austin and Denver recorded actual rent declines for low-income renters after expanding housing stocks.

📊 48 

CRE sentiment index scored 48 out of 100 in July, with 76% of professionals expecting deal activity to increase or hold steady in H2. Industrial leads investor interest at 34%, followed by multifamily at 27%, while 40% believe pricing has finally hit bottom after months of volatility.

💼 10% 

CBRE expects CRE investment activity to rise 10% this year despite elevated Treasury yields, with office leading at 19% growth. Cap rates have remained stable amid bond volatility, and the firm believes investors can realize the best cycle returns by acquiring assets now, historically optimal timing after cap rate peaks.

🏘️ DEAL OF THE WEEK
2X VALUE INCREASE AND 47%+ IRR IN 3 YEARS

Chad Schieler and the team at Focused Capital nearly doubled the value of this property and achieved a 47%+ IRR in just three years.

Here's how they did it 👇

🏢 Property details: This 25-unit multifamily property was purchased in October 2022. It was built in 1930 and is located in Kokomo, Indiana, about one hour north of Indianapolis.

💸 Finances: The property was purchased off-market from an aging seller for $759,000. The team secured a $959,000 loan at 5% fixed interest. The seller covered the cost of all renovations.

💼 Business plan: The team addressed major deferred maintenance, which included roof repairs, masonry repairs, repairing and sealing windows, and resolving water heater/boiler issues.

They also renovated all units, including refinishing wood floors, repairing wall plaster and tile, installing new bathroom fixtures/toilets, repairing tub surrounds, installing new kitchen cabinets and countertops as needed, applying fresh paint, and refreshing the flooring and paint in all common areas. Exterior renovations included asphalt parking lot repair, fresh landscaping, installing exterior lighting, and repairing gutters and downspouts.

🍾 Results: The property sold in July 2025 for $1.4 million. Total investment on the return was $323,118, which resulted in a 2.03X equity multiple and 47.46% IRR for Chad and his JV partner.

💪 Takeaways: "Due to the small size of the property, we struggled often getting experienced, great property management at this asset, which has led to us targeting properties 100-plus units in size,” said Schieler. “We faced occupancy issues due to marketing and leasing conversions during the sale period, which delayed us in finding a buyer that would acquire the asset. Ultimately, we were diligent on asset management and successfully sold the asset in July 2025.

“We encountered several surprise large expenses,” he continued, “but fortunately, we had set aside a large amount of capital reserves to weather storms. This has led us to refine our buy box to newer assets with less costly capital expenditure exposure.”

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

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