🚛 Renters are moving. Here's where they're going.

👋 Hello, Best Ever readers! Today is National Absurdity Day, which should be easy to celebrate — just look at what some sellers are asking.

In today’s newsletter, renters migrate, debt looms, underwriting evolves, transactions keep rising, and much more.

🎉 Best Ever Conference X program is officially live! Check out the full schedule and get $100 off your ticket with code PROGRAM100. See the full program here.

📩 Join us alongside Mark Khuri of SMK Capital Management TODAY at 1 pm ET to learn the red flags and stress tests they use to protect $70M+ across 130+ properties — before the money goes out the door. Save your seat now!

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

🌊 Debt Wave: Nearly $936 billion in CRE loans are scheduled to mature in 2026, up 19% from 2025's revised estimate, as loan extensions push the industry's largest refinancing wave out two years while underlying challenges remain unresolved.

📉 Underwriting Shift: National rent growth has been negative for three consecutive months, forcing multifamily investors to abandon decades of growth-based assumptions and pivot to downside protection models that prioritize avoiding loss over chasing returns.

🏢 Office Split: Office vacancy sits at 14.1% near record highs with five of 12 major markets at 25-year peaks, but a handful of districts in New York and San Francisco are staging comebacks — creating a strikingly uneven recovery across the country.

⚖️ Claims Capped: A Massachusetts bankruptcy court ruled that lease termination can occur without strict state-law formalities, making it harder for landlords to maximize claims and potentially shrinking CRE payouts after tenant defaults across portfolios.

⛳ Topped Out: Callaway sold 60% of its Topgolf stake in a $1.1 billion deal, valuing the 111-location driving range chain at roughly half its 2021 price as the company unwinds a merger that saw shares fall 65%.

🏆 TOP STORY
RENTERS ARE MOVING. HERE’S WHERE THEY’RE GOING.

Over the past six years, 20 of the 50 largest U.S. metros have flipped from being dominated by local renters to being driven more by out-of-market demand. It's a fundamental rebalancing in how renters make housing decisions. Affordability and remote work flexibility now trump traditional pulls like proximity to employment hubs.

The biggest shifts have come in Detroit, Philadelphia, and Sacramento as renters hunt for affordability beyond their home cities, but the trend trickles down into smaller markets, reshaping both the migration and affordability maps.

• Detroit and Philly Lead: Out-of-market renters now make up 54.9% of Detroit's rental demand in Q3 2025, up from just 30.3% in Q3 2019. Philadelphia saw a similar surge, with out-of-market shoppers jumping to 55.2% from 31.8%, as New York now accounts for 25.3% of Philly's rental traffic — up from 6.7% six years ago. 

• California Hotspots: Sacramento's out-of-market share rose to 62.1% from 43.2%, while San Francisco climbed to 62.2% from 46.0%, as San Jose now makes up 18.4% of SF rental traffic, up from 7.5%. What these markets share: relative value compared to nearby expensive metros.

• New Destinations: Raleigh leads with 69.6% of rental demand from out-of-market shoppers, followed by Hartford (67.8%), Richmond (66.1%), Providence (66.0%), and Nashville (64.8%). These metros offer more affordable home prices and higher homeownership rates while attracting newcomers with strong job opportunities. Hartford and Providence particularly benefit from New York and Boston transplants seeking lower rents with reasonable commutes.

• The Holdouts: New York has the highest share of local rental demand at 74.8% — unchanged from six years ago — followed by Chicago (74.1%), Los Angeles (69.6%), Dallas (67.9%), and Miami (64.5%). Rent-stabilization protections and high home prices keep ownership rates low, so residents stay renters even as costs climb.

The rental market now has two distinct archetypes. Markets dominated by local renters face high regulatory barriers and sticky populations that create both downside protection and upside limits. Markets attracting transplants may see stronger rent growth than local fundamentals suggest.

THE BOTTOM LINE

The shift creates two paths: markets where transplants drive demand growth, or metros where sticky local populations provide stability. The durability of these trends depends on whether remote work arrangements hold and whether destination cities can keep their affordability edge as demand pushes rents higher.

💰 CRE BY THE NUMBERS
CAP RATE PROJECTIONS, DEAL VOLUME, AND MORE

📉 5.1% Cap Rate

Multifamily cap rates have held at 5.7% for seven quarters — the longest streak in 25 years — but fundamentals support a 5.1% rate, creating a 60-basis-point gap. Analysts expect cap rates to decline gradually in 2026 as distress resolution, easing credit, and steady renter demand remove temporary market frictions.

💼 $150.6 Billion 

U.S. CRE transactions recorded $150.6 billion in Q3 2025, up 23.7% QoQ and 25.1% YoY, bringing total volume through the first three quarters to $375 billion — up 10.3% from 2024 and 13% from 2023, signaling accelerating deal flow after a slow start to the year.

🏠 37 Metros 

Incomes rose faster than rents in 37 of the 50 largest U.S. metros over the past year, as national median household income increased 4% while typical asking rent grew just 2.3%. Affordability improved most in markets where rents fell YoY, including Austin (-3.1%), Denver (-2.1%), and Phoenix (-0.7%).

🖥️ $3.46 Billion

Blackstone secured a record $3.46 billion CMBS refinancing for its QTS data center portfolio, the largest deal of its kind to date, as the portfolio's value climbed 18% to $5.62 billion over four years. AI-driven demand continues pushing data centers from niche real estate plays to core institutional assets.

📩 YOU’RE INVITED
TODAY: PEEK INSIDE A $70M INVESTMENT PLAYBOOK

What separates a winning CRE investment from a costly mistake?

🗓️ TODAY at 1 pm ET, Mark Khuri of SMK Capital Management is doing something most operators would never do: showing you the deals SMK Capital passed on — and exactly why. After analyzing thousands of opportunities and deploying $70M+ across $1.5B in assets, Mark knows the difference between signal and noise. And he's sharing the investment committee playbook that's guided every single decision.

Here's what makes this session different: 

✅ See the deals they rejected — Not just the wins. Learn what made SMK walk away from "good-looking" deals that would have been disasters.

✅ The numbers behind the numbers — Discover which metrics and stress tests reveal hidden downside risk that sponsor projections conveniently ignore.

✅ 2026 market positioning — Where SMK is actively deploying capital right now, which sectors they're avoiding, and the specific markets offering asymmetric opportunity.

✅ Think like institutional capital — Master the portfolio construction frameworks that separate sophisticated allocators from deal chasers.

🏘️ DEAL OF THE WEEK
ACHIEVING YEAR 4 PRO FORMA RENTS IN YEAR 1

Todd Dexheimer and the team at Endurus Capital acquired a neglected 99-unit apartment building in Minnesota from an owner whose management style left the property in disrepair — and 35% vacant.

Here's how he transformed it, as explained on the Best Ever CRE Show 👇

🏢 Property details: The 99-unit apartment complex is located in Champlin, MN, on the Mississippi River, with a beautiful location but decades of deferred maintenance. The building was 65% occupied at acquisition, with units untouched for 30-40 years — green carpet in hallways, no lighting, and structural issues, including a separate pool building that had settled differently than the main structure, causing the connecting hallway to slope.

💸 Finances: Todd wasn't the high bidder, but won the deal after the first buyer fell out. The property was purchased for $9.1 million. His team budgeted $41,000 per door for renovations — $22K for unit interiors and approximately $20K for exterior and common areas. The total project cost approached $4.1 million, including the structural fixes and amenity upgrades.

💼 Business plan: The previous owner's daughters managed the property while living on-site and "hating people," Todd says — they literally vacated units around their apartment to avoid tenants. Todd's team got a model unit completed within two weeks of closing, showed existing residents the renovations, and offered them the chance to stay at new rents. Thirty-two residents chose to remain and pay the increased rates.

The renovation included full unit gut renovations with new kitchens, flooring, and bathrooms. But the amenity package separated this from typical value-add deals: indoor pickleball court, rock climbing wall, full gym, cold plunge, red light therapy, sauna, outdoor smoker station, podcast studio, and co-working space. Todd also ripped off the mansard roof — a $250,000 investment — just for aesthetics.

🍾 Results: The property is already achieving rents $50 above pro forma despite opening amenities in just the last few months. Todd projects another $100 rent increase during the spring leasing season, which would put the property at year-four pro forma rents within the first year of operation. Original rents averaged around $1,200, while new rents are pushing $1,650-$1,700.

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