👑 The new king of rental destinations

👋 Happy Sunday, Best Ever readers!

In today’s newsletter, the new king of rental destinations, a major league debacle, an office vacancy record, a warning about self-storage, and much more.

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Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

⚾ Stadium Debacle: Athletics owner John Fisher held a Las Vegas stadium groundbreaking despite lacking funding for the $2 billion project. Having spent only $50 million of the required $100 million to unlock $380 million in public funding, some doubt whether the stadium will actually be built.

📊 Appraisal Cuts: The U.S. Appraisal Subcommittee returned after seven months with 30% fewer staff amid federal cost-cutting as $1.5 trillion in CRE loans mature. Leadership turmoil and mounting bias investigations challenge oversight during a critical refinancing period.

🏭 Steady Demand: Industrial net lease sales totaled $4.6 billion in Q1 as cap rates climbed to 6.56% amid higher borrowing costs. Private buyers remained active while REIT participation dropped sharply, though strong fundamentals support continued investor interest.

⛅ Sun Belt Squeeze: Sun Belt cities are losing their reputation as affordable alternatives, as home prices have surged 99-134% over the past decade, outpacing coastal markets. Phoenix, Miami, Atlanta, and Dallas now face restrictive zoning and NIMBYism that previously plagued only coastal cities.

📈 Midwest Rising: Chicago leads the Midwest multifamily resurgence with 4.2% YoY rent growth, ranking third nationally as investors deploy $800 million in new regional funds. Q1 sales doubled while Class-A median prices jumped 33% to $421,500 per unit amid limited new supply.

🏆 TOP STORY
THE 5 BEST CITIES FOR RENTERS IN 2025

The South has cemented its position as America's premier region for renters, claiming all top 10 spots in RentCafe's 2025 ranking of best cities for renters and 41 of the top 50 cities overall. The analysis evaluated 150 U.S. cities across 20 metrics, including affordability, job opportunities, apartment quality, and community amenities, grouped into three categories: cost of living and housing, local economy, and quality of life.

🥇 The New King: McKinney, TX, claims the top spot for the first time with its strong affordability and quality of life rankings. The Dallas suburb offers lower-than-average costs, high-end apartments, consistent job growth, and over 40 parks in a small-town atmosphere with urban amenities. McKinney strikes the perfect balance between affordability and suburban comfort.

☀️ The Top Five: Sarasota, FL, took second place, appealing to diverse demographics from retirees to remote workers with its coastal location and major employers. Atlanta, GA, maintains third place with numerous Fortune 500 companies and budget-friendly options for young renters. Austin, TX, and Huntsville, AL, round out the top five with their tech hubs and aerospace industries, respectively.

🧹 Southern Sweep: Southern cities rounded out the top 10, including Wilmington, NC; Charleston, SC (last year's top performer with its booming tech sector); Round Rock, TX (benefiting from Austin's spillover); Raleigh, NC; and Orlando, FL.

🏆 Best of the Rest: Myrtle Beach, SC, topped the nation in cost of living and housing thanks to its abundance of high-end apartments and below-average costs. Miami, FL, emerged as the leader in local economy with its booming startup scene and steady renter income growth, while Washington, D.C., scored highest in quality of life for the second consecutive year.

THE BOTTOM LINE

The South’s dominance is nothing new. However, as renter preferences evolve and migration trends continue, cities like McKinney are emerging as alternatives to saturated coastal markets and Sun Belt neighbors struggling with overmigration and rising costs, opening the door for investors across asset classes as these markets continue to grow.

💰 CRE TRENDS
OFFICE VACANCY HITS ANOTHER RECORD HIGH

U.S. office vacancy reached a record 20.6% in Q2, continuing its post-pandemic climb from 17% five years ago. The latest figure represents a 50-bp YoY increase, with Moody's Analytics reporting that return-to-office mandates "have done little to stem the bleeding."

Regional performance varied sharply. Birmingham, Palm Beach, Miami, Wichita, and Columbia posted the strongest improvements, while Nashville, Denver, Seattle, Portland, and San Jose suffered negative rent growth and rising vacancy rates.

Beyond office, other CRE sectors also showed deterioration, with retail vacancy climbing to 10.5% and industrial to 7.5%. Multifamily remained relatively stable at 6.5% vacancy with average asking rents of $1,832 monthly.

🎙️ THE BEST EVER CRE SHOW
THE TRUTH ABOUT SELF-STORAGE

Self-storage has been marketed as the "easy" CRE investment — simple operations, no tenants living on-site, and passive income potential. In a recent episode of the Best Ever CRE Show, Sean Graham, who owns four self-storage facilities totaling 140,000 square feet, explained the realities of the self-storage market and why it's not as easy as many think.

• Overbuilding is Real: Many markets are experiencing oversupply. One of Graham's Northern Michigan facilities went from 90%+ occupancy to struggling with competition after multiple new facilities opened within five miles.

• Zoning Research is Critical: It’s critical to understand development rules not just in your target area, but in surrounding municipalities. New competition can appear quickly and significantly impact performance.

• Current Market Challenges: Graham has paused acquisitions entirely, focusing on stabilizing his existing portfolio. Current cap rates and interest rates don't provide favorable spreads, especially when competing against larger regional players and REITs.

Perhaps the biggest myth about self-storage, according to Sean, is that it's passive. Self-storage requires active management. With a thousand tenants across his portfolio, Sean's team constantly manages month-to-month leases, handles delinquencies, and conducts auctions. Still, he champions it as a worthwhile investment — if you do it right.

"I wouldn't say it's passive by any means," Sean admits. "However, I also find a lot of value with bringing the operations in-house and doing everything yourself, building out the teams, having the call center, having the property management — doing it all in-house, you learn a lot more."

🎙️ Listen to Sean’s full episode here.

🎓 BEST EVER RESOURCES
PASSIVE INVESTOR TIPS

THE RULE OF 72

In his recent book, Passive Investor Tips, Travis Watts explains the Rule of 72, which is a simple investment formula that calculates how long it takes for an investment to double in value by dividing 72 by the annual yield percentage.

Example: An 8% annual yield investment doubles in about nine years (72 ÷ 8 = 9), while a 10% yield doubles in 7.2 years. For instance, $100,000 invested at 10% annually could grow to over $1 million in approximately 25 years through compound growth.

The Rule of 72 should be used as a guide rather than a guarantee, since market conditions and individual circumstances affect actual results. It works best for steady investments like dividend-paying stocks or fixed-debt instruments. Investors should also consider additional factors like tax implications, equity upside potential, and refinancing opportunities when making investment decisions.

📚 For more tips and stories like these, Passive Investor Tips is available now.