💰 The record gap that's reshaping hospitality

👋 Hello, Best Ever readers! The team at Google plans to put a space-based data center in orbit by 2027 … because of course they do.

🌎 Meanwhile, here on earth, in today’s newsletter, luxury hotels boom, deals spike, Sonder shuts down, cap rates diverge, and much more.

📩 Join us alongside Mark Khuri of SMK Capital Management on November 20 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

🏘️ Deal Velocity: Apartment transaction volume hit $43.8 billion in Q3 2025, according to RealPage, up 13% YoY and 21% QoQ, despite fewer properties trading. Cap rates rose to 5.63% — the highest since 2017 — while the average price per unit held at $227,167.

👴 Senior Surge: Senior living is outpacing other CRE sectors. Demand is outstripping new deliveries in nearly every market, driving rent growth and boosting valuations as minimal new supply supports continued revenue gains through 2026.

🏢 Office Profits: Leading CRE firms like CBRE, JLL, and Cushman & Wakefield report record leasing activity as office demand rises. Tenants signed 12M SF of deals in Q3 — the highest since 2019 — while new construction at record lows gives landlords rare pricing power heading into a landlord-friendly 2026.

📦 Logistics Turn: Logistics real estate has hit an inflection point, as net absorption totaled 47M SF in Q3, up 64% QoQ. New lease signings rose 10%, while vacancy hovers near the mid-7% range. The construction pipeline continues shrinking below 2017-2019 averages amid developer discipline and land scarcity.

🏨 Surprise Shutdown: Sonder Holdings will immediately wind down operations and file for Chapter 7 bankruptcy after Marriott ended its licensing agreement due to default. The company cited severe financial constraints from integration challenges with Marriott, which resulted in significant costs and a sharp revenue decline.

🏆 TOP STORY
THE RECORD GAP THAT’S RESHAPING HOSPITALITY

The luxury hotel market is pulling away from the rest of the lodging industry, and the gap just hit a record high. Luxury room rates averaged $394 per night in 2025, a $168 premium over the next most expensive tier. That gap was just $60 in 2008.

While lower-scale and mid-tier hotel bookings were down slightly through September, luxury property demand rose 2.5% YoY. Wealthy Americans, flush with stock market and real estate gains, keep spending, defying headwinds from reduced international tourism and white-collar job market weakness.

The ultraluxury tier is another world entirely:

• Ultraluxury Premiums: The top 10 most expensive hotels in major U.S. markets often charge double the typical luxury rate. In New York, ultraluxury hotels average $1,560/night compared to $472 for standard luxury properties, more than triple the rate.

• Resilient Demand: High-end hoteliers like Montage International report 8% revenue growth YoY, with 2026 group bookings stronger than previous years. The company plans to double its 15-property portfolio over the next three to five years.

• Wealth Effect Driving Behavior: Multigenerational trips are increasingly popular, with grandparents paying for villas and yachts rather than two-bedroom suites. Affluent travelers are "making choices based on 'I want this when I want it, and I'm willing to pay for it,'" according to CoStar's national director for hospitality analytics.

The trend extends beyond rates to operations. Corinthia's Surrey hotel on Manhattan's Upper East Side charges over $2,000/night with a two-night minimum for December weekends. The 100-room property offers personalized butler service, deep-soak tubs, and a private members' club restaurant. Staff are trained to open car doors within 15 seconds and address guests by name.

The middle market, meanwhile, is getting squeezed. Bookings are flat or declining, while luxury properties command unprecedented pricing power.

THE BOTTOM LINE

The U.S. hotel market is splitting into distinct performance tiers. Luxury properties are commanding record premiums while midscale assets face structural challenges. The rate gap — now nearly three times what it was in 2008 — suggests this separation is accelerating. For hotel investors, the flight to quality isn't just a trend. It’s becoming the safest bet.

📩 YOU’RE INVITED
LEARN HOW TO INVEST LIKE AN INSTITUTION

Most investors chase returns. Smart investors avoid landmines first.

Join us on November 20 at 1 pm ET as Mark Khuri of SMK Capital Management pulls back the curtain on their investment committee process, showing you the exact framework they use to evaluate opportunities across 130+ properties valued at $1.5B+.

This isn't another theory session. Mark will walk through real deals they've said YES to and real deals they've walked away from, revealing the specific red flags and structural advantages that separate winning investments from costly mistakes.

What you’ll walk away with:

✅ The instant disqualifiers — Learn the red flags that make SMK walk away from deals, no matter how attractive the projected returns look on paper

✅ Stress tests that actually work — See the exact metrics and scenario analyses SMK runs before deploying capital, including how to pressure-test sponsor assumptions most investors never question

✅ Where the smart money is moving in 2026 — Get SMK's current investment thesis on sectors and deal structures offering asymmetric risk-adjusted returns

✅ How institutions build portfolios — Stop investing deal-by-deal and learn the sophisticated frameworks top capital allocators use across market cycles

P.S. Can't attend live? Register anyway and we'll send you the replay so you can watch on your own time.

💰 CRE BY THE NUMBERS
INVESTMENT SURGES, CAP RATES DIVERGE, AND MORE

💰 $112 Billion 

U.S. CRE investment hit $112 billion in Q3, up 13% YoY, led by private investors accounting for 61% of total volume. Office jumped 35% to $19 billion, while multifamily led all sectors at $42 billion as the CBRE Lending Momentum Index reached its highest level since 2018.

📈 20%

Low-income workforce housing rents surged over 20% between 2021 and 2025 in eight of 13 U.S. regions — more than double the 9.2% increase for discretionary housing. Jacksonville workforce rents soared 15.6% while discretionary rents rose just 1%, as investors target unsubsidized Class C and D apartments.

📊 5.2% Spread 

Cap rates showed a 5.2% spread in September, from cell towers at 4.5% to skilled nursing at 9.7%. Office rates fell 24 bps YoY while the weighted average held at 6% and industrial led core assets at 5.1%.

🏘️ 55% 

Half of affordable housing professionals believe market challenges will impact 2026 deal pipelines, with 55% citing high construction costs as the biggest barrier. Despite concerns, 52% expect access to affordable housing to expand in 2026, while 62% anticipate development growth, led by multifamily demand at 64%.

🏘️ DEAL OF THE WEEK
THE 16-BUILDING, 60-TENANT DEAL NOBODY WANTED

Ash Patel and his team turned 500 days of market rejection into an 18% cash-flowing acquisition at $3.5 million — $1.4 million below the original asking price.

Here's how they're executing this value-add play, as explained on the Best Ever CRE Show 👇

🏢 Property details: 16 buildings totaling approximately 83,200 SF (5,200 SF each) with nearly 60 tenants in Louisville. The property was listed on CREXI for over 500 days before acquisition, with 70% occupancy at purchase. The average building cost was just $220,000 — a fraction of multifamily comps or build costs.

💸 Finances: The property was under contract at $4.2 million (down from the original $4.9 million listing), but the day before due diligence expired, Ash's team renegotiated to $3.5 million. The deal is structured as all-cash with no bank financing, offering investors a 7% preferred return with quarterly distributions. The unique structure includes no upfront acquisition fees — all GP compensation is escrowed until investors receive full principal plus preferred return, then splits 60-40 in favor of GPs.

💼 Business plan: The strategy is to hold for one year to capture long-term capital gains treatment, then sell buildings individually starting June 30, 2026. The team recognized that while few buyers wanted to manage 16 buildings and 60 tenants for $3.5 million, many would pay $500,000+ for a single cash-flowing building with 4-5 tenants. They brought on a 4% property management company that also develops, plus a leasing agent who created her own marketing campaign and lease templates.

💪 Biggest Challenge: Managing investor expectations. Multifamily investors expected rapid occupancy improvements, but office operates differently — success means stable, long-term tenants who renew leases and pay rent consistently.

🍾 Results: The property is currently cash-flowing 18% and has signed several new leases since acquisition, with multiple tours scheduled. As each building sells starting mid-2026, 100% of proceeds will return to investors pro rata as principal reduction until the full $3.5 million is returned plus preferred return, then profits split 60-40 favoring GPs. The team expects significant upside from selling stabilized buildings individually versus the bulk purchase price.

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