🚨 The shutdown is now a real-time housing crisis

👋 Happy Sunday, Best Ever readers!

In today’s newsletter, the shutdown hits multifamily, humanoids are coming, the office outlook improves, puzzle parking saves a dead deal, and much more.

📩 Looking to balance your portfolio beyond real estate? Join us November 6 at 3 pm ET for a free webinar on Diversifying with Algorithmic Trading, where you’ll learn how systematic trading strategies can provide non-correlated returns to complement your CRE investments. Save your spot.

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🗞️ NO-FLUFF NEWS
CRE HEADLINES

⚠️ Fed Warning: After the Fed delivered its second consecutive quarter-point rate cut, Jerome Powell warned a December cut is "far from" guaranteed as divided members debate pausing easing. Treasury yields jumped 9 bps while CRE transaction volume accelerated 19%.

📉 Falling Rents: Denver and Austin led national rent declines at 8% each in Q3 amid record supply, followed by Phoenix at 5%. The South added 250,000 new units while occupancy fell to 95.4%, though strong retention rates signal healthy underlying demand.

🎸 Music City: Nashville tops the Fall 2025 multifamily investment rankings, fueled by strong job growth, affordability, and favorable tax policies. Midwest cities dominated the top 10, with Indianapolis at No. 2 and Columbus at No. 3, as investors favor secondary markets.

🏭 Vacancy Peak: U.S. industrial vacancy hit 7.5% in Q3 2025 — the highest in over a decade — and is forecast to peak at 7.9% in Q3 2026 as speculative supply pressures occupancy. Absorption remains 50% below 2024 levels while rent growth slows to 1.0%.

🤖 Construction Bots: Contractors are being urged to prepare for humanoid construction robots as skilled labor shortages intensify and productivity lags. Current deployments focus on repetitive tasks, while future applications could include pipe installation, sensor work, and earthwork in tight spaces.

🏆 TOP STORY
THE SHUTDOWN IS NOW A REAL-TIME HOUSING CRISIS

The government shutdown just entered its most damaging phase for multifamily. Now in its fifth week and already the second-longest in U.S. history, the shutdown crossed a critical threshold this week as SNAP benefits — providing food assistance to more than 40 million Americans — lapsed on November 1. While HUD announced Friday that Section 8 housing voucher payments will continue through December, the extension offers only temporary relief as uncertainty persists.

With tenants forced to choose between food and rent following the SNAP lapse, the National Apartment Association warns of potential rent payment issues as economic pressure mounts. But the damage extends beyond rent collections.

• HUD staffing crisis: The Department of Housing and Urban Development is operating at approximately 25% capacity. Every HUD building inspector for federally subsidized affordable housing was let go.

• Frozen financing: New HUD loan processing remains frozen, and FHA insurance policies that back a significant portion of multifamily financing can't be written.

• CDFI Fund shutdown: Every staffer at the CDFI Fund, which helped finance more than 45,000 affordable housing units in fiscal 2024, was laid off, blocking funding distribution.

• Voucher freeze: New project-based vouchers developers use to underwrite affordable housing cannot be processed.

• Flood insurance lapse: Since October 1, the National Flood Insurance Program can't issue new or renewal policies, stalling projects needing proof of insurance.

Year-end deadlines create additional urgency. Developers facing December 31 LIHTC deadlines may lose millions in credits if they can't access federal approvals in time. The backlog from the shutdown means exponentially longer processing delays when the staff returns.

With SNAP benefits now lapsed, apartment operators face immediate tenant pressure even as Section 8 payments continue through December. Federal workers have already missed paychecks and are requesting rent deferrals. The December extension for housing vouchers doesn't address the broader funding crisis or the mounting backlog of frozen loans, stalled projects, and year-end deadlines threatening to collapse deals.

THE BOTTOM LINE

The shutdown has moved from administrative inconvenience to existential threat for affordable housing. With HUD at 25% capacity, SNAP benefits lapsed, and year-end LIHTC deadlines approaching, pressure is mounting. The Section 8 extension through December is temporary and doesn't solve frozen financing, staffing shortages, or processing backlogs threatening deals. Every additional week compounds the damage. What began as a political standoff is now a housing crisis in real time.

📩 YOU’RE INVITED
A TRUE DIVERSIFICATION PLAY BEYOND REAL ESTATE

Even the best CRE portfolios can feel the squeeze when rates rise or property values dip. That’s why smart investors are exploring non-correlated strategies to balance their holdings.

🗓️ Join us for a free webinar: Diversifying with Algorithmic Trading on November 6 at 3 pm ET — where you’ll learn how systematic trading in global markets can provide returns that move independently of real estate.

What you’ll get out of the webinar:

✅ A high-level walkthrough of how algorithmic trading works and why it’s emerging in modern portfolios

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✅ Real-world examples of successful algorithmic strategies

✅ A frank conversation about scams, unreliable bots, and what to watch out for when evaluating offerings

P.S. Can’t make it on November 6? Register anyway, and we’ll send you the replay.

💰 CRE TRENDS
THE OFFICE OUTLOOK KEEPS GETTING BETTER

Office market projections through 2026 just got more optimistic. CoStar's revised forecast now anticipates positive momentum after Q3 delivered the strongest quarter of occupancy gains since 2019.

The firm now expects 10M SF of positive absorption over the next four quarters — a significant upgrade from the previous forecast, which anticipated a 4M SF decline. Rent growth projections also improved, with CoStar expecting the metric to reach 1% by late 2026 and 1.5% by mid-2027, compared to earlier forecasts that kept it below 1% well into 2027.

What's driving the change:

• Occupancy surge: Q3 posted the strongest quarter of occupancy gains since 2019, despite stagnant job growth in traditional knowledge industries.

• Space commitments: Many occupiers are committing to additional space in anticipation of higher office attendance, even without significant hiring.

• Near-term momentum: These behaviors are expected to boost absorption for several more quarters.

The longer-term outlook remains cautious. Per-employee space needs are expected to stay below pre-2020 levels, creating a structural headwind to future demand. CoStar projects vacancy will remain above 13.5% through the end of the decade — a full percentage point above the peak following the Great Recession.

Downside risks persist. Persistent inflation and volatile trade policy still threaten economic growth. Additionally, preliminary employment data revisions show the job market has been weaker than initially reported. This is especially true in key knowledge industries, where tech-enabled efficiency could further erode payrolls.

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🎙️ THE BEST EVER CRE SHOW
THE PARKING INNOVATION THAT SAVED A DEAD DEAL

When a Jersey City developer faced city restrictions that cut his project from 60 units down to 40, mechanical parking systems saved the deal. Chris Tiessen, President and CEO of KLAUS Multiparking, joined John Casmon on the Best Ever CRE Show this week to break down how puzzle parker systems helped this developer and others maximize unit counts on land-locked sites.

The Problem: Traditional two-level parking requires roughly 19 feet of height, accounting for eight feet per level plus three-foot slabs between floors. By switching to puzzle parker systems — which stack cars using movable platforms similar to a childhood sliding puzzle — the project needed only 12 feet total.

The Result: That freed up seven feet of vertical space, which allowed the developer to add another residential level and bring the unit count back closer to 60 units. "If you can build two or three more units because of it, that's just money in your pocket," Tiessen says.

• How it Works: Cars move up, down, or sideways via platforms that tenants control with key fobs. One ground-level space stays empty to allow platform movement, but the system still delivers 2x to 5x the parking capacity on the same footprint.

• Cost: The systems run roughly $23,000 per space fully installed, which includes first-year maintenance and coordination with subcontractors. They eliminate the need for expensive parking ramps, save construction time by avoiding second slabs, and improve NOI through self-use operation without valet labor costs.

• Markets: The technology sees primary adoption in New Jersey near NYC, Miami, and California. It's also active in Columbus student housing, Salt Lake City, Denver, and geographically constrained areas like Ketchum, Idaho. The sweet spot is 30 to 80 spaces, though projects range from 10 to over 300 spaces.

For developers facing parking-to-dwelling ratio requirements on tight sites, mechanical systems offer a way to preserve unit counts without expanding the building footprint. The Jersey City project shows how reclaiming vertical space can mean the difference between a deal that pencils and one that doesn't.

🎙️ Listen to Chris's full episode here.