📉 What 40% fewer leasing hours does to NOI

👋 Hello, Best Ever readers!

In today’s newsletter, AI hits leasing offices, capital comes back, a $12M student-run fund, office leasing soars, optimism lags, and much more.

Today’s edition is presented by AI for CRE Collective. AI is moving fast across commercial real estate. The hard part is knowing where to start and which tools are worth your time. The AI for CRE Collective brings together 800+ brokers, investors, developers, owners, lenders, asset managers, and property managers using AI to underwrite deals, build BOVs and OMs, research markets, analyze sites, abstract leases, and automate repetitive work. Learn more.

🎓 TODAY at 1 pm ET, join us for The Unfair Advantage: How AI Is Separating the Best Operators From the Rest (And What This Means For Investors), presented by Justin Spillers of Real Estate Alpha. Save your spot.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

💰 Capital Comeback: U.S. CRE investment volume has climbed 21% YTD to $250.3 billion, with private buyers driving $70.9 billion against $22.4 billion from institutions. Cross-border capital jumped 35% to $14.4 billion in H1, and CBRE projects a 16% full-year gain.

🎓 Student Capital: Indiana University undergraduates managing $12M in outside equity have booked a 65% gross profit on an Indianapolis warehouse in 16 months, their first exit across 12 deals. At least 18 student-run funds now operate nationally, up from a handful a decade ago.

🍔 Drive-Thru Politics: Minneapolis and Annapolis have banned new drive-thrus citywide, Atlanta has barred them in its Beltline district, and Culver City just extended its moratorium another 10.5 months after an In-N-Out proposal drew backlash. The format carries 60% of fast-food transactions, making entitlements a live underwriting question for net lease owners.

🏚️ Burden Gap: Renter cost burdens have returned to 51.1% nationally, erasing the gains made through 2019, with Columbus and Virginia Beach each up more than nine percentage points. Severe burdens are climbing fastest where averages look stable, as in St. Louis.

🏗️ Conversion Confidence: Building officials in D.C., Chicago, Dallas, and Denver have declined to tighten conversion scrutiny after New York stop-work orders halted several projects, noting those involved additions atop existing structures. The national pipeline still holds more than 90,000 units, up 28% YoY.

🏆 TOP STORY
HOW AI IS CUTTING PM TEAMS AND PAYROLLS

The property manager who spends her morning answering the same six questions about pet deposits is doing work that a machine now does for free, at 2 a.m., in whatever language the prospect types in. That math is why tech firms are pouring billions into automating the rote tasks that fill a leasing office's day, and why the roughly 466,100 property, real estate, and community association managers working in the U.S. are watching the ground shift under them.

The efficiency numbers are large enough to change an operating budget. EliseAI, valued at $2.2 billion and deployed across a sixth of U.S. apartments, estimates the technology can cut leasing and administrative hours by 40% and deliver payroll savings of 10% to 20%. Equity Residential, which owns roughly 85,000 units, trimmed headcount 20% between 2020 and 2025 as it layered in centralization and AI leasing. With insurance, debt service, and construction costs largely outside an operator's control, payroll is the line item that answers to management.

• Attrition Is Doing the Cutting: Job losses in this sector are arriving through unfilled vacancies rather than layoffs. Property manager turnover can reach 30% or higher in some markets, against a 9.9% average across white-collar work. Operators don't need to fire anyone to shrink a team — they just need to stop backfilling.

• Adoption Is Slower Than the Pitch: NAI Hiffman spent roughly two years piloting an AI invoicing tool that codes invoices to the correct property. Early on, it demanded more work than it saved, requiring constant correction before the system learned. It now absorbs additional properties and clients without added headcount.

• The Retention Risk Is Real: Cutting staff for its own sake can push tenant retention down far enough that the technology ends up costing more than it saves. Charney Cos. frames the question as doing more with existing people rather than doing more with fewer, using AI to build resident profiles that would otherwise consume hours of manual work.

The firms getting the most out of this are not the ones with the smallest teams. They're the ones redirecting hours toward the parts of the job a machine can't do — the walkthrough, the renewal conversation, the escalation that needs judgment.

THE BOTTOM LINE

Payroll savings of 10% to 20% land directly in NOI, and for a line item that size, the valuation effect compounds at current cap rates. Where the ceiling sits is less settled. Some operators argue that cutting staff for its own sake risks the resident experience and eventually the rent roll, while others treat the same tools as a way to absorb more units without adding people. Same technology, opposite conclusions about headcount — which makes this a capacity decision more than a cost-cutting one.

🤝 TOGETHER WITH AI FOR CRE COLLECTIVE
GET YOUR FIRST AI WIN IN CRE

Join 800+ CRE professionals using AI to underwrite deals, build BOVs and OMs, research markets, screen sites, abstract leases, review operating reports, and automate repetitive work with AI for CRE Collective.

Inside, you get:
✓ AI for CRE Certification and role tracks for every CRE seat
✓ 500+ hand-tested tools with member-only discounts
✓ 300+ workflows, 500+ prompts, and CRE AI skills
✓ Live workshops, monthly member huddles, and weekly office hours
✓ Advanced masterclasses, including the $599 Claude for CRE course
✓ A community sharing what works on active deals and assets

Start free for 7 days and get full access. Bring one task that is eating your time, find the workflow built for it, and use the community or office hours when you get stuck.

Underwrite a live deal, draft the BOV, abstract the lease, research the market, or automate the report before the trial ends.

Finish the Certification in your first 30 days. If you don't get your first win, we refund your entire first month. Cancel anytime.

🌟 BEST EVER INNER CIRCLE
WHAT HAPPENS IN CINCINNATI…

We just left our first annual Inner Circle offsite where our members spent the day doing what they do best: helping each other grow.

We challenged each other's thinking, workshopped business roadblocks in small groups, put members in the hot seat for live feedback, and each walked away with a personalized two-year growth roadmap.

Then we traded the meeting room for a Reds game and capped off the day together at Great American Ball Park (and the Reds won!). ⚾

To everyone who joined us: thank you for making it such an incredible day. The conversations, generosity, and willingness to help each other are what make this community so special.

We'll share a full recap (and some of our favorite moments) in our Sunday newsletter.

Wish you were here? Make sure you're at the next one. Start by booking a quick intro call with AJ.

💰 CRE BY THE NUMBERS
OFFICE LEASING SOARS, OPTIMISM LAGS, AND MORE

📉 62.4M SF

Office leasing hit 62.4M SF in Q2, a 16% YoY jump that puts full-year activity on pace to surpass 2022, currently the highest on record. Vacancy fell 30 bps to 18.3%, the steepest quarterly decline since 2015 — and unlike the last two years of drops driven by conversions shrinking supply, this one came with real tenant demand behind it.

🏗️ 318M SF

Industrial leasing reached 318M SF in H1, up 20% YoY, with Q2 activity alone rising 12%. Net absorption hit 114M SF, the sector's strongest showing since 2023, as large-block tenants returned and chipped away at the 1.5B SF sitting available. Leverage is tilting back toward landlords, and the tenants who waited out the glut are running out of runway.

Spec Returns: Space under construction grew 10% YoY to 312M SF with starts rising three straight quarters, meaning the pricing power landlords just regained comes with a clock on it.

📊 34%

Only 34% of residential real estate investors expect conditions to improve over the next six months, and just 26% think today's market beats a year ago, the lowest share on record. The gap matters: sentiment about the present has collapsed while forward expectations tick up, meaning capital is sitting out on current conditions rather than a broken long-term thesis.

Flipper Split: Fix-and-flip investors are far more optimistic at 44% expecting improvement, against 26% of rental investors, who mostly expect the status quo to hold.

🎓 LIVE EDUCATION
A LOOK INSIDE A FULLY AI-POWERED MULTIFAMILY OPERATION

Today at 1 pm ET, Justin Spillers opens up Real Estate Alpha's operation live to show exactly how AI is being used across leasing, operations, and performance management in ways most multifamily operators haven't considered yet.

Including the one integration that 4x’d their conversion rates.

Justin manages 1,000+ units, $1M+ in monthly cash flow, and has paid every investor on time for 10 consecutive years. He's one of the few operators in the space implementing AI at a level that gives his portfolio a measurable edge.

Plus a live Q&A at the end. Can’t make it? Register anyway, and we’ll send you the replay.

🎙️ THE BEST EVER CRE SHOW
BUYING A STARBUCKS FOR THE TAX TREATMENT

The Opportunity Zone pitch has always sounded like development work: buy land, build something, wait a decade. The investors working with Justin White, a broker who specializes in the structure, skip all of that. They buy a newly built Starbucks with a signed lease, close before the tenant ever takes possession, and collect 10 years of tax-free appreciation without ever picking up a shovel.

On a recent episode of the Best Ever CRE Show, Justin joined Ash Patel and Amanda Cruise to walk through how it works and why it keeps pulling capital away from apartments.

Justin does place buyers into OZ apartments when they want more control over their rents. But the specialty he has built runs the other direction. A leased Chipotle or 7-Eleven inside an OZ delivers identical tax treatment with none of the tenants-and-toilets work, and the whole thing turns on a single IRS rule: the property qualifies only if the buyer is the first to put it into service inside the OZ.

• The CO Timing Window: Buyers acquire from established developers and close right at certificate of occupancy, before the tenant takes possession. That satisfies the original-use requirement, and because the lease is already signed, rent starts almost immediately. No construction, no lease-up, no shovel.

• The Triple-Net Concession: The property has to keep providing jobs to stay compliant, so landlords convert from NNN to NN and take back property taxes, landscaping, or similar. Justin reports nearly every national tenant has agreed once the change is framed as a win for both sides.

• The Yield Math: Over a 10-year hold, an OZ investment sheds tax on appreciation and depreciation recapture alike. A deal penciling at a 5 or 5.5 cap outside an OZ performs like a 7 or 8 once those benefits land.

The program is permanent now under the One Big Beautiful Bill Act, and a fresh OZ map takes effect in 2027. For operators holding gains, that makes the next designation window worth watching.

👉 Listen to Justin’s full episode here.