💰 What the $106T wealth transfer means for CRE

👋 Happy Sunday, Best Ever readers!

In today’s newsletter, family offices invest billions, banks are back, Class A thrives, coworking booms, and much more.

🎟️ Accredited LPs can now access the Best Ever Conference at an exclusive rate LOWER than general admission. Same access, better price. Get your LP Pass today.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

🏦 Banks Are Back: Banks issued $227 billion in CRE debt during the first nine months of 2025, 85% more than last year and roughly in line with 2019 levels, even as delinquencies sit near decade highs and extend-and-pretend strategies push total maturities to $957 billion.

📈 A-Grade Growth: Class A apartments recorded their 55th consecutive month of YoY rent gains with rents up 1.4% annually despite elevated supply, according to RealPage. Class C rents dropped 3.2% in the deepest annual decline for that segment in nearly 14 years.

👀 Fed Focus: The Fed is monitoring community and regional banks concentrated in office and multifamily lending as CRE loan delinquencies hover near decade highs at 1.56%, with elevated interest rates and tighter underwriting threatening borrowers' ability to refinance maturing loans.

🏢 Regional Recovery: All four U.S. Census regions posted positive net absorption for the first time since 2021, with national demand surging 19.8M SF in Q3 after 14.9M SF of negative absorption the previous quarter.

🤖 AI Ready: Contractors have turned bullish on AI, with 87% anticipating meaningful transformation and 85% expecting less time on repetitive tasks. Despite limited current adoption below 15% for most functions, early adopters report remarkably high effectiveness rates of 70% or more.

🏆 TOP STORY
HOW ONE CAPITAL SOURCE IS RESHAPING CRE

A new wave of capital is reshaping CRE investment, and it doesn't look like traditional institutional money. Family offices are investing billions into CRE, but they're bypassing large asset managers in favor of direct deals and partnerships with other offices.

The shift creates opportunity for operators who understand what these investors want: tax efficiency, control, and long-term partnerships built around generational wealth preservation rather than quarterly returns.

The country is in the midst of the Great Wealth Transfer. Nearly $106 trillion in family assets are moving to younger generations through 2048, driving the creation of more than 8,000 family offices globally, up from roughly 6,100 in 2019 and projected to reach 10,700 by 2030. Real estate already represents 22.5% of the average family office portfolio, and as 44% plan to increase allocations as the market stabilizes and interest rates decline, there are a few key factors supporting the trend.

• Tax strategy drives deal structure. The preservation of the 1031 exchange and extension of bonus depreciation make CRE particularly attractive for wealth preservation. Tahari Capital, for instance, has been transitioning East Hampton retail holdings into Manhattan multifamily through 1031 exchanges, most recently paying $11.8 million for a 31-unit East Harlem building.

• Direct investment beats institutional funds. Family offices are abandoning large asset managers like Blackstone and Apollo in favor of direct ownership and collaboration with other families. Newbrook Capital Properties, for example, now manages a $400 million portfolio comprising more than 2,000 multifamily units by partnering directly with other family offices rather than raising a traditional fund.

• Networks replace gatekeepers. Family offices are creating collaborative ecosystems that pool resources for deals aligned with specific tax and control requirements. Realm invests on behalf of about 115 families with $200 million to $250 million each in investable assets, demonstrating how these networks allow smaller offices to access institutional-scale opportunities while maintaining bespoke strategies.

Unlike institutional investors focused on deployment timelines, family offices prioritize long-term value and tax optimization. The approach reflects growing frustration with institutional funds that have been slow to deploy capital and lack the customized strategies family offices require.

THE BOTTOM LINE

Operators who can deliver tax-efficient structures, direct ownership opportunities, and long-term partnerships stand to benefit from billions in patient capital that's increasingly frustrated with traditional institutional managers. Family offices aren't just participating in the CRE recovery — they're reshaping how deals get done.

🎉 BEST EVER CONFERENCE
EXCLUSIVE OPPORTUNITY FOR ACCREDITED LPS

🎟️ We're introducing a new ticket tier designed specifically for our limited partner audience — the Accredited LP Pass.

What You'll Get: Accredited LPs can attend the Best Ever Conference at a special flat rate — lower than our standard General Admission price. You'll enjoy full three-day access to the same content, connections, and opportunities, including direct networking with a community where 95% of attendees have actively closed deals in the past nine months.

Why We Created This: While our other ticket prices will continue to increase, we wanted to ensure serious limited partners have an accessible path to connect with top operators and build the relationships that drive successful partnerships.

This offer is exclusively available to accredited LPs.

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🗺️ ON THE MAP
THE BIGGEST WINNERS OF THE COWORKING BOOM

America's coworking boom has sorted itself into clear winners and losers. The coworking market across the U.S. grew 23% between 2023 and 2025, fueled by steady increases in remote workers and renewed economic stability. While some emerging markets are experiencing rapid expansion, established hubs continue adding inventory, and a few mature markets show signs of saturation despite strong underlying fundamentals.

• Gilbert, AZ, led all markets with a 160% coworking expansion, adding eight spaces as its workforce grew 9% and remote workers more than doubled from 15,000 to 33,000, reflecting its diverse economy and proximity to Phoenix's talent pool.

• Chandler, AZ, posted the second-highest coworking growth with nine new spaces as remote employees more than doubled to 34,000 and the local workforce expanded 8%, driven by corporate anchors like Wells Fargo and PayPal.

• Newark, NJ, nearly doubled its coworking inventory to 13 spaces by 2025, keeping pace with a 126% surge in remote workers to 8,000. The city's 8% workforce expansion and affordability relative to New York City continue attracting professionals seeking flexible offices.

• Boston, MA, led in remote work adoption with telecommuters tripling to nearly 19% of the labor force, driving a 34% expansion in coworking spaces. Employment rose 1.2% while corporate investments from Hasbro, Amazon, and Lego helped sustain the 16-space addition.

• Austin, TX, added 19 coworking spaces as remote workers nearly doubled from 74,000 to 157,000. The booming tech sector and expansions by Samsung, SpaceX, and Apple fueled workforce growth, positioning the city's 77 total flex offices to serve growing hybrid demand.

The coworking expansion reflects a fundamental shift in how Americans work and where they choose to do it. Markets that combine strong job growth, remote work adoption, and population inflows are seeing the most robust coworking development, signaling durable demand for flexible workspace that extends well beyond pandemic-era experimentation into a permanent feature of the office landscape.

🎙️ THE BEST EVER CRE SHOW
THE ‘TWO AMERICAS’ IN MULTIFAMILY

The multifamily recovery isn't reaching every asset class equally. Andrew Cushman joined Matt Faircloth on the Best Ever CRE Show this week, explaining this phenomenon — and why operators betting on uniform rent growth are setting themselves up for disappointment.

Class A and B properties continue posting gains while Class C assets remain stuck in neutral, creating what Faircloth calls "two Americas." Luxury 4- and 5-Star units absorbed over 429,000 units in 2024 but posted just 0.2% annual rent growth with an 11.4% vacancy rate. Meanwhile, mid-priced assets achieved 1.3% rent growth with a 7.3% vacancy rate.

• Asset class determines trajectory. Class A and B properties are seeing rent growth while Class C remains stagnant. Class B properties posted 1.7% rent increases while Class C managed 3.4% growth in Q2. Markets with positive population growth and limited oversupply could see 2% to 3% annual rent growth in 2026 and 2027 for premium assets, but Class C properties face continued pressure as affordability challenges limit pricing power.

• The divergence is normal, not an anomaly. Class C properties saw the most cap rate compression in Q3 with a 5 bps decrease, representing cap rates expanding back to their historical spread. “That's one of the reasons why those typically trade at much higher cap rates,” Cushman explained. “Because there's more volatility, there's more risk.”

• Experienced operators are choosing sides. Cushman no longer operates in Class C, signaling where capital is flowing. Markets avoiding large supply increases like Detroit (3.2% YoY rent growth), Kansas City (3.0%), and Cleveland (2.8%) outperformed oversupplied Sun Belt markets, where Austin saw rents decline 4.8% YoY. Many troubled deals banking on rent growth to close valuation gaps are concentrated in Class C properties, where rising rents may not materialize.

In short: The market isn't uniformly recovering — it's rewarding quality and punishing age, creating opportunities for buyers who understand which side of the divide offers the clearest path to returns.

🎙️ Listen to Andrew's full episode here.