⛽️ Why everyone's suddenly in on gas stations

👋 Hello, Best Ever readers!

In today’s newsletter, gas stations take off, juggernauts cut jobs, the Fed cuts rates, CRE sales surge, and much more.

🎃 BOO! Best Ever Conference tickets go up at midnight TOMORROW. 48 hours left to lock in your BEC X experience at the lowest possible rates. Get yours today.

🔓 Most alternative investments still correlate with the broader market. But algorithmic currency trading doesn't. Join us on November 6th at 3 pm ET to learn how systematic trading strategies can strengthen your portfolio. Save your seat.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

✂️ Fed Cuts: The Fed delivered its second consecutive quarter-point rate cut on Wednesday, lowering the overnight rate to 3.75%-4% amid rising layoffs and shutdown concerns. Mortgage rates hit a one-year low at 6.19% last week.

🏘️ Renter Leverage: National apartment rents fell 0.3% in September, the steepest drop in 15 years, as surplus supply takes longer to absorb. Landlords offered concessions on 37% of rentals — a record for September — while youth unemployment at 9.2% threatens demand.

💎 Luxe City: Detroit claims the No. 1 luxury housing market spot with 90th percentile prices at $721,625, far below the national average of $1.24 million. Listings average just 57 days on market, outperforming the 78-day national average.

💰 Dry Powder: Multifamily attracts nearly 60% of investor dry powder as YTD sales volumes reach the highest levels since 2022. Private buyers make up 51% of acquisitions while institutions and REITs account for 36.8%, with Texas leading at $6 billion in sales.

📉 Price Floor: San Antonio operators have cut rents 5.8% YoY to $1,172 monthly — the nation's most affordable large market — as occupancy fell to 92.5%, the lowest among top 50 markets, according to RealPage. Supply hit 12,900 units in early 2025 while 28% offer concessions.

🏆 TOP STORY
WHY EVERYONE’S SUDDENLY IN ON GAS STATIONS

One unlikely asset class has been turbocharged in recent months. Since 100% bonus depreciation became permanent in July under the One Big Beautiful Bill Act, gas station and convenience store investment sales have surged 27%, far outpacing the 17% increase in overall retail investment sales.

The Biggest Reason: The tax break allows investors to deduct the full value of equipment improvements or purchases upfront instead of spreading depreciation over 39 years — a massive benefit for equipment-heavy assets like gas stations.

Here’s a rundown of why gas stations are suddenly hot:

• Immediate Tax Benefits: Investors can deduct full depreciation for everything except land in Year 1, and gas stations' underground storage tanks, submersible pumps, and other equipment make them especially tax-advantageous.

• Extended Viability Timeline: EV battery production tax credits now end in 2028, and Biden-era transition mandates were overturned, pushing the timeline for EV market dominance well past 2035.

• Recession-resistant: Gas stations are viewed as essential, day-to-day businesses that don't require predicting economic cycles.

• Competition Intensifying: Bonus depreciation is making buyers more aggressive on pricing, compressing cap rates and creating more willing sellers.

Demand is coming from high-net-worth investors, REITs, new investment funds, and repeat buyers. Senior housing developers and multifamily operators with older portfolios that have already taken full depreciation are particularly active, using gas stations as a one-time tax benefit play.

The frenzy mirrors the 2021-2022 environment during the last period of 100% bonus depreciation, but with more inventory available. REITs, funds, and individuals who bought car washes over the past five to seven years are now looking to exit, many through 1031 exchanges. The increased supply of sellers, combined with tax-motivated buyers, is creating a robust transaction environment.

*One Caveat: The tax benefits aren't automatic. About 25% of gas stations use ground-lease structures that don't qualify, and convenience stores must derive over 50% of revenue from petroleum to qualify as 15-year depreciable properties.

THE BOTTOM LINE

Gas station buyers are racing to close before the year’s end to get 100% depreciation on their books for 2025. For investors with existing portfolios seeking tax offsets, gas stations offer unique benefits. And though they require specialized expertise to navigate the complexities, the potential upside may justify the effort.

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💰 CRE BY THE NUMBERS
SALES SURGE, JUGGERNAUTS CUT JOBS, AND MORE

💰 $307.2 Billion 

U.S. investment sales recorded 20,594 transactions totaling $307.2 billion through Q3, putting the market on pace for 9.1% growth in transaction count and 4.8% increase in dollar volume compared to 2024 as strong Q3 performance drives recovery.

💼 14,000 Jobs 

Amazon announced 14,000 corporate job cuts with plans to eliminate 10% of its white-collar workforce as AI adoption accelerates across major employers. UPS reduced management by 14,000 positions over 22 months while Target cut 1,800 corporate roles, leaving nearly two million Americans jobless for 27+ weeks.

📈 $827 Billion 

Commercial and multifamily lending is forecast to reach $827 billion in 2025, a 24% jump from 2024, with multifamily accounting for $417 billion as Fed rate cuts fuel recovery. MBA projects that growth will slow by 2027, with total originations dropping 6% to $781 billion.

🏢 180,585 Units 

Apartment conversion projects surged to record levels with 180,585 units in development from repurposing offices, hotels, and other buildings, up 19% YoY. Nearly 25,000 apartments were completed via adaptive reuse in 2024, double the 2022 total, as office conversions accounted for 43% of the pipeline.

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🏘️ DEAL OF THE WEEK
FROM CLASS C TO B AND 2X PROPERTY VALUE IN 5 YEARS

Victor Collazo and the team at Extraordinary Assets are converting this property from Class C to Class B and are projected to nearly double the property value within five years.

Here's how they’re doing it 👇

🏢 Property details: This 92-unit Class C building is located in Wichita, Kansas, and was purchased in June 2024.

💸 Finances: The team acquired the property for $5.45 million. They raised $2.9 million in capital and secured a loan at 7.37% interest, 30-year amortization, 10-year term, 2 years interest only.

💼 Business plan: The plan is to convert the property from Class C to Class B and hold for five years. Interior upgrades include new or refaced cabinets, new black appliances, resurfaced countertops, new paint, new blinds, and new flooring. Additional repairs included exterior siding, fencing along the property line, decks and stairs, and landscaping.

🍾 Results: The team plans to sell or refinance the property in 2029 and estimates the value will be $8.5 to $9.5 million. Projected returns include:

• 1.9-2.1x Equity Multiple

• 7%-9% CoC

• 18%-21% AAR

• 15%-17% IRR

💪 Biggest Challenge: “The biggest issue was taking over a property that was not maintained very well,” said Collazo. “Since the time of purchase, we also had to deal with one fire, three floods, two deaths, and one hit-and-run. So, we should have raised more capital for operating reserves.”

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