💸 Why renters are ditching affordability

👋 Happy Sunday, Best Ever readers!

In today’s newsletter, renters trade up, AI sparks panic, renewals rise, the MHP window closes, and much more.

Today’s edition is brought to you by Tribevest. Independent Capital Aggregators (ICAs) who treat capital raising like a business raise more — with less friction. If you’re attending Best Ever Conference, come see how Fund of Funds can help you aggregate capital across deals and asset classes. 👉 Book time with Tribevest

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

🤖 AI Panic: CRE stocks suffered their sharpest sell-off since 2008, with CBRE down 26% over two days — despite CBRE reporting quarterly profit up 15% YoY —and office REITs falling 6.7% over AI disruption fears.

🏛️ Fannie & Freddie: Republicans have introduced legislation to end the 18-year conservatorship of Fannie Mae and Freddie Mac, potentially opening the door to a $30 billion IPO while codifying post-recession safeguards and tying conforming loan limits to median income.

🔄 Renewals Rise: Multifamily renewal lease rate growth outpaced new lease trade-outs by 6.1% in Q4, marking the widest gap since Q1 2010 as landlords increasingly prioritize tenant retention and durable cash flow over aggressive new leasing.

🏢 Office Repricing: Office deal volume jumped 21% YoY in 2025 as prices fell 32% from 2021 peaks, with seven consecutive quarters of positive absorption bringing national vacancy down to 16.3% and occupancy climbing toward pre-pandemic levels.

📊 Multifamily Stall: Major apartment REITs expect operating expenses to climb 2.7% in 2026 while rents grow less than half a percent, with Mid-America Apartment Communities projecting same-store NOI to decline 0.75% despite limited new supply and strong renewal rates.

🏆 TOP STORY
RENTERS ARE DITCHING AFFORDABILTIY FOR CLASS A

For years, apartment operators have chased rent growth as the primary lever for value creation. But something unexpected is happening: Renters are choosing to upgrade to better properties rather than stay put in cheaper units. Income growth has doubled rent growth since 2023, giving renters enough breathing room to prioritize where they live, not just whether they can afford it.

Class A occupancy rose 25 bps over the past year while Class B and C properties struggled — a divergence that signals a fundamental shift in renter behavior. When leases come due, qualified residents aren't fighting to stay in their current units. They're trading up the quality spectrum, and the data confirms that it's systematic.

• Concession rates fell 40 bps in December for Class A units alone, double the overall market decline, as properties no longer need to sweeten deals to attract tenants.

• Class A lease trade-outs reversed in December for the first time, signaling renters are staying put or trading within the Class A segment while Class B and C residents churn out.

• Contacts, visits, and applications rose 5% in December, with the top of the leasing funnel pointing toward spring momentum concentrated in better assets.

The insight is counterintuitive. In a softening market, focusing on quality isn't defensive — it's offensive. Class A assets attract renters with better credit, higher incomes, and longer lease horizons. That means lower turnover, higher renewal rates, and pricing power without losing residents.

Operators managing Class B and C properties face a different reality. The traditional playbook of adding amenities and pushing rents doesn't work when renters can simply upgrade. These properties must justify their positioning through exceptional management or accept lower rent points relative to competition.

THE BOTTOM LINE

Renters trading up is the story beneath the headline. National occupancy looks stable, but composition is shifting decisively toward quality, creating distinct winners and losers by asset class. The operators who recognize this shift early will win.

🤝 TOGETHER WITH TRIBEVEST
GET THE FUND INFRASTRUCTURE TO HELP YOU SCALE

Independent Capital Aggregators (ICAs) don’t win by raising for one deal — they win by building a system.

Tribevest supports ICAs with Fund of Funds infrastructure that allows you to:

• Aggregate capital professionally

• Work with multiple Sponsors

• Create a better experience for investors

• Raise capital again and again without starting from scratch

At Best Ever Conference, Tribevest will be:

• Demoing their newest platform updates

• Walking through how ICAs structure Fund of Funds

• Answering questions about compliance and investor onboarding

• Creating FREE deal pages to help you gather interest for active or upcoming deals

If you’re serious about scaling your capital raising efforts, set up a meeting.

💰 CRE TRENDS
CAP RATE STABILZATION SIGNALS THE END OF REPRICING

U.S. CRE cap rates leveled off in the second half of 2025 after months of volatility, signaling that the market has moved past price discovery and into selective risk-taking. Transaction volume surged 19% over the past year as lenders re-entered with healthier loan-to-value ratios, and most investors now expect cap rates to hold steady or compress — a reversal from earlier predictions of further increases.

• Multifamily markets showed the most movement in the second half of 2025, with coastal and select Midwest markets tightening modestly at the lower end for Class A stabilized assets, while secondary markets like St. Louis and Orlando demonstrated marginal tightening alongside suburban and value-add properties settling into narrower ranges.

• Office yields remain elevated but stabilization is appearing in downtown Boston and Washington, D.C., where cap rates held steady or tightened slightly, while suburban office shows signs of stability in key markets despite remaining wide.

• Industrial cap rates stayed relatively tight and stable in gateway markets, reflecting continued investor confidence, while retail neighborhood centers tightened slightly in the Midwest and Northeast, with Southern and Western markets holding mostly steady.

• Lenders re-entering the market pushed the CBRE Lending Momentum Index above its five-year average as capital flowed back toward properties where income durability is clearest, with investors shifting away from macro timing and toward careful submarket selection.

The plateau marks the end of the repricing cycle. For investors, it's less about predicting the next move and more about targeting stabilized assets in markets where risks are now clearly defined.

✍️ BEST EVER BLOG
THE MOST DANGEROUS SIGNAL FOR CAPITAL RAISERS

When investors say they're "interested" but don't commit, your capital raise is in danger. Interest is cheap—it costs nothing to request a deck or schedule a call. Commitment requires trust.

Most operators lead with the deal itself, forcing investors to reverse-engineer confidence from spreadsheets. This creates delay, not momentum. When investors can't clearly see how you think and operate, they default to "keep me posted"—limbo where capital raises quietly die ⚠️

The fix isn't more slides. It's removing friction by making your judgment and consistency visible upfront. Strong interest without clarity isn't progress—it's a warning sign. 💡

In this blog, Marcin Drozdz of M1 Real Capital discusses why investor "interest" without commitment signals a stalled capital raise—and how to fix it.

🎙️ THE BEST EVER CRE SHOW
MOBILE HOME PARKS ARE STILL HOT … FOR NOW

The mobile home park sector is attracting serious capital from multifamily operators fleeing competitive markets. Supply is declining, affordable housing demand is growing, and depreciation schedules offer meaningful tax benefits. 

But the window to find quality secondary market deals at reasonable prices is closing. Consolidation is accelerating, institutional capital is moving in, and operators with seasoned track records estimate investors have roughly five years before the landscape shifts dramatically.

Amanda Cruise, co-founder of Voyage, has acquired 12 manufactured home communities totaling over 300 pads, with six deals gone full cycle since 2019. She joined Pascal Wagner this week for a special edition of the Best Ever CRE Show to discuss what actually works, and where newer operators are getting blindsided.

• The Rent Growth Trap: Operators who jump rents too aggressively on legacy tenants face resident churn, homes coming back to the park, and vacancy spikes. $250-to-$400 rent increases in 18 months don't work the way they might in multifamily.

• Park-Owned Homes: Many operators inherit park-owned homes and struggle to manage them. HVAC replacements alone cost $5,500 per unit. The better strategy is selling or financing these properties to residents quickly and collecting lot rent instead.

• Institutional Capital Misconceptions: New investors often assume partnering with large PE firms provides better outcomes. Emerging managers who've weathered multiple cycles and answer directly to investors offer more flexibility and accountability than distant institutional capital.

Investors evaluating mobile home park deals should focus on market fundamentals first — population growth, diversified job centers, and relative housing affordability matter more than operational optimization, and buying in the wrong market or making these three mistakes will destroy returns regardless of execution quality.

🎙️ Listen to Amanda's full episode here.