🏔️ Why renters are suddenly looking West

👋 Happy Sunday, Best Ever readers! 

In today’s newsletter, renters look West, a $100M fraud, the great AI office paradox, concessions peak, office leasing surges, and much more.

Today’s edition is presented by King Operating Corporation. Private oil and gas offers monthly income, significant tax advantages, and hard-asset exposure outside traditional markets. King Operating's current fund is forecasting a 2.8x multiple on invested capital. Watch their latest market outlook.

🎉 Best Ever Conference XI is now live! Join us March 8–9, 2027, in Dallas, Texas, for a reimagined conference experience built around a 1:1 ratio of GPs and LPs. Learn more.

💡 Ten consecutive years. Every investor paid on time. 850+ units. This Thursday at 1 pm ET, Justin Spillers of Real Estate Alpha walks you through the operation behind it. Save your seat.

Let’s CRE!

🗞️ NO-FLUFF NEWS
CRE HEADLINES

🏦 $100M Fraud: A California investor has been charged with using doctored collateral documents to secure nearly $100 million in CRE loans, triggering a $50 million write-down at Zions Bancorp and litigation at Western Alliance.

📉 Office Pullback: The CMBS special servicing rate fell 51 bps to 10.86% in May, led by office dropping 91 bps to 16.75% and lodging improving 121 bps to 8.45% as resolutions outpaced new transfers.

🤖 AI Paradox: AI firms have signed 11.5M SF of office leases in Q1, a decade-high 23% of all U.S. activity, even as the tech they are building has driven 116,854 sector layoffs YTD, surpassing all of 2025.

🏭 Warehouse Crunch: Industrial value-add investment reached $28.6 billion in Q1, up 36.6% YoY, as new supply fell to 55.7M SF, the lowest quarterly total since 2017, and leasing climbed 18%.

🔑 Concession Peak: Apartment concessions held at 16.9% in May, near the highest level since 2014, with the average discount of 10.9% translating to nearly six weeks free on a 12-month lease, according to RealPage.

🏆 TOP STORY
RENTERS ARE SUDDENLY LOOKING WEST. HERE’S WHY.

Renters are suddenly looking west. For the first time in the history of RentCafe's quarterly engagement tracker, the West led every other region in apartment-hunter interest, placing 11 cities in the national top 30 and sending five newcomers into the rankings. The South, Midwest, and Northeast each gave ground.

The pull is a mix of return-to-office mandates and affordability math. Tech employers in San Francisco and Seattle are drawing workers back, and the renters priced out of those cores are spilling into cheaper neighbors like Oakland and Long Beach. The result is a regional reshuffle that scrambles the usual map.

• The West Surges Ahead: Eleven cities cracked the top 30, the most of any region. Oakland and Spokane anchored the showing, with Oakland posting a 50% YoY jump in saved searches as Bay Area renters chased access at a lower price point.

• The South Holds Its Ground: Nine cities placed, led by Atlanta and Miami, both top-three nationally for a second straight quarter. Miami made its first-ever top-five appearance, vaulting 24 spots to No. 3 as saved searches more than doubled.

• The Midwest Stays Steady: Seven cities landed in the top 30, paced by Minneapolis at No. 1 nationally. Strong healthcare, finance, and tech employment, plus the Upper Harbor redevelopment, kept the region consistently represented.

• The Northeast Thins Out: Just three cities made the cut, but the Bronx debuted in the top 10 at No. 6 after listings added to favorites more than doubled, signaling renter appetite for New York City access without Manhattan pricing.

The cities pulling the most renter attention span seven states and four regions, with no single metro type dominating the list:

1. Minneapolis, MN: Saved searches jumped 35% on the strength of healthcare, finance, and tech anchors.

2. Atlanta, GA: Ranks first nationally for listings added to favorites, holding at No. 2 for the second quarter.

3. Miami, FL: Tops the country in page views as Northeast in-migration continues.

4. Oakland, CA: Saved searches climbed 50% as renters chase Bay Area access for less.

5. Spokane, WA: Posted the second-highest page-view count nationally, drawing cost-conscious Seattle renters.

6. The Bronx, NY: Listings added to favorites more than doubled, the tightest inventory of any market tracked.

7. Long Beach, CA: Saved searches rose 22% on overflow demand from Los Angeles.

8. Cincinnati, OH: Ranks sixth nationally for favorites on a growing tech and startup base.

9. Milwaukee, WI: Vaulted 56 spots, the quarter's biggest climber, on new economic investment.

10. Baltimore, MD: Listings added to favorites surged 163% as D.C. workers widened their commute radius.

THE BOTTOM LINE

Renter demand is following jobs and value in roughly equal measure, and the markets winning attention now are the affordable satellites orbiting expensive cores. For operators weighing acquisitions, the engagement data points toward secondary cities absorbing spillover demand long before it shows up in rent rolls.

🤝 TOGETHER WITH KING OPERATING CORPORATION
WHY MORE REAL ESTATE INVESTORS ARE EXPLORING ENERGY

Energy has become a key focus for wealth advisors, family offices, and sophisticated investors seeking diversification, tax advantages, and income-generating opportunities.

Private oil and gas investments can offer a unique combination of potential benefits, including:

• Significant tax advantages

• Monthly income potential

• Portfolio diversification outside traditional markets

• Exposure to long-term energy demand growth

King Operating structures investments like real estate, with a defined exit strategy that has been successfully executed in the marketplace.

Current Opportunity: KOPIII

• Average annualized distribution rate of 8.6% over the past six months

• Average 2025 K-1 deduction of 84.6% for participating partners

• Forecasted 2.8x multiple on invested capital*

Learn whether private oil and gas investing fits your investment strategy. Please include BEC as the referral source on the form.

💰 CRE TRENDS
OFFICE LEASING JUST HAD ITS BEST QUARTER SINCE 2018

Office leasing came roaring into 2026. Tenants signed roughly 120M SF in Q1, a 25% jump over the same period last year and the strongest quarterly showing since 2018. The number of individual leases signed hit its highest point in a decade.

The recovery is being built on volume, not size. New lease sizes have run about 15% below their late-2010s averages since 2023, held down by cautious hiring and a shortage of large blocks in newer buildings. What's driving the surge is a flood of smaller deals, which tend to carry shorter terms and turn over faster, feeding still more activity.

• The Markets Pulling Ahead: Nearly half of the country's largest office markets have clawed leasing back to within 10% of their 2015 to 2019 averages. Charlotte, New York City, Miami, and San Francisco have already cleared that bar, with banks anchoring the rebound — Citigroup, JPMorgan Chase, and Sumitomo Mitsui have all announced Charlotte expansions.

• The Markets Still Waiting: Atlanta, Washington, D.C., Chicago, Denver, Seattle, San Diego, and Philadelphia remain more than 20% below their prior leasing norms, a reminder that the recovery is far from evenly distributed.

Whether the momentum holds is an open question. The latest analysis points to return-to-office gains plateauing, soft job growth, and rising energy costs tied to the Iran conflict as headwinds that could cool demand through the back half of the year.

🎉 BEST EVER CONFERENCE
BEST EVER CONFERENCE XI IS OFFICIALLY LIVE

We're excited to announce that registration is now open for Best Ever Conference XI! The event will take place March 8 - 9, 2027, at Gilley’s Dallas, one of the city’s most iconic venues.

This year, we're taking a different approach.

Instead of building a bigger conference, we're creating a more intentional one. BEC XI is designed around a 1:1 ratio of GPs and LPs, with networking at the center of the experience.

Attendees will participate in structured GP-LP networking sessions designed to facilitate meaningful introductions, stronger relationships, and more opportunities to do business together.

You'll still get high-level content, expert insights, and the Best Ever community you've come to expect, but with a greater focus on helping the right people connect.

Attendance is intentionally curated, and spots are limited. Use code EARLYBIRD10 for 10% off your ticket.

Interested in one of our 10 sponsorship spots for BEC XI? Reply to this email for details.

🎓 BEST EVER LIVE EDUCATION
A LIVE WALKTHROUGH OF AN 850+ UNIT VERTICALLY INTEGRATED PORTFOLIO

This Thursday, June 18, at 1 p.m. ET, Justin Spillers of Real Estate Alpha is opening up his own 850+ unit portfolio to show you exactly what vertical integration looks like in practice and why it's the structure that keeps investors paid when markets get difficult.

Justin spent a decade as a real estate attorney before building a portfolio generating $800,000+ in monthly cash flow with 95%+ occupancy through every market cycle. And he's showing you his own operation, live.

Can’t make it live? Register anyway, and we’ll send you the replay.

🎙️ THE BEST EVER CRE SHOW
THE INDUSTRIAL EDGE HIDING IN THE LEASE TERMS

Industrial landlords give away more value in a single lease clause than most operators lose in an entire renovation budget. The renewal option — standard in most commercial leases — hands tenants a one-sided exit that costs landlords when the market moves either direction.

On a recent episode of the Best Ever CRE Show, Graham Storey, a commercial broker and industrial investor in Raleigh, NC, joined hosts Ash Patel and Amanda Cruise to break down how he and his partner structure leases to protect upside and why most operators are giving it away without realizing it.

• The Renewal Trap: Renewal options exclusively benefit tenants. If market rents rise to $8 PSF and a tenant holds a renewal at $6 PSF, they exercise it. If rents fall to $4 PSF, they renegotiate. Storey avoids renewal clauses entirely, opting instead for five-year base terms with 3% annual escalations, keeping re-pricing leverage at lease expiration.

• NNN Conversion as Value Creation: Many of Storey's acquisitions carry modified gross leases at below-market rates — a condition most buyers see as a liability. His team treats it as inventory. Converting a modified gross lease to triple net at market rent can reprice a building's value without a single capital improvement.

• The Below-Market Signal: Storey's first filter on any deal is price per square foot relative to market. His second is lease type and remaining term. A month-to-month modified gross lease at $4.50 PSF in a $6 PSF market is the setup — not the problem.

Storey's buy box targets stabilization at a 12% cap rate, with the spread between acquisition basis and stabilized value doing the work. In the Raleigh Triad, where he's been most active, that means buying around $40 PSF in a $60 PSF market and leasing vacant space quickly, evidenced by his team filling two empty buildings within three months of acquisition.

🎙️ Listen to Graham’s full episode here.