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Good morning. Special servicing rates are on the rise again, hitting their highest level since 2013. Trepp’s latest report reveals which property types are under the most stress—and why the office sector continues to drag the market down.

Today’s issue is brought to you by Agora—one solution for all your investment management needs.

🎙️This week on No Cap Podcast, RockStep Capital CEO Andy Weiner breaks down why the retail apocalypse was overblown and how his team is turning forgotten malls into durable cash flow machines.

Market Snapshot

*Data as of 07/10/2025 market close.

SPECIAL SERVICING

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• High-yield farmland: Landmark Mandarin Grove, an 80-acre California citrus property, is now accepting investments from accredited investors. Target net IRR: 11.1%. Target net cash yield: 9.4%. (sponsored)

• Fed focus: Despite rising CMBS delinquencies, the Fed sees stabilizing CRE markets with steady loan growth and tightening credit spreads.

• Price support: Builder-funded mortgage buydowns are propping up US home prices, with Morgan Stanley estimating homes could be up to 12% cheaper without them.  

• Rent rebound: SFR rents edged up 1.7% in early 2025, led by sharp increases in the Midwest and Northeast, even as vacancy rates hit a nine-year high. 

• Inflation uptick: Inflation rose to 2.7% in June as tariffs began pushing up prices on goods like furniture and clothing.

• Style snapshot: An analysis of active US home listings reveals clear trends in how architectural styles differ by price, size, location, age, and appreciation.

• Energy auction: BLM will auction 13 geothermal parcels in California this August to boost clean energy development.

• Million dollar divide: What $1M buys varies wildly, from sprawling barns in the Midwest to modest condos in pricey coastal cities.

• TOPA tension: DC Council postponed a vote on rental reform amid disputes over tenant rights and eviction changes.

• Eastward expansion: Cityview is entering East Coast markets like Boston, Atlanta, and Orlando with a focus on workforce housing.

• Housing overhaul: California will establish a standalone housing agency with a new Affordable Housing Finance Committee, aiming to streamline development processes. 

• Austin in balance: Home listings in Austin have jumped nearly 70% since 2019, signaling a shift toward a more balanced housing market.

• Supply bet: Brookfield bought 53 light industrial buildings for $428M, betting on demand from US onshoring.  

• Urban revival: Cities are easing zoning rules to welcome small-scale manufacturers back into urban neighborhoods.

• AI arms race: Meta plans to spend hundreds of billions on AI infrastructure, building multiple Manhattan-sized data center campuses.

• Build boom: Avison Young says Trump’s new tax and funding law could spark a surge in U.S. industrial development. 

• Chicago conversion: Bridge Industrial plans to buy and demolish Chicago’s Ford City Mall, replacing it with a $150M, 913K SF logistics campus.

• Vacancy uptick: Vacancy ticked up to 4.3% in Q2 as leasing slowed and rents edged down, but supply remains tight.

• Asset chase: Retail real estate investment is surging, with $24.6B in sales through May and institutional capital returning aggressively, especially for grocery-anchored and value-add centers.

• Maker movement: Zoning changes are fueling a rise in artisan businesses, reshaping urban retail and industrial space.

• Securitized subs: Jersey Mike’s is issuing $400M in asset-backed securities tied to franchise fees and trademarks, aiming to return capital to majority owner Blackstone.

• AI disruption: AI is driving companies to lease less space, favor flexibility, and prioritize high-quality, collaborative offices.

• Tall ambitions: Hines is planning the West Coast’s tallest tower in San Francisco, signaling optimism despite high office vacancies. 

• Distress watch: Savanna missed the maturity deadline on a $463M loan tied to 5 Bryant Park, as rising costs and falling income put the Midtown tower’s debt underwater.

• Leadership tension: The White House is ramping up efforts to oust Jerome Powell, citing the Fed’s $2.5B HQ renovation as potential cause.

• Hotel hotspot: New York City’s hotel market continues to outperform the nation with high occupancy and strong revenue.

A MESSAGE FROM WARESPACE

We’re deploying $500M to acquire industrial properties.

WareSpace is the next generation of small-bay industrial—co-warehousing designed for small and growing businesses. One simple monthly payment covers everything: property tax, utilities, equipment, racking, shared-kitchens, conference rooms, etc. The kind of features small businesses actually want.

We’re actively acquiring flex, industrial, office, and big box retail properties (50K–250K SF) with $500M in capital ready to deploy.

We’re targeting:

• Immediate or near-term vacancies

• Class A–C assets with loading docks or drive-ins

• Transitional properties that need capex

All-cash closings. Fast timelines. And now offering a $1/SF broker bonus on every deal.
Yes, you read that right—$1 per square foot as a direct broker incentive, on top of standard market commissions. Offer valid for all deals closed before 12/31/25.

Have a deal? Send it to VP of Acquisitions, Jeff Jenkins at [email protected].

We close fast, pay cash, and move quickly. Let’s make a deal!

*This is a paid advertisement. Please see the full disclosure at the bottom of the newsletter.

📈 CHART OF THE DAY