👋 Hello, Best Ever readers! We’re on the ground in Salt Lake City for BECX this week, and if you’re not here, you’re missing out. Stay tuned for a full conference recap next week as we celebrate our best conference yet.
In today’s newsletter, landlords lose leverage, affordability spikes, delinquencies soar (again), Texas does data, and much more.
Let’s CRE!
🏠 Affordability Spike: Rent affordability has reached a four-year high as the typical U.S. household now spends 26.4% of income on rent — the lowest share since 2021 — with Zillow forecasting multifamily rents to remain flat and single-family rents to rise just 1.1% in 2026.
🗳️ Rent Control Clash: Massachusetts Democrats have split over a ballot measure that would cap annual rent increases at inflation or 5%, with 63% of voters in support, while Governor Maura Healey and real estate groups warn the policy could slow housing production and depress property values.
💻 Crypto Caution: More than 10,000 investors have poured $356 million into tokenized real estate assets, with Deloitte projecting $4 trillion in tokenized real estate by 2035. But experts warn the unregulated market has attracted fraud, citing a platform accused of raising $2.6 million for Detroit properties it didn't own.
🏗️ Data vs. Housing: Big Tech's AI infrastructure buildout has driven land prices near Dallas from $40,000 to $350,000 an acre in three years, while data centers outbid home builders across Northern Virginia, suburban Chicago, and Atlanta as the AI land rush reshapes development priorities nationwide.
🏭 Industrial Reset: National industrial vacancy held at 7.4% in Q4 2025 as new starts slow and motivated sellers re-enter the market, leading one expert to call it “a much more attractive period” for investors than the tailwind-driven run of the past two to four years.
Over the last few years, in the wake of the pandemic, landlords have held most of the cards. Rents climbed, vacancies stayed razor-thin, and tenants in most markets had little choice but to accept whatever terms were on the table. Now, that dynamic has quietly but decisively reversed.
Across the 50 largest U.S. metros, average rental vacancy climbed to 7.6% in 2025 — up from 7.2% a year earlier — pushing 44 markets into renter-friendly or balanced territory, according to Realtor.com's January Rental Report. The national median asking rent fell 1.5% YoY to $1,672, marking the 29th consecutive month of annual declines and a cumulative 4.8% drop from peak, leaving only six metros that still clearly favor landlords.
The supply wave that defined pandemic-era construction is now fully visible in the numbers. Sun Belt markets that attracted billions in investment capital are now granting tenants significant negotiating room, while coastal holdouts continue to defy the national trend.
San Jose is the No. 1 landlord market. With vacancy at just 3.5% and median asking rent at $3,319 — the highest of any tracked metro — San Jose remains the tightest market in the country. Rents rose 1.9% YoY, a stark contrast to the national decline. Boston, New York, Providence, and Riverside round out the landlord-friendly group, all holding vacancy below 5%.
Sun Belt markets are bleeding landlord leverage. Austin's vacancy surged from 8.2% to 13.8% as asking rents fell 7.3% to $1,358, one of the sharpest single-market corrections in the report. Dallas–Fort Worth vacancy hit 10.5% with rents down 2.5%, Houston hit 11.4% with rents down 2.3%, and Orlando and Tampa both sit between 9% and 11.4% vacancy. These are markets where investors priced in durable population inflows and are now absorbing the cost of that bet.
Milwaukee is the cautionary tale. Vacancy more than doubled in a single year, jumping from 4.9% to 10.8%, the sharpest swing in the report. Yet median asking rent is still up 1.2% YoY to $1,630, suggesting landlords haven't fully repriced yet. Denver, Sacramento, and Washington, D.C., all shifted classifications downward as well, illustrating how quickly market conditions can flip even in previously stable metros.
Not every market is following the national script. Pittsburgh and Richmond — affordable, job-rich metros — actually tightened, with vacancy compressing and rents edging up as out-of-market renters seek relief from higher-cost cities. Kansas City and Virginia Beach show rents rising even with vacancy above 7%, proving that local demand drivers can override headline numbers.
With 44 of the 50 largest metros now classified as renter-friendly or balanced, the leverage that defined multifamily investment for much of the past decade has largely evaporated. For investors underwriting new acquisitions or refinancing existing assets, the question is no longer whether the market has shifted — it's which of the six remaining landlord-friendly markets can hold the line, and for how long.
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The delinquency rate for office loans in CMBS climbed to a record 12.34% in January — the highest since Trepp began tracking in 2000 — as lenders abandon "extend and pretend" strategies, with more than half of the roughly $100 billion in CRE loans due this year unlikely to repay at maturity.
Texas has 6.5 GW of data center capacity under construction — nearly double Virginia's 4 GW in the pipeline — and JLL projects the Lone Star State could surpass Virginia as the largest domestic data center market by 2030, driven by abundant land, energy resources, and a business-friendly environment.
U.S. retail vacancy is expected to peak at just under 4.4% before easing in late 2026 and into 2027, according to CoStar. Full-year net absorption is forecast at just over 16M SF — the third-lowest annual demand in a decade, behind only 2020 and 2025.
U.S. housing starts rose 6.2% in December to a seasonally adjusted annual rate of 1.404 million, topping forecasts of 1.310 million. Multifamily starts led the month with a 10.1% MoM jump, though both single-family and multifamily starts remain down YoY.
Student housing has a reputation problem. Mention it to a multifamily investor, and they picture kegs in living rooms and security deposit nightmares. But Zach Feldman, founder of Aptitude Real Estate, joined Matt Faircloth on the Best Ever CRE Show this week to make the case that purpose-built student housing is quietly outperforming conventional multifamily on one of the metrics that matters most: rent per square foot.
The secret is bed-bath parity — the industry standard where every bedroom comes with its own private bathroom. Combined with renting by the bed rather than the unit, it fundamentally changes the revenue math.
The per-bed premium is real. Feldman's four-bedroom units run 1,200–1,400 SF and lease for $1,200–$1,800 per bed, depending on the market. At the high end — think University of Michigan — that translates to $6–$7 PSF monthly. Compare that to workforce housing typically fetching $1.10–$1.30 PSF, and the gap is stark.
More bathrooms means more revenue per unit. A conventional two-bedroom might have one and a half baths. Feldman builds two-bed, two-bath minimum and scales up to five-bed, five-bath townhouse units. Each additional bathroom is additional monetizable space that conventional multifamily simply doesn't capture.
Individual leases de-risk the rent roll. Each resident is only responsible for their own bedroom's rent. Parents act as guarantors on individual beds, not the full unit, reducing exposure and making collections more straightforward than a single joint lease covering four tenants.
Expense ratios are comparable; yields are better. Operating expenses run in the low 30s as a percentage of revenue — similar to conventional multifamily — but the revenue base is significantly higher per square foot, which is where the return advantage compounds.
Student housing's reputation as a headache asset obscures a straightforward financial case. When you lease by the bed, enforce bed-bath parity, and target the top 20–25 enrollment-growth universities, the rent-per-square-foot math looks less like residential real estate and more like short-term hospitality, without the nightly volatility.
🎙️ Listen to Zach's full episode here.
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— Joe Fairless
