The warehouse market is officially back. Prologis posted a record-breaking 2025 with 228 million square feet of leases signed, pushing occupancy to nearly 95%. Southern California led the charge, with LA hitting 42 million SF of deal volume (matching pandemic-era highs) thanks partly to a 615,000 SF Amazon lease. New CEO Dan Letter declared vacancy has peaked and rents are "beginning to inflect." For logistics investors, the post-pandemic demand reset may finally be complete.

Logistics demand is finally turning a corner after years of post-pandemic softness. A new Prologis report flags five metros capturing the momentum: Indianapolis (expanding international cargo routes), Phoenix (absorbing California overflow with Amazon as anchor tenant), Jacksonville (riding east coast port shifts), Columbus (home to Rickenbacker Global Logistics Park expansion), and Savannah (leveraging port growth with aggressive business development). The common thread? Lower land costs, strong transport connectivity, and growing local demand. For industrial investors hunting yield outside primary markets, these five are worth watching.

The Fed seems to be hitting pause. After December's cut brought rates to 3.5–3.75%, J.P. Morgan no longer expects January easing following a solid jobs report. The outlook: rates hold steady through 2026, with a potential hike in Q3 2027. A potential wild card remains as a DOJ investigation into Chair Powell and a pending replacement (frontrunner Kevin Hassett favors lower rates but would need FOMC consensus). For CRE borrowers, don't count on cheaper debt anytime soon.

Chicago's office-to-residential playbook keeps expanding. The City Council approved $57 million in TIF funding for Golub & Co.'s conversion of 30 N. LaSalle, a half-vacant 44-story tower slated to become 349 apartments. It's the latest under the LaSalle Revitalization Initiative, now totaling six projects, $900+ million in investment, and 1,765 new units across 2 million SF of former office space. For investors watching conversions, Chicago's proving the right public incentives can make these deals work.

The other day I was scoping out a single-story office building in Chicagoland. It had potential for a flex industrial conversion.

I talked with the broker on the phone, scrolled through the floors pans/pictures/building specs, and got really good idea about the building before the tour.

Then I said: "This conversion is going to run about $1.25 million."

The broker was a little surprised. He said something like, "you probably need to talk to contractors to know that."

"Yeah, definitely I will, after we go under contract" I said. "But I already know rough numbers. I've done similar projects. Beaver Creek, OH was $35 a foot. I can break that down: $1/SF for demo, $4/SF for flooring, sprinklers at $4/SF, paint $1.5/SF, $3 for HVAC, and so on. This building is 35,000 square feet. Similar scope. So it's $35 a foot again."

Those numbers didn't come from a spreadsheet, they came from my head. 

And it saved me two weeks and hundreds of hours of chasing contractor bids just to find out if this deal even pencils.

Most operators outsource their construction knowledge to contractors.

That's a mistake!

Imagine being a mathematician who can't do multiplication without a calculator. You'd never trust your own work. You couldn't push back when someone gave you a wrong answer.

You'd be at the mercy of whoever hands you numbers.

That's what happens when you don't know your CapEx costs intuitively.

In value-add, CapEx is one of the top three levers (alongside finding good deals and ability to lease efficiently). If you can't estimate construction costs on your feet, you're flying blind. Worse, you can't negotiate. You have no objective basis to say, "That bid is high."

Here's my method (it's not original - operators have used it for decades - but it works):

I break every project down to per-square-foot or per-unit costs. Demo is $1/SF. Interior paint is $1.50/SF. Vanilla box buildout is $30/SF. Electrical submetering is $15,000 per unit. HVAC submetering is $6,000 per unit.

I keep a running cost matrix on my phone (see the image below). 

Every project I do, every bid I receive, I update it. I learn what things actually cost in my market. Over time, those numbers get memorized.

When I walk a building now, I can calculate a ballpark CapEx before I get back to my truck.

The formula is simple:

This isn't about being reckless. One of my mentors told me: "The speed of construction is the speed of decisions." 

You need to move fast, but with conviction, not guesswork.

If you don't use this skill, you lose it. It's a muscle. Keep sharpening it.

I know many of you are seasoned builders and operators. How do you estimate your projects? Do you have your own cheat sheets or systems? What would you add to mine?

Let me know in your reply to this email (I’ll read every one).