Good morning. It's Sunday, August 16th, and in this week's edition, we're covering Chicago industrial printing its first $8 net rent while Class B and C flatten, the 68% odds markets now put on a September Fed hike, and how I stopped retraining AI every week on my deals.
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Chicago industrial just printed its first $8 net rent. Average asking net rents topped $8 per square foot in Q2, a market first, on roughly 25 million square feet of first-half leasing. The demand mix flipped: big box outpaced small-bay infill on net-new absorption, Class A rents kept climbing, and Class B and C plateaued or slipped from where they sat a year or two ago. Tenants are buying operational efficiency above all - power for automation, trailer parking, labor access - with the deepest activity in the 50,000 to 150,000 square foot range and 500,000-plus requirements back on I-55 and I-80. Under 15 million square feet is under construction market-wide, and single-tenant net lease cap rates tightened about 25 basis points year over year. Read the record for what it is. That $8 is a Class A number, not a market-wide one, and with construction this thin the gap between good product and average product keeps widening.
"The Retail Apocalypse Is A Lie": Tyler Cauble sits down with James Cook, who runs retail research for the Americas at JLL, to take apart the retail collapse story. Retail vacancy is sitting at 4.4%, close to industrial, with almost no meaningful new supply delivered since 2008. They get into the barbell economy hollowing out mid-tier retail, which tenants should worry you on a rent roll, which ones justify paying up, and how Chick-fil-A picks its sites. Watch here
"Life of an apartment complex owner": Ben Mallah walks through what owning an apartment complex actually looks like, unedited. Deferred maintenance, problem tenants, the gap between the pro forma and what gets collected, and what is left after the loan and the management fee. Mallah puts real numbers on camera more often than anyone else in this space, and that is the reason to watch it. Watch here
Futures traders now put a September hike at 68%. The Fed is boxed in from both sides, per Deloitte's latest weekly read. The committee held on July 29 with a 9-3 vote, called activity solid and inflation still elevated, and Kevin Warsh said impatience about moving sooner "was not warranted." Markets didn't buy the patience: 89% odds of at least one hike before year end. Oil climbed on Middle East tension and 30-year Treasury yields hit their highest level since 2007. The labor side is pulling in the other direction - payrolls fell 23,000 in July, wage growth slowed to 3.2% a year against 3.5% inflation, and participation dropped to 61.4%.
CRE Impact: Long-term rates set what you pay to borrow, and they are at a 19-year high while the Fed is still openly talking about hiking. Nobody is getting rescued by cheaper money this year. Price the deal off today's rate, and if you are counting on a lower rate at exit, cut that assumption out and see if it still works.
There's a lot of AI slop out there right now. I'm going to try to make this email the opposite.
I'm going to share how I built a framework for running acquisitions inside Claude Cowork. Now nothing about the property gets lost. Every task I teach it, it keeps, and it gets sharper every week. When I open the next property, it already knows everything I taught it on the last one. No reteaching. This isn't technical, I promise. It's just a different way to work with AI on long projects like an acquisition or a due diligence, so the training compounds instead of starting from scratch.
Here's what used to happen. For example, I'd ask it to abstract a lease. It'd hand me back some AI crap. I'd give feedback. Wrong again. Ten rounds in, it finally did it my way. Then the chat would get too long and forget what we agreed on at the top. And none of that training came over to the next property project. Back to round one.
So here's how I solved it. I stopped working in the chat app and moved to Claude Cowork, which runs off my own Mac, out of my Documents folder. Every property gets a folder. Inside: an index file that tells Claude where everything is, plus three subfolders. Reference, Skills, Outputs.
The index tells it what's here, what to trust, and which job to run when. It's the memo you'd hand a new analyst on day one. Here the analyst is Claude, and the index is the "master SOP" pointing to every skill, aka SOP, underneath it.
Reference is everything about the deal. Purchase agreement, title work, rent roll, inspection report. And every conversation. Tenant interviews, Zoom calls, the planner, the fire marshal, the sprinkler guy. I drop the transcripts in, and a task runs every day that pulls any email about the property into the same place. The context stays current.
That one is quietly the biggest win. Your deals stop moving smoothly a lot of the time because you're waiting on information that already exists somewhere. A document, a call from two months ago, an email nobody remembers. Now I ask the AI and have it in thirty seconds instead of waiting two days for someone to confirm.
And Skills is where the knowledge compounds. Every week I teach it my way, and it moves out of my head and onto my Mac, where it gets a little better each time. The first time I taught it to abstract a lease took an afternoon of corrections. Now it already knows my way, instantly, on every lease since. Proforma, zoning research, critical dates, weekly update, same thing. Due diligence is 40 to 70 tasks. Each one gets taught once instead of every time, and none of them start from zero anymore. And some of them Claude now runs on its own without me asking.
Outputs are the files Claude produced in that project. Pretty much anything digital. The PSA, the LOI, redline comments, proformas, decks, debt memos, emails. This compounds too. Every week a few of them get a little better, and that better version is where the next property starts.
Now when I get a new deal, I make a folder for it on my computer, start a new project in Cowork, and tell Claude to wire in the skills from the last one. Forty-five seconds later that deal has an analyst who already knows how I underwrite and how I run an acquisition due diligence. And when a new model comes out next spring, ChatGPT or Gemini or whoever is faster and better, I point it at the same folder. It's up to speed instantly. Nothing to retrain. And this analyst doesn't quit after five years and walk out the door with everything you taught it. That knowledge is on your computer.
Try this framework. Index, Reference, Skills, Outputs. It works for me, and it'll work for you.
That's it for this week. Hope it helped.
And if it did and you feel like giving something back, we've got a giving back project going. In October we're building a house in Ensenada, Mexico for a family that lost their dad. They're having a hard time right now. If you'd like to donate, you can do it here.
Hit reply with the word INDEX and I'll send you mine.
Not to copy, just so you can see what one looks like before you write your own. And if you've already built something like this, tell me what's in yours.
I read every one.
LET ME HEAR IT
Until next Sunday.
Be well,
Saul
P.S. Missed my podcast with Nicolas Lares? Here is the full episode.
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