Good morning. It's Sunday, Feb. 22, and in this week's edition, we're covering CRE debt distress at 2013 levels, Indiana's $5B stadium pitch for the Chicago Bears, the Supreme Court's Trump tariff ruling and what it means for Fed rates and CRE, and why the smartest investors treat brokers like their most valuable repeat customers.
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The "extend and pretend" era is officially over. Lenders are calling in tens of billions in troubled CRE loans, with office CMBS delinquencies hitting a record 12.34% in January (the highest since Trepp started tracking in 2000). More than half of the roughly $100 billion in CMBS loans maturing this year are unlikely to repay at maturity, according to Morningstar DBRS, down sharply from a 75% payoff rate in 2024-2025. Close to $25 billion in CMBS loans are now sitting past maturity without resolution, a level not seen since 2013. The silver lining: industrial and grocery-anchored retail continue to perform, and CMBS issuance hit $125.6 billion in 2025 (up 21% year-over-year). For investors with dry powder, the distress cycle is creating opportunities, but the window to cherry-pick quality assets at a discount won't stay open forever.
The city of Portage, Indiana, launched a long-shot bid to lure the Chicago Bears with a $5 billion stadium proposal called Halas Harbor. The 300-acre project would be offered rent-free to the team, contingent on a move across state lines. Financial Pivot Unlike Chicago's tax-heavy stadium debates, the Portage plan claims "zero taxpayer burden." Led by businessman Lou Weisbach, the project would be fully privately financed, with investment recouped through non-football revenue. The pitch arrives as the Bears express frustration over tax and infrastructure hurdles at their Arlington Heights site. The move could shift billions in ancillary development—retail, hospitality, and residential—from Illinois to Northwest Indiana. While Arlington Heights remains the frontrunner, Indiana's "debt-free" offer creates significant competition.
Supreme Court Strikes Down Trump Tariffs: Fed Path Clouds Over A 6-3 ruling on Friday found the Trump administration lacked authority to bypass Congress and impose sweeping tariffs. The decision cancels billions in duties, potentially forcing $175B–$200B in refunds to importers.
The ruling upends Federal Reserve inflation modeling. While the "tariff reset" provides a disinflationary impulse—opening the door for summer rate cuts—the prospect of massive refunds acting as a $200B fiscal stimulus complicates the path. The 10-year Treasury yield climbed to 4.1% as investors weighed increased bond auctions to finance these refunds.
CRE Impact: The decision offers a "double tailwind" for commercial real estate. Lowered duties on steel and aluminum are expected to reduce building costs by roughly 4.6%, reviving stalled projects. However, yield volatility continues to pressure refinancing for office and multifamily assets.
Most investors obsess over finding deals direct to seller.
They try direct mail, cold calls, skip tracing, every trick in the book to avoid paying a broker.
That’s a big mistake!
A great broker isn't a cost. They're your best repeat customer, someone who keeps bringing you inventory, vouches for you with sellers, and makes sure you see the deal before anyone else does.
I sat down with one of the sharpest small-bay industrial brokers in Southwest Florida at our Newport Beach Industrial IQ Bootcamp to break this down. His framework was simple and I haven't forgotten it:
Credibility first, likability second, compensation third.
Most investors flip that order. They lead with money and wonder why brokers don't call them back.
CREDIBILITY IS YOUR RESUME
Your reputation takes 10 years to build and one deal to destroy.
The biggest credibility killer is bailing on deals. I once committed to a broker to buy a former FedEx cross-dock facility in Franklin, Wisconsin (47,000 sq ft, $2M).
The city killed my conversion plan entirely.
I made zero dollars finding a developer to take it down instead, but I kept the relationship. That was worth far more.
It’s also important to give feedback fast. When a deal doesn't fit, respond within 24 hours and show your work.
Walk them through your underwriting and educate them on your buy box. You stop being a random buyer and start becoming the person they call first.
LIKABILITY IS UNDERRATED
Be someone brokers actually want to talk to.
We do quarterly luncheons (Off Market Chicago) with our top broker relationships, sometimes bringing in lenders or other market participants. Deals get discussed and referrals happen naturally.
No one feels sold to.
You want to be the name that pops into their head on the drive to a listing appointment.
COMPENSATION (DONE RIGHT)
Never chisel a broker's commission.
Saving $25K to annoy the person controlling your deal flow is a terrible trade.
Pay them the full fee. When the deal warrants it (for example, on a hot deal in a multiple-offer situation), add a 1% buyer's broker consulting fee on top.
For the rare broker who becomes a true partner, one who is handling leasing or other owner responsibilities and working alongside you, consider a phantom equity structure.
We use 3% to 5% profit share tied to NOI targets.
We did this with one of our Fort Myers brokers. He hit his lease-up numbers and walked away with over $350K across his leasing commission, disposition fee, and profit share.
We don’t think of it as a cost, we think of it as better leverage.
When a broker passes you a deal that doesn't fit , how many of them get a real, thoughtful response from you explaining why?
Or does their email just disappear and they never hear from you?
Do you have a list of your top 10 or 20 brokers that you're in consistent, intentional communication with? If not, when are you going to build it?
And when did you last take a broker to lunch? Not to pitch, just to build the relationship.
Hit reply and tell me where you are with this.
I read every response. If you're stuck, I'll point you in the right direction.
LET ME HEAR IT
Until next Sunday.
Be well,
Saul
P.S. Missed my podcast with Justin Goodin? Here is the full episode.
Videos & podcasts: I publish them weekly. Subscribe on YouTube, Apple Podcast or Spotify.
Random Saul Fact: This week I got to explore India with a great group of friends — that's the Himalayas behind us.
