Good morning. It's Sunday, May 3rd, and in this week's edition, we're covering why CRE prices are climbing in Q1 but the recovery is splitting hard between gateway towers and secondary markets, what Powell's most divided FOMC vote since 1992 signals for borrowing costs through the rest of 2026, and a personal piece on why I was wrong about metal flex buildings outpricing concrete.
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Off-Market: 8% Cap Small Bay Industrial (Will County / Chicago MSA)
Before I take this to the open market, I wanted to give my Value Builder readers the first look at a property I'm getting ready to sell.
I've owned this multi-tenant small bay industrial building in Crete for the last 6 years. It's been a phenomenal & stable asset, but I'm planning to trade up into a larger facility. Because I'd prefer a quiet, straightforward transaction, I'm offering it here first.
It's a 100% occupied, tilt-up concrete building sitting just outside Cook County in Will County - meaning you get the full Chicago MSA density without the Cook County tax burden.
The Numbers:
If this fits your acquisition criteria, just reply to this email and we'll set up a time to talk.
Commercial real estate prices climbed in the first quarter, but CoStar's latest market read shows the recovery is anything but uniform. Office posted the strongest 12-month gains overall, though the headline hides a real split: trophy towers in gateway cities like Boston, New York, and San Francisco are still trading at steep discounts, while smaller deals in non-gateway markets like Dallas, San Jose, and Richmond carried the gains. Industrial and multifamily showed similar patterns, retail kept lagging, and the entire western US declined across every property type. The South led the country.
What it means for CRE: The "office is dead" narrative is wrong, but so is "office is back." This cycle separates trophy gateway towers from secondary-market product. Underwrite by submarket, not by sector headline.
🔗 "I'm Building 43,000 SF of Flex Space at 1/3rd of The Cost": Tyler Cauble walks through the Peerless Mill Warespace deal, breaking down how a 20-year master lease replaces a land purchase entirely, the ML Operator tax election that generated $637K in Year 1 savings, and what it actually takes to execute a structure like this. Watch here
🔗 "Kirk Kerkorian: Building Las Vegas": Niko Ludwig profiles the man who turned $12,000 in wartime savings into a $16 billion empire, bought and sold MGM three times, and reshaped Las Vegas more than any single person in history, all while almost nobody knew his name. Watch here
Powell's final scheduled FOMC meeting as chair ended with a third straight rate hold at 3.5% to 3.75% and the most divided board vote since 1992. The Fed pointed to Middle East-driven inflation, particularly oil, as reason for caution. Powell will stay on as a Fed governor while a federal investigation into Fed renovations completes, and Kevin Warsh's nomination to replace him cleared committee on a party-line vote.
CRE Impact: Cheap money isn't coming back this quarter. Three dissenting members signaled a likely cut at the next meeting, so the next move probably trends down rather than up, but borrowers should plan for current debt math, not the math anyone was hoping for in 2026.
For years I believed metal buildings were the B-team of industrial real estate.
Concrete was the real product, the kind institutions actually wanted to own and the only thing that reliably held value.
Metal was what you put up when you couldn't afford concrete, the pole barn with a glass storefront slapped on the front, the kind of building nobody serious wanted to own.
That was the story I had told myself for years, and last week I found out I was wrong.
I sat down with Cody Payne on the Value Builder Podcast.
Cody has closed more than 1,000 flex industrial transactions and wrote the book on the space, Flex Space Domination.
When he mentioned in passing that his highest price-per-square-foot sales are consistently metal buildings, I stopped him and asked whether I had heard him right.
He said it wasn't uncommon, like he was stating something obvious. The piece I had been missing came down to where the demand actually lives.
Infill industrial, your older concrete product sitting deep in the city, has a ceiling on what it can charge.
The tenant base there is established and has been for decades, made up of contractors, plumbers, and electricians who shuffle between buildings but stay inside the same submarket and chase the lowest rate they can find.
You aren't creating new demand in those neighborhoods, you're recycling demand that was already there.
Drive fifteen or twenty minutes out from the urban core and the picture changes.
New rooftops are going up, new schools are opening, and new service businesses are following the population out to where the people now live. Those tenants need space, they want quality, and they are willing to pay for it.
A modern metal flex building with glass storefronts, better clear heights, and the amenities tenants actually use is selling into demand that didn't exist five years ago.
That was the distinction I had never fully caught. Suburban flex in a growth pocket isn't fighting over an existing rent comp, it's setting the comp from scratch.
I want to be careful here, because I dug into the numbers after the conversation and the picture isn't uniform across the country:
In Sun Belt growth markets like Austin and Nashville, new suburban metal flex is hitting $16 to $19 per square foot NNN, which is a strong number by any measure. That doesn't translate everywhere.
In supply-constrained coastal markets such as Northern New Jersey, Los Angeles, and parts of Chicago, infill small-bay still commands a meaningful premium because the location simply cannot be replicated. Last-mile space holds its value precisely because there is no new last-mile space being built.
The way I'm thinking about flex industrial right now sorts into three groups.
The first is suburban metal sitting in front of a population wave, where new rooftops and new businesses are creating demand the building was designed to serve and rents track the growth curve.
The second is infill concrete in a supply-constrained market, where the irreplaceable location does the heavy lifting and tenants stay because moving isn't really an option, the kind of asset you can hold without worrying about it.
The third is basic metal with no real differentiation, no amenities, and no location story to tell, where the only way to win a deal is to be the cheapest, and that's a race no investor should want to win.
I published a full research breakdown on LinkedIn this week with market-by-market rent comps, cap rate data, and a look at where institutions are actually putting capital.
It’s absolutely worth bookmarking if you’re underwriting any flex deals this year.
Now I want to hear from you.
Cody's experience is heavy in Texas and my research covers the Sun Belt broadly, but I genuinely don't know how this plays out everywhere.
In your market, does new suburban metal flex rent for more than older infill product?
Hit reply. I read every response, and I'll share the best ones in a future issue.
LET ME HEAR IT
Until next Sunday.
Be well,
Saul
P.S. Missed my podcast with Cody Payne? Here is the full episode.
Videos & podcasts: I publish them weekly. Subscribe on YouTube, Apple Podcast or Spotify.
Random Saul Fact: Writing this from Carlsbad, CA. Some places you visit. Some places visit you back. This is one of them.
