The Sun Belt multifamily gold rush is officially cooling off. A recent report shows Americans ditching pandemic-era hotspots like Florida and Arizona for smaller, affordable markets (Oregon topped the list for the first time). BGO's Ryan Severino warns investors got caught flat-footed: 2024 saw the highest new multifamily inventory in 50 years, and many who fled south didn't stick around. The play now is workforce housing, modest office parks, and discount-anchored retail over premium bets.

J.P. Morgan is calling 2026 a bright year for CRE fundamentals. Multifamily debt markets get a boost from a 20.5% increase in GSE lending caps, retail is posting its strongest valuations in a decade, and office is showing signs of life with record rents in some Midtown Manhattan buildings. The caveat: tariffs have pushed steel, aluminum, and copper costs up 50%, and another federal shutdown looms after Jan. 30. Strong fundamentals, but macro headwinds require careful positioning.

President Trump is directing Fannie and Freddie to purchase $200 billion in mortgage bonds, a move experts say could shave at least 25 basis points off mortgage rates. FHFA Director Bill Pulte says they have the cash and can execute quickly, calling it a "one-two punch" alongside the administration's ban on institutional investors buying single-family homes. For CRE investors, this signals aggressive federal intervention that could ripple through multifamily absorption and single-family rental competition.

Chicago's 2026 development calendar is stacked. The Obama Presidential Center opens in June, Google's $280 million Thompson Center makeover debuts this year, and Northwestern's new Ryan Field should be ready by football season. The Bears stadium saga continues with Indiana's governor pushing for a Hammond deal while Illinois legislators stay focused elsewhere. Meanwhile, Lincoln Yards gets a second act as Foundry Park after Sterling Bay sold off portions of the stalled megadevelopment.

Everyone's chasing yield.

New marketing funnels. Off-market deal tricks. Creative financing structures. 

Operators are obsessed with squeezing an extra 2-3% out of every deal, but most attempts to increase returns actually increase risk. 

Smart investing is about asymmetry. You want positive asymmetric bets where the upside is greater than the downside.

Chasing yield often flips that equation. You end up in negative asymmetric territory, where one miss wipes out years of incremental gains.

Remember Warren Buffett's two rules:

The highest-ROI activity in commercial real estate isn't finding more deals, it's killing the bad ones before they kill you.

Naples. Self-storage facility. Half occupied, below-market rents. 

It looked like a layup!

It had an HOA (we skimmed the docs, no concerns there). Our attorney skipped getting the zoning letter pre-closing.

That letter arrived post-closing.

The county restricted leasing to HOA residents only.

We couldn't expand demand, and we couldn't raise rents. We were trapped.

We lost $700,000. IRR went negative.

The math is on something like this is brutal!

If you're grinding for 2-3% IRR improvements per deal, it takes five wins to recover from one loss like that.

Contrast that with a warehouse in Crete, Illinois. 100% vacant. Broker said "no demand."

During due diligence, we secret-shopped the competition. Turns out, demand was fine (the seller was just $2/SF asking above market).

In due diligence, before we closed, we marketed at the real number, and leased it fully in 60 days. Half a million in value, found by just picking up the phone!

Here's the pattern I've seen across dozens of deals:

Most IRR increases aren't found in clever structures or beating other buyers. They're found in due diligence.

A tenant needing expansion, bloated expenses, rents 15% below comps.

And most IRR destruction comes from skipping steps.

Skimming docs, trusting brokers without verifying, or not getting the zoning letter.

You can spend a year grinding for incremental gains, and then lose it all because you didn't read the asterisk.

Stop chasing the next trick, and build an impeccable due diligence process. Simply kill deals that don't pass.

I shared my 25-point checklist in "Non-Negotiable."

If you don't have a system, steal mine.