Good morning. It’s Sunday, Apr. 12, and in this week’s edition, we’re covering the office fire sale sweeping U.S. cities with buildings going for 90% off, the Fed minutes revealing rate-increase talk is back on the table, and what the “Who Moved My Cheese?” moment looks like for value-add investors right now.
First time reading? Join over 11k commercial real estate professionals. Sign up here.
And, as always, send us feedback at [email protected].
Off-Market | 66K Sq Ft Shopping Center in Joliet, IL | 8.8% Cap In Place
Looked at an interesting opportunity this week - a fully stabilized shopping center in Joliet, IL, coming direct from the seller. It's off-market - the seller is considering a quiet sale. Not my typical buy since it's 100% occupied and the value-add is long-term, not immediate. But the numbers look good compared to what you can find on market.
If you're a 4-5+ year value-add buyer, here's the high level:
8.8% Cap In Place (seller thinks it's closer to 10%, but based on similar buildings we own in the area and our OpEx, I’m underwriting at 8.8%)
$8.3M | 66K Sq Ft | $126/SF | 100% Occupied | 30K Daily Traffic
5-Mile Demographics: Avg. Household Income $91K | Population 156K | 8 Local & Regional Tenants
~29-year average tenancy across the rent roll
WALT of ~2.3 years - these tenants will extend, and that's where your future value-add bumps are
If you're interested, reply to this email. I'll send the NDA and facilitate the introduction.
America’s office market is in full fire-sale mode, with some buildings trading for more than 90% below their prior sale prices. In Chicago, a developer bought a 485,000-square-foot office building for $4 million (it sold for $68 million a decade ago). In Denver, a two-building complex that traded at $176 million in 2013 went through foreclosure at $5.3 million.
Even the GSA got in on it, selling a 940,000-square-foot D.C. building to a residential converter for $24 million. Owners and lenders who held on for years hoping for a post-Covid rebound are finally capitulating to remote work and stubbornly higher rates.
Distressed office sales hit $5.2 billion last year across 204 buildings, and 2026 volume is running 25% above last year’s pace.
CRE Impact: Rock-bottom pricing is unlocking redevelopment plays that didn’t pencil before — urban farms, residential conversions, industrial repurposing. More than 90,000 apartments are now in the conversion pipeline nationwide, up 28% year-over-year. If you’re in the distressed space, the deal flow is accelerating.
🔗 "Nobody Wanted This Vacant Warehouse. He Bought It With $0 Down in 45 Days": Tyler Cauble walks through how Matt Barbaccia found a 70% vacant flex warehouse, closed it with 100% seller financing and zero out of pocket, and is now forcing appreciation through lease-up. Full deal breakdown from due diligence to the back-end numbers. Watch Here
🔗 "Grant Cardone Breaks Silence on Controversy, Lawsuits, and Selling Real Estate": Cardone on The Iced Coffee Hour covering housing predictions, sales mistakes, his current investing strategy, and why he added Bitcoin to his real estate fund. Watch Here
🔗 “Decoding the Real Estate Cycle”: Blackstone’s Nadeem Meghji, Global Head of Real Estate, speaks at the firm’s 2026 Private Capital Group Summit about why the early stages of a commercial real estate recovery (driven by improving debt markets and declining new construction) are creating compelling investment opportunities right now. Watch Here
The Fed minutes from March showed something investors haven’t heard in a while: rate increases are back on the table.
While most officials still see a cut as likely if inflation cooperates, “some” made a strong case for describing future moves as “two-sided” (meaning hikes aren’t off the menu). Higher oil prices from the Iran war are expected to push inflation up in the near term, and the “vast majority” acknowledged that bringing inflation to 2% could take longer than expected.
The Fed held rates steady for the second consecutive meeting, and the committee remains deeply split: seven officials expect one cut this year, and seven see no cuts at all through 2026.
CRE Impact: The two-week ceasefire brought some relief to energy markets, but the broader signal is clear — borrowing costs are not coming down anytime soon, and there’s now a real scenario where they go up. Anyone underwriting deals with rate-cut assumptions baked in should stress-test the other direction.
There’s a famous little book called Who Moved My Cheese?
The whole premise is simple: two mice and two little people live in a maze, find a massive pile of cheese, get comfortable, stop exploring, and build their entire routine around that one spot.
Then one day, it’s gone. Someone moved it.
For years, the value-add playbook was almost embarrassingly simple. Buy a building below market rents, renovate it, push rents to market, watch NOI grow, sell at a compressed cap rate, repeat.
Between 2021 and 2023, you didn’t even have to be that good. The market was doing the heavy lifting.
Multifamily rents jumped 13.5% in 2021 alone. Industrial ran 20–30% cumulative growth.
You could buy a building, trip over your shoelaces during the renovation, and the market would still bail you out.
Those were good days. If you want to understand exactly what drove that run (and what killed it) I put together a full breakdown in The End of Easy Value-Add.
Worth a read before you underwrite your next deal.
We had that couple of years of easy money, and then the cheese moved.
By 2023, industrial rents started declining 5–6%. Multifamily flatlined nationally and went negative in oversupplied markets. Cap rates expanded 150–200 basis points across asset classes.
In plain math: if you bought a multifamily building at a 4% cap rate in 2021, and the market is now pricing that same building at 5.7%, your NOI needs to grow 42% just to get back to your original valuation.
Not to grow the value, just to break even. It felt like hitting a wall.
The spread between where rents are and where you can push them is virtually gone in most markets.
The old cheese is gone. So where’s the new cheese?
My thesis is straightforward:
Banks and lenders are sitting on a growing pile of problems that need to be solved.
Loan delinquency rates have more than doubled since 2022.
Hundreds of billions in commercial loans are maturing in 2026 with no clean exit.
I broke down exactly how serious this is getting in The Rising Tide of Defaults. The numbers tell a story most people aren’t paying attention to yet.
Some of those loans will get extended, some reworked. But the ones where the math simply doesn’t work will have to be sold at a discount.
That’s the new cheese.
Buying at today’s actual income numbers, without needing rent growth to make the deal pencil.
No heroic assumptions, just honest math on real cash flow.
Has the cheese moved in your world too?
Where are you seeing it? And where do you think the new cheese is?
Reply and let me know. I read every response.
LET ME HEAR IT
Until next Sunday.
Be well,
Saul
P.S. Missed my podcast with Aleksey Chernobelskiy? Here is the full episode.
Videos & podcasts: I publish them weekly. Subscribe on YouTube, Apple Podcast or Spotify.
Random Saul Fact: Making final edits for this week's newsletter at a new coffee spot, The Living Room here in Lemont, IL. Such a cozy, cool place.
