March 2026
Office supply gaps, private credit stress, data center politics, and a nuclear milestone.
IN THE MARKET
The Office Shortage Nobody Is Talking About
Everyone in commercial real estate knows the office market has too much space. The problem with that supposed truism is that it’s about to be wrong.
Not wrong about the headline numbers - vacancy is still elevated in Denver, Minneapolis, and most U.S. markets. But wrong about what those numbers mean for anyone making a real estate decision in the next 12 to 36 months. Because the space tenants actually want is vanishing, almost no new supply is coming, and a massive wave of lease decisions is about to hit the market at the same time.
The Disconnect
The national office pipeline has dropped 43% in a single year. Q4 2025 deliveries were the lowest since 2012. Across the entire Midwest, less than 500,000 SF is under construction. In Denver, meaningful new starts require heavy pre-leasing and are concentrated almost entirely in Cherry Creek.
At the same time, half of all pre-pandemic office leases 10,000 SF and above haven’t expired yet. Newmark estimates 1.4 billion SF rolls by 2027. While some of those tenants will reduce their space due to changing office dynamics, a far greater number - estimated at 69% of tenants by Newmark - are estimated to maintain or expand their footprint. When those tenants go looking, many will find the quality options they expected aren’t there.
And the vacancy that does exist? It’s largely in buildings nobody wants. Many of those are leaving the market permanently through conversions. Every one that does tightens the supply that remains.
This Isn’t Theoretical
In Manhattan, trophy buildings ended 2025 at 3.7% availability - essentially full. Large tenants are now starting searches five or more years before their leases expire. Nationally, the prime office vacancy is 14%, a full 6 percentage points below non-prime and the widest gap on record. Demand is expected to outpace new supply through 2026, tightening the top of the market further.
Not all markets are there yet. But the same structural setup is evident across the country: collapsing pipelines, rising expectations, and sublease inventory that dropped significantly in 2025.
The Decision in Front of You
If you’re renewing or relocating in the next two to four years, your leverage is at its peak right now. Concession packages are still generous in the best buildings, but that won’t last as quality supply tightens.
If you’re evaluating office investments, the repricing window is narrowing. Average sale prices rose for the first time since 2021 last year. Well-located assets with repositioning potential are getting harder to find at distressed pricing.
If you’re considering development, the pipeline is at a 25-year low. New, well-conceived projects will face far less competition than the vacancy headlines suggest.
The best real estate decisions have never been about reading today's market. They've been about positioning for the market that's forming. Right now, the vacancy headlines say surplus. The pipeline, the lease wave, and the shrinking inventory say something very different. The players who act on where this market is headed - not where it's been - will define the next cycle.
ON OUR MINDS
Echoes of 2008. Private credit rushed into CRE after the financial crisis as nonbank lenders filled the gap left by retreating banks. Now that sector faces its own stress test: lender stocks down 25%+, redemption requests spiking, nearly $1 trillion in CRE loans maturing this year, and JPMorgan restricting credit to private funds after marking down loan portfolios. The biggest blowups so far trace to fraud, not systemic CRE distress. But banks fund the funds that fund the deals, so tightening at the top cascades down. We're watching closely for signs of contagion.
Boom Meets Backlash. As demand for data centers continues to grow, so does the backlash - from Denver's moratorium to a dozen statehouses to the floor of the U.S. Senate. Big Tech recently pledged to foot the bill for energy cost increases, but the commitments are voluntary and the details still thin. Is a handshake enough to solve the issue?
A Nuclear 4th of July. We've enjoyed tracking the nation's progress on a reinvigorated nuclear energy industry. In February, the U.S. military airlifted a modular nuclear reactor for the first time, flying a microreactor nearly 700 miles from California to Utah. And the DOE is pushing to bring three advanced reactors to criticality by our 250th birthday on July 4, 2026. Whether they hit that deadline or not, the momentum is real and the implications for energy-hungry sectors like data centers are worth watching.
We remain grateful for your continued partnership and trust. If any of these topics hit close to home - whether it's a lease decision on the horizon, an acquisition or disposition question, or just a conversation about where the market is headed - we'd welcome the chance to think through it with you.
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February 2026
Drone delivery is moving from pilot programs to real operations. As the FAA advances the regulatory framework, expansion could accelerate and have real-world implications for CRE.
IN THE MARKET
Drone delivery hubs are already operating in Dallas and Phoenix. If beyond-visual-line-of-sight (BVLOS) regulations normalize as the FAA intends, industrial sites with surplus land could become preferred nodes in emerging delivery networks. That has direct implications for the next generation of logistics real estate.
Operators like Wing, Zipline, and Amazon have already completed over a million commercial deliveries. Today, the commercial use case is focused on small, time-sensitive parcels within limited radii. The drones add a new layer to the last-mile stack and work alongside existing vans.
Why Ground Matters
Despite the rooftop imagery often associated with drone delivery, current operations launch from land adjacent to warehouses or retail sites. They require clear approach paths, open airspace, charging and battery infrastructure, and interior staging areas where parcels are sorted and queued for dispatch. While the idea of a drone hub feels like a novelty today, it is really a micro-fulfillment center with aviation capability.
Where the Real Estate Opportunity Lies
Logistics properties with surplus yard space hold a natural advantage, particularly if launch and recovery pads can be integrated without significant retrofit…
The February edition also covers AI in CRE brokerage, tariffs at the Supreme Court, and an incredible Olympic victory for USA Men’s Hockey…
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January 2026
This month, we take a deeper look at where the market stands today and what’s ahead for 2026.
IN THE MARKET
Welcome to 2026! Like many of you, we’ve spent the past month parsing annual forecasts from our most trusted sources, separating signal from noise to assess where the market stands and where it’s headed. After reviewing the data and debate, our house view is refreshingly simple: 2026 marks a return to supply-and-demand fundamentals as the primary drivers of commercial real estate value.
After years of excess, 2026 continues the dose of sobriety we experienced in 2025. An extended hangover followed the era of declining rates that pushed marginal (and often highly levered) investments to the brink once interest rates reset higher. In 2025, the recovery began to take shape as supply deliveries peaked, lenders re-entered the market in force, and price discovery became more functional. Today, we find ourselves in a market characterized by elevated but stable interest rates, above-average vacancy in several sectors, and modest yet durable demand.
As disciplined investors re-engage and debt markets remain liquid, transaction volumes have rebounded from cyclical lows and are expected to rise meaningfully throughout the year…
The January edition also covers growing geopolitical uncertainties, data centers’ outsized impact on the U.S. economy, and evolving office design…
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November 2025
As Thanksgiving rapidly approaches, we wanted to share an abbreviated spin on our monthly SETT Snapshot. This month, we’re offering our thoughts on a few items on our minds for which we are grateful. Happy Thanksgiving to you all!
ON OUR MINDS
Balance finds a way. Despite turbulence in select sectors, we are grateful to see the industry rebalancing itself and working back towards supply/ demand equilibrium. Office vacancies remain extraordinarily high, yet office construction has plummeted. Undersupplied multifamily has further helped this problem by taking larger chunks of obsolete office off the market for conversion. And after the post-2020 surge in industrial development, pipelines have normalized while certain sites previously slated for traditional industrial are now being repositioned for data center use.
A meeting of the minds.After years of slower volume, bid-ask spreads are starting to narrow, pricing is recalibrating, and transaction volume is returning. Deal timelines are still slower than most would prefer, but the early signs of a thaw are here and we’re grateful to see buyers and sellers closing in on common ground.
The moonshot of moonshots.We’re also grateful for the innovators pushing the boundaries of what’s possible. Whether or not they succeed, their ambition is inspiring and we respect the bold pursuit of unconventional ideas.
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October 2025
After months of tracking nuclear and energy stories, we felt it was time to take a deeper dive into the topic. Where do we stand today on nuclear energy, what’s on the horizon and why does it matter?
IN THE MARKET
The Nuclear Moment Arrives
America’s power grid is officially maxed out. Electricity demand from data centers, cryptocurrency mining, AI workloads and advanced manufacturing has surged beyond what our existing infrastructure can reliably deliver. While an “all-of-the-above” mix of natural gas, solar, and wind remains essential, the most promising long-term solution is nuclear energy, the only scalable, 24/7, carbon-free source capable of meeting these demands sustainably and reliably.
Where We Are Now
Nuclear power currently provides about 18% of U.S. electricity, generated primarily by reactors built decades ago. The last two years, however, have marked a turning point: Vogtle Units 3 and 4 in Georgia became the first new U.S. reactors in over 30 years, while several older plants are being extended or restarted, including Michigan’s Palisades facility. Momentum is accelerating. The ADVANCE Act of 2024 directed the Nuclear Regulatory Commission to fast-track advanced reactor approvals, while transferable clean-energy tax credits now allow developers to monetize incentives up-front. Together, these changes have unlocked private capital and begun dismantling decades-old regulatory barriers.
Who’s Building What
Over the next several years, nuclear reactor restarts and power-purchase agreements from existing plants are attempting to bridge the power gap until new technologies come online…
The October edition also covers fears of “mega AI layoffs,” a significant office milestone in NYC, and leveraging AI in CRE…
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September 2025
What’s really happening in construction right now? This month, we ask ARCO/Murray to break down the trends transforming the industry.
IN THE MARKET
For a look at current construction trends and insights, we sat down with Drew Gavic, Vice President of ARCO/Murray, to understand what he’s seeing in the market today and what’s on the horizon:
What’s a surprising construction trend you’ve noticed on the ground in the last 6-12 months that doesn’t show up in national reports yet?
In today’s higher-interest-rate environment, owners are prioritizing speed to market and maximizing building SF on tricky sites over traditional cost benchmarks. Many developers are saying, “If we can open the doors three months sooner or gain an additional 10% of building SF, the project pays for itself.” That shift isn’t showing up in national cost reports, but it’s absolutely changing how we approach schedules, procurement and design decisions.
What role do you see AI and data analytics realistically playing in construction over the next three to five years - and what’s just noise?
We’re already seeing real, tangible benefits from AI and data in construction…
The September edition also covers RTO trends, an accelerating infrastructure build-out, and broader acceptance of nuclear energy…
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August 2025
This month, we explore the growing momentum behind office-to-residential conversions and the strategies cities are testing to breathe new life into their urban cores.
IN THE MARKET
The Downtown Reset Gains Momentum
Green shoots are finally visible in the office market with employees trickling back in greater numbers and once-theoretical office-to-residential conversions starting to rebalance supply. Office vacancy rates remain painfully high, but cities like New York, Minneapolis and Denver are re-thinking ways to turn dark office towers into homes and - for now - the momentum feels real.
Denver kickstarts conversions. Backed by a $570 million Downtown Development Authority (DDA) plan, the city committed its first $100 million in catalytic investments this summer. Those funds are seeding the first major downtown conversions, albeit for a relatively small number of additional housing units. It’s encouraging to see progress, though in order to truly reshape the downtown core, the city will need to address its longstanding permitting issues (which are improving but not yet resolved), the legislative challenges and uncertainty around Regulation 28 and Energize Denver, and expand financial incentives beyond the select few awarded DDA funds.
Minneapolis leans on faster approvals. The city has cut red tape with expedited approvals and modifications to its parking and inclusionary zoning requirements…
The August edition also covers turbulence in the economy, Big Tech’s infrastructure binge, and next-gen nuclear reactors…
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July 2025
This month, we turn our attention towards the explosive growth of data centers and its impact on commercial real estate, infrastructure planning and regional economies across the U.S.
IN THE MARKET
Anchor Tenants of the Digital Economy
Data center demand in the U.S. has gone parabolic. Vacancy is near zero in key U.S. markets, and more than 6,000 megawatts of new capacity is under construction - 83% of it already pre-leased. With demand projected to double by 2030, tech giants like Meta, AWS, Microsoft and OpenAI are racing to build massive campuses to power AI and cloud services, often before the chips to fill them are even available.
But, the surge is straining infrastructure. Power access has become the biggest hurdle, with long utility interconnection queues, transformer shortages and multi-year delays forcing developers and users to plan far in advance and find creative solutions for securing power. In addition, water scarcity and fiber connectivity are emerging constraints, especially in rural or drought-prone regions.
This boom is rippling across other real estate sectors. Industrial-zoned land is being acquired for data center development…
The July edition also covers crypto in CRE, fully automated (dark) factories, and meaningful insights from Seth Godin…
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June 2025
This month, we turn our attention towards emerging trends in industrial real estate.
IN THE MARKET
The Emerging Industrial Divide
As global uncertainty continues to dominate headlines - from geopolitical tensions in the Middle East to alarm over U.S. debt and deficits to trade disputes to election surprises in NYC - our attention shifts toward the more resilient end of the commercial real estate risk spectrum: industrial.
Over the past several years, industrial real estate has emerged as one of the top-performing sectors. The COVID-19 pandemic accelerated the shift from brick-and-mortar retail to e-commerce, triggering a surge in demand for logistics and distribution space. E-commerce now accounts for approximately 16% of total retail sales, with plenty of room to grow. According to CoStar, U.S. industrial supply has expanded by 2.0 billion square feet — a 12% increase — over the past five years. This rate of growth is nearly triple the pace of the previous two decades. Simultaneously, asking rents surged by more than 40%. However, after hitting a historic low of 3.8% in 2022, vacancy rates have nearly doubled to 7.4% as of Q2 2025. With rising vacancies, rent growth has stalled, turning negative in Q2 for the first time in nearly 15 years. While we don’t foresee the level of distress affecting other property types, this softening marks the first meaningful opening in years for both tenants and investors.
A closer look reveals a bifurcation within the sector…
The June edition also covers AI impacts on employment, (even) more news on nuclear energy, and significant investments in AI and AI infrastructure…
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May 2025
This month, we explore the growing divergence in commercial real estate: distress at the surface, but resilience building underneath.
IN THE MARKET
Bouncing along the Bottom.
The office market headlines are alarming - both nationally and in our own backyards. In Denver, a nearly 1 million-square-foot office property sold for a staggering 98% less than its 2019 sale price. In Minneapolis, a comparable asset sold at a 97% discount to its 2016 sale price. On the surface, these transactions suggest a market in freefall. Are we witnessing a self-reinforcing doom loop of distress? Or are these sales isolated events - symptoms of outdated assets rather than systemic dysfunction?
We believe it’s the latter and that these transactions aren’t bellwethers of broad-based decline, but signs of an evolving market shedding outdated inventory. Many of today’s distressed assets are prime candidates for adaptive reuse, which should help tighten the overall supply picture in oversaturated urban cores.
While the headline numbers remain sobering, a closer look reveals signs of recovery…
The May edition also covers significant capital building on the sidelines, more news on nuclear energy, and social media’s impact on CRE…
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April 2025
We are thrilled to bring you our inaugural snapshot of the latest commercial real estate insights and developments. In this edition, we have rounded up key trends that are impacting the CRE market today and into the near future.
IN THE MARKET
Uncertainty leads the day.
After weeks of preamble, sweeping U.S. tariffs arrived. And then morphed into a moving target as larger tariffs were temporarily paused for most nations (aside from China) to allow time for negotiations. We don’t pretend to know better than others how this will ultimately play out, or whether fears of imminent inflation and recession will prove correct.
What we do see – through the lens of commercial real estate – is a path to opportunity. In the near term, inflation (or even the fear of it) is anticipated to strain development underwriting while uncertainty has already pushed some larger developers to reduce their development forecast. If construction slows or stalls, compression and declining vacancies would provide a significant boost to rent growth in the coming years.
In addition, just weeks ago, near term financing challenges seemed poised to benefit from a (finally) thawing debt market…
The April edition also covers office market dynamics, DOGE, and nuclear power…
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