MARKET RESEARCH & COMMENTARY
What we're seeing
in the markets.
Monthly market commentary and periodic deeper research on commercial real estate across the Upper Midwest, Mountain West and beyond. Written by our partners for the clients, investors, and professionals we work with.
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May 2026
Where the Consensus is Thin.
The May Snapshot examines how much of today's economic resilience is reaching CRE tenants. With AI capex contributing an estimated 140 basis points to 2026 GDP growth and four hyperscalers guiding to roughly $725 billion in combined capex, headline strength is concentrated in a narrow set of beneficiaries. The edition traces the two-speed pattern through industrial, office, multifamily, and retail, and outlines why valuation risk lies in cap rates pricing broad resilience while NOI growth depends on a much narrower base.
Where the Consensus is Thin.
A tailwind with fewer beneficiaries, data centers running into political walls, build-to-rent finding a policy lifeline, and loneliness emerging as a retail thesis.
IN THE MARKET
Below the Print
Headline growth is holding up, but how much of it is reaching CRE tenants?
By every standard headline measure, the economy looks resilient as GDP grew 2.0% in Q1, unemployment sits at 4.3%, and the S&P hit a record high this month.
But for CRE owners and operators, broad resilience does not equate to strength of specific tenants or sectors. It matters where this growth is coming from, how much tenant demand is tied to it, and what happens if that demand pauses or shifts markets.
THE AI TAILWIND
AI-related capital expenditure is doing an unusual amount of work in the national numbers. Bridgewater estimates AI capex is contributing roughly 140 basis points to 2026 GDP growth and 150 basis points in 2027. Microsoft, Amazon, Meta, and Alphabet have collectively guided to roughly $725 billion of 2026 capex, up from approximately $400 billion in 2025. A growing body of economic outlooks document a genuine "two-speed expansion" with AI-intensive sectors surging while construction, manufacturing, and interest-rate-sensitive industries fall behind. Data centers were the lone bright spot in an otherwise weak 2025 construction market.
The labor market tells the same story from another angle. The information sector has shed 342,000 jobs since November 2022 and the hires rate has fallen to its lowest level since January 2011. We are in a low-hire, low-fire economy where unemployment looks healthy at 4.3% only because net immigration turned negative and the labor force stopped growing. AI capex contributes to GDP without the level of commensurate jobs from more traditional sources of growth.
WHAT THIS MEANS FOR CRE
The texture has specific consequences for specific property types.
Industrial has inverted faster than most aggregate reports suggest. Small-bay continues to hold below 5% vacancy. But big-box leasing (500K+ sq ft) surged 80.7% year-over-year in Q1 2026 per JLL, with the largest mega-box facilities driving the gains with asking rents up 14.5% annually. Since January 2025, vacant 1M+ sq ft warehouses have fallen from 54 nationally to 27, with half in lease negotiations. The drivers are 3PL consolidation, manufacturer re-tooling, and data-center-adjacent uses. Part of the industrial rebound is the AI capex story playing out one step removed from the data center itself, in the warehouses, fabrication facilities, and component logistics around the buildout.
In Office, tightening availability does not necessarily mean recovering demand. The information sector that historically anchored premium urban offices has been shedding jobs for years, and trophy leasing can look healthy while the employment base beneath it stays narrow. Manhattan trophy availability has been driven down in part by obsolete supply leaving the market through conversion and demolition. Owners should separate genuine tenant expansion from statistical tightening before underwriting rent growth.
For Multifamily, the gap between Class A trophy and workforce housing continues to widen. Trophy assets in supply-constrained markets are holding up, while workforce operators face pressure from weakening lower-income demand and operating cost inflation.
Retail's bifurcation between off-price/luxury growth and mid-tier collapse, which our April issue described, is another expression of the same two-speed pattern.
UNDERWRITING WHAT COMES NEXT
None of this is a prediction and the economy is not weak. Productivity growth is strong, consumer spending is still positive, and credible voices on the bullish side have been right by the headline numbers for two years.
But the honest question when underwriting new deals is how much tenant demand is borrowed from a macro tailwind concentrated in a handful of companies, and what happens if AI capex pauses or redistributes to other markets.
The valuation risk is that cap rates may be pricing broad resilience while NOI growth is tied to a narrower set of tenants, sectors, and capital budgets. The aggregate numbers should continue to look fine. The texture is the story to keep tracking.
ON OUR MINDS
i. Not in our backyard.
Denver City Council passed a one-year moratorium on new data center development on May 18, joining Larimer County and roughly 69 other jurisdictions nationwide that have paused or restricted hyperscaler buildout. The national capex story still holds, but the geography is shifting toward less-resistant markets. The next gigawatt has to land somewhere, but with the AI backlash growing, the question is where?
ii. Build-to-rent gets a lifeline.
The BTR saga continues as the House recently voted to strip a Senate provision that would have required institutional investors to sell newly constructed single-family rental homes within seven years of completion. Since the Senate added the provision, new BTR investment has ground to a halt. Will the latest version pass the Senate and re-open the BTR market?
iii. Loneliness as a leasing thesis.
As trends of a loneliness crisis expand across cohorts of the population, some CRE practitioners are looking for solutions. Can so-called "third places" - informal gathering spots like cafes, libraries, and parks - be used as tools to fight loneliness? And beyond the societal benefits, can these "social-centric" centers sustain CRE investments alongside or in lieu of more generic retail?
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.
Want to discuss this with our team?
Contact Us →April 2026
Unfamiliar Recoveries.
The April Snapshot examines how the retail recovery has progressed further than the prevailing narrative suggests, with best-in-class grocery-anchored centers trading at 5.25–5.5% cap rates and institutional capital already engaged. The edition argues the opportunity has shifted from thematic retail exposure to specific sub-segments where institutional adoption remains incomplete, including medical and healthcare-anchored centers and unanchored strip in supply-constrained infill markets. Also covered: AI's bifurcated labor impact and an unusual office leasing rebound led by secondary markets.
Unfamiliar Recoveries.
Retail healed while no one was watching, AI is reshaping the labor market in two directions at once, and the office rebound is showing up in unexpected places.
IN THE MARKET
Mark Twain Was Right About Retail
But the obituary was retracted while you weren't looking.
Ten years ago, the consensus was to avoid retail. Malls were dying, e-commerce was rising, and the sector was overbuilt. That view was correct at the time and capital fled accordingly.
The story most retail bulls tell today is that while everyone was looking away, the sector quietly healed. Construction collapsed and bad inventory got demolished. Tenants shifted toward services that can’t be replaced by a delivery van. And with fundamentals now the strongest in a decade, the sector is mispriced because capital hasn't noticed yet.
Half of that story is right. The other half is two years out of date.
THE FUNDAMENTALS DID HEAL
Inventory has grown roughly 8 basis points annually over the past decade. More than 130 million square feet has been demolished or repurposed. Vacancy has been below 5% for over four years, comfortably below the 7%+ historical average from the 15 years prior. And with a manageable construction pipeline, rents are growing and the recovery is real. [Costar]
BUT CAPITAL ALREADY NOTICED
Retail transaction volume is up 20% year-over-year. Best-in-class grocery-anchored centers trade at 5.25–5.5% cap rates. CBRE's 2026 investor survey ranks retail the third most-targeted CRE sector. That is what late-cycle price discovery looks like. The marginal buyer today is institutional, not opportunistic.
THE BULL CASE HAS SOFT SPOTS
Net absorption turned positive in early 2026 but remains negative on a trailing twelve-month basis [Costar]. Vacancy is low partly because demand is healthy and partly because nothing is being built. Service tenants pay higher headline rents than the national chains they replaced, but they bring weaker credit, shorter leases, and higher failure rates. They also have not been recession-tested to the extent of the prior generation of retail chains. And the "no new supply" story is partly a math problem as development yields sit below stabilized cap rates. Developers aren't building today because the returns don't pencil. If cap rates compress, supply could come back faster than the narrative suggests.
THE OPPORTUNITY NOW
Retail today looks closer to apartments in 2013 than in 2010 and reflects a recovered sector that institutions are buying, not a contrarian bet. The opportunity is no longer in "retail" as a thematic exposure but in sub-segments where institutional capital hasn't fully arrived.
Medical and healthcare-anchored centers solve the credit-quality problem in the broader thesis: hospital systems and PE-backed operators on long leases, with demand driven by demographics rather than discretionary spending.
Unanchored strip in markets with stable-to-growing demographics, high construction costs, and supply-constrained infill is in the middle of a re-rating. Cap rates are compressing toward grocery-anchored as dedicated institutional vehicles enter the format, and the window to buy ahead of full adoption is open but narrowing.
The segments to avoid are the ones the index buyer is now bidding up – stabilized grocery-anchored at sub-5.5% caps, Class B/C malls at any yield, and service-heavy strip in saturated suburbs.
Twain got his obituary corrected. Retail's correction is already in print, and investors know the sector recovered. The work now is identifying the specific pieces still trading below where institutional capital is heading.
ON OUR MINDS
i. The mega AI layoffs are no longer hypothetical.
We asked back in October whether the "era of mega AI layoffs" was hyperbole or something bigger. Six months later, the answer is coming into focus as Amazon cuts 30,000+ and Meta announces a RIF on 10% of its workforce. The CRE question we keep coming back to is if Big Tech can run leaner while spending billions on AI infrastructure this year, what does that mean for office demand in the markets these companies anchor?
ii. The other side of the AI labor story.
As Big Tech sheds jobs, the data center buildout is starving for labor to the point where Meta and CBRE just launched a free training program to fill the gap. With technician roles paying up to $300K and data center job postings skyrocketing, could some of the same workers being displaced by AI find their next chapter building and managing its infrastructure?
iii. A peculiar recovery.
Q1 2026 was the strongest office leasing quarter in nearly eight years but the rebound smells different than past recoveries. Secondary markets outpacing gateways (we see you at the podium, Minneapolis and Denver)? Smaller deals replacing big block leases? Momentum building even as office-using employment contracts? Something to keep an eye on.
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.
Want to discuss this with our team?
Contact Us →March 2026
The Office Shortage Nobody Is Talking About.
The March Snapshot challenges the prevailing office surplus narrative by examining a structural mismatch quietly forming beneath the headlines. The national office pipeline has dropped 43% in a single year, Q4 2025 deliveries hit their lowest point since 2012, and roughly 1.4 billion square feet of pre-pandemic leases roll by 2027. With prime vacancy already 6 percentage points below non-prime, the edition outlines why tenants, investors, and developers face a narrowing window to act on the market that's forming, not the one that's been.
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
i. 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.
ii. 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?
iii. 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.
Want to discuss this with our team?
Contact Us →February 2026
Drone Delivery and the Next-Generation Logistics Map.
As drone delivery transitions from pilot programs to commercial operation, the February Snapshot examines what evolving FAA regulations and beyond-visual-line-of-sight standardization could mean for industrial real estate. Today's drone hubs operate from land adjacent to warehouses and retail sites, requiring clear approach paths, power capacity, and flexible interior staging. The edition outlines why logistics properties with surplus yard space and operational optionality may be positioned to capture a meaningful share of next-generation last-mile demand.
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 and the Next-Generation Logistics Map
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. IOS sites may also be well positioned, but land alone is insufficient. The real differentiator is operational optionality: flexible interior space, sufficient power capacity, robust connectivity, and circulation that allows integration of truck and aerial dispatch.
As BVLOS flights become standardized, service radii expand. At that point, assets capable of offering multimodal nodes for ground and aerial logistics could command stronger strategic positioning in site selection competitions, and a greater share of tenant demand.
THE RISK-REWARD BALANCE
Skeptics are right to question scale. Payload limits, weather and unit economics may keep drone delivery niche.
But logistics value often accrues at the margins and even modest adoption could elevate certain nodes within distribution networks. Owning adaptable properties preserves downside protection with potentially significant upside exposure.
ON OUR MINDS
i. The sky is not falling on CRE brokers.
Despite CRE brokerage firms falling prey to the recent rotating AI scare, our (admittedly biased) view is that this is seriously misguided. Trusted human relationships matter more than ever, particularly when it comes to complex, high stakes deals. While it’s tempting to imagine future deals being negotiated by opposing Clawdbot armies, our view is that people will remain central to real estate transactions and those who will be most successful will be the ones who maintain their humanity and connection to one another, while leveraging the productivity and data advantages of AI tools.
ii. Tariffs, tariffs, tariffs.
Plenty of others have dissected the recent Supreme Court tariff ruling and its implications, but suffice it to say that we will continue to monitor the situation and don’t expect it to go away anytime soon.
iii. WHAT. A. GAME.
Congratulations to the USA Men’s Hockey Team for an incredible win. An amazing feat and a powerful reminder that, no matter our differences, moments like this bring our entire country together.
We remain grateful for your continued partnership and trust. Whether you're exploring new opportunities or navigating strategic decisions at the asset level, our team is here to support you every step of the way. If you’d like to take a deeper dive into any of the topics covered this month, don’t hesitate to reach out - we’re always happy to connect.
Want to discuss this with our team?
Contact Us →January 2026
A Return to Fundamentals.
The January Snapshot frames 2026 as a return to supply-and-demand fundamentals as the primary drivers of CRE value. With interest rates elevated but stable, debt markets re-engaged, and transaction volumes rebounding, the source of returns is shifting from appreciation to income and operational execution. New construction is slowing sharply across nearly all sectors except data centers, constrained by labor costs, tariffs, and limited power-served sites. The edition outlines why disciplined investors focused on local fundamentals are well positioned for the year ahead.
This month, we take a deeper look at where the market stands today and what’s ahead for 2026.
IN THE MARKET
A Return to Fundamentals
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. Importantly, the source of returns is shifting. The appreciation-driven playbook of the low-rate era is giving way to an income-focused market, where operational execution and asset management drive value creation. This transition reflects a healthier, more durable market structure that rewards well-managed assets capable of capturing an outsized share of tenant demand.
On the supply side, today’s oversupply across select sectors and geographies appears increasingly manageable. New construction is slowing sharply across nearly all property types (with data centers the notable exception). Higher labor costs tied to restrictive immigration policy, elevated material prices driven by tariffs, and a shrinking pool of viable development sites (particularly those with sufficient power) are collectively suppressing new supply in 2026 and beyond.
Which brings us back to first principles. This is a market where understanding local supply pipelines, tenant demand, and the ability to generate real operating income will matter most. As today’s excess supply is absorbed and construction remains constrained, we expect demand to once again outpace new supply and create a compelling entry point for disciplined investors willing to focus on fundamentals.
ON OUR MINDS
i. Geopolitics.
Like many of you, we are closely tracking ongoing global and domestic uncertainties and their potential implications for the U.S. economy and CRE markets - from Ukraine to Taiwan, Iran to Venezuela, and the future of Gaza.
ii. Data Centers.
Data centers continue to drive outsized economic activity in the U.S. How sustainable is this growth?
iii. Office Design.
A novel concept - asking users directly what they actually want.
IN THE SETT
We’re excited to highlight the recent grand opening of Grab Thai in Hopkins, Minnesota - a strong example of how thoughtful tenant representation and site selection translate into real-world success. Grab Thai brings an authentic Thai street-food concept to the Twin Cities, featuring a focused menu built around fresh ingredients and proven, high-demand dishes like Pad Thai, curry rice bowls, and noodles.
Working closely with the ownership team, we supported Grab Thai in identifying and securing a location that aligned with their operational needs, customer base, and long-term growth strategy. The result is a well-positioned restaurant that activated its space immediately. We were honored to join in the community-driven opening that included a monk blessing, ribbon cutting, and traditional Thai dance.
Congratulations to the Grab Thai team on this milestone! We’re proud to have played a role in bringing this concept to market and in helping create a win for both tenant and landlord by activating the property, driving foot traffic, and adding lasting value to the neighborhood.
To learn more, visit www.grabthaimn.com.
We remain grateful for your continued partnership and trust. Whether you're exploring new opportunities or navigating strategic decisions at the asset level, our team is here to support you every step of the way. If you’d like to take a deeper dive into any of the topics covered this month, don’t hesitate to reach out - we’re always happy to connect.
Want to discuss this with our team?
Contact Us →
November 2025
Balance Finds a Way.
The abbreviated November Snapshot reflects on signs of structural rebalancing across commercial real estate. Office construction has plummeted to multi-decade lows even as vacancies remain elevated, with conversions absorbing obsolete inventory. Industrial pipelines have normalized, with select sites repositioning toward data center use. Bid-ask spreads are narrowing and transaction volume is returning. The edition offers a measured pre-Thanksgiving view of how supply, demand, and capital markets are quietly working back toward equilibrium.
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
i. 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.
ii. 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.
iii. 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.
We remain grateful for your continued partnership and trust. Whether you're exploring new opportunities or navigating strategic decisions at the asset level, our team is here to support you every step of the way. If you’d like to take a deeper dive into any of the topics covered this month, don’t hesitate to reach out - we’re always happy to connect.
Want to discuss this with our team?
Contact Us →October 2025
The Nuclear Moment Arrives.
With electricity demand from data centers, AI workloads, and advanced manufacturing exceeding what the U.S. grid can reliably deliver, the October Snapshot takes a deeper look at nuclear energy's accelerating resurgence. The ADVANCE Act, transferable clean-energy tax credits, and a pipeline of restarts and small modular reactors are reshaping the energy landscape. For CRE, the edition examines why proximity to reliable, carbon-free power is becoming as defining to a prime location as access, labor, and logistics.
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 next generation of small and advanced reactors is already underway including those by TerraPower, GE Hitachi/ TVA, Oklo and others. Broad deployment won’t happen overnight. Most experts expect first units late this decade, and full commercial adoption by the mid-2030s once proven designs can scale and be replicated nationwide. These will add gigawatts of firm, carbon-free capacity just as AI-driven load peaks.
WHY DOES THIS MATTER FOR CRE?
For data centers and high-load users, access to stable, carbon-free energy will dictate where new facilities can be built and which markets stay competitive. But even for traditional property types (industrial, office, retail, multifamily), uninterrupted, low-cost power is essential for operational resilience, tenant retention and ongoing feasibility. Properties located near nuclear-supported corridors could gain long-term pricing advantages while reliable, 24/7 energy will protect existing assets and future development from brownouts and rolling outages.
Bottom line is that nuclear energy is entering a new chapter that is cleaner, smaller, faster and finally financeable. As the U.S. grid strains under record demand, its resurgence offers a pivotal path toward long-term energy stability. For investors, developers and occupiers alike, reliable power will soon be as defining to a prime location as access, labor and logistics.
ON OUR MINDS
i. “The era of mega AI layoffs is here”
Is that hyperbole? Or the start of a mass disruption unlike any we have seen before? And on the flip side, what types of new jobs and industries could sprout from this displacement if productivity gains surge and facilitate new opportunities?
ii. New York is back - how about the rest of us?
The New York City office market reached an important milestone in July with office attendance (finally!) exceeding pre-COVID levels. Is NYC a bellwether for the rest of the country, or is it uniquely positioned to outperform in the current office market? And will this recent success sustain after next month’s election?
iii. Leveraging AI in CRE.
AI is permeating every sector of the economy and CRE is no exception. We’ve been impressed with AI tools that streamline workflows and sharpen research, but one case stands out: with the help of AI-enhanced data modeling, BGO gained a significant edge by uncovering predictive insights that flipped their investment thesis and reshaped their deployment strategy.
IN THE SETT
Lamar, Brian and Alex recently returned from our inaugural partner retreat, where we celebrated the first year of our expanded partnership amidst the unforgettable backdrop of Yosemite National Park. A sincere thank you goes to Basil Newburn of Tidemark Real Estate Services for his incredible hospitality and for helping make the retreat such a memorable experience.
The weekend offered an opportunity to push our limits in backpacking and more importantly, to recharge, reflect and look ahead. We took time to celebrate what we’ve accomplished over the past year and to set our sights on where we’re headed next. This has been a year of meaningful growth and momentum. We’ve expanded into the Mountain West region and represented an amazing range of clients across regions from tenants relocating and upgrading their space to investors navigating acquisitions and sales.
We’re also proud to share that we’ve officially launched our property and asset management platform, allowing us to leverage our combined expertise to deliver even greater value and full service support for our clients and partners.
As 2025 begins to wind down, we’re filled with gratitude for your continued trust, and excitement for what’s ahead in 2026!
We remain grateful for your continued partnership and trust. Whether you're exploring new opportunities or navigating strategic decisions at the asset level, our team is here to support you every step of the way. If you’d like to take a deeper dive into any of the topics covered this month, don’t hesitate to reach out - we’re always happy to connect.
Want to discuss this with our team?
Contact Us →September 2025
Construction Trends with ARCO/Murray.
In a candid conversation with Drew Gavic, Vice President of ARCO/Murray, the September Snapshot examines how higher-rate dynamics are reshaping construction priorities on the ground. Owners are increasingly prioritizing speed to market and maximum buildable square footage over traditional cost benchmarks—a shift not yet reflected in national reports. The edition also covers practical AI applications transforming estimating and operations, alongside takeaways from Andrew Ross Sorkin's keynote on leverage, trust, and emerging systemic fragility in today's economy.
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
Construction Trends with ARCO/Murray
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. AI has been integrated into our estimating tools to help speed up early cost models, enhanced our build out of national cost databases, helped gamify training apps to keep our teams sharp, and supported an internal pilot program where AI assistants surface lessons learned and best practices in seconds. On the operational side, AI is supporting real-time dashboards and automated system checks to give our teams live visibility into budgets, safety, and progress across jobs - that’s real value today. What feels like noise is the idea that AI will replace human expertise on-site. At the end of the day, construction success depends on relationships, context, and judgment. AI can supercharge those, but it won’t replace them.
What’s a construction-related belief or “rule of thumb” that most people in the industry take for granted - but you actually disagree with?
A lot of people still treat lowest first cost as the most important metric in decision-making. I think that mindset is outdated. The most successful owners today are the ones who look at total cost of ownership, factoring in speed to market, operational efficiency, and long-term flexibility. In many cases, shaving months off a schedule or designing a building that can adapt to future needs is far more valuable than a few percent saved on initial bids.
ARCO/Murray is a national design-build contractor, with almost 50 offices nationwide, focused on delivering turnkey solutions across industrial, commercial, and specialty markets. They bring together integrated design and construction teams to provide clients with cost certainty, speed, and a single point of accountability from concept to completion. For more information, please visit www.arcomurray.com.
ON OUR MINDS
i. Return to Office.
Despite more companies mandating a return to office, employee resistance is stalling progress. Have we reached a new equilibrium with hybrid work? Or will a full return to office regain traction if/ as the economy softens?
ii. The Build-out Accelerates.
As noted in last month’s newsletter, Big Tech’s infrastructure binge was already boosting the US economy. Now, following a $100 billion investment from Nvidia, OpenAI is laying out plans for $1 trillion of additional infrastructure.
iii. Nuclear Again.
As energy demands continue to surge from increasing AI demand, nuclear is starting to see broader acceptance as a potentially viable solution.
IN THE SETT
Lamar and Alex recently returned from the Wisconsin Real Estate Alumni Association’s 2025 Biennial Conference in Madison, WI. Beyond providing a great opportunity to reconnect with classmates and fellow alumni, the event featured outstanding panels and speakers, and was highlighted by a thought-provoking keynote from Andrew Ross Sorkin.
Sorkin drew on themes from his new book, 1929: Inside the Greatest Crash in Wall Street History—and How It Shattered a Nation, to argue that while today’s economy may appear strong, its foundations are fragile. The real risks, he warned, aren’t sitting in banks as in 2008 but have shifted to insurers, private equity, and semi-liquid retail funds that look safe - until they’re not.
“Crises always come down to two things: leverage and trust. And when trust disappears, everything unravels—gradually, then suddenly.” - Andrew Ross Sorkin
Takeaways from the keynote included:
Debt Pressure: U.S. liabilities now exceed $37T and could surpass $50T within a decade. Interest costs may soon exceed defense spending, a historic marker of declining superpowers.
Bubble Parallels: The AI/data-center boom resembles past speculative manias (radio in 1929, fiber in 1999), requiring relentless capital and faith in demand.
Policy Risks: Fed politicization, persistent tariffs, and the spread of “too big to fail” from banks to states and industries further heighten systemic fragility.
For real estate professionals, the takeaway is clear: rigorously stress-test debt, liquidity, and policy exposure before the next “sudden” moment arrives.
We remain grateful for your continued partnership and trust. Whether you're exploring new opportunities or navigating strategic decisions at the asset level, our team is here to support you every step of the way. If you’d like to take a deeper dive into any of the topics covered this month, don’t hesitate to reach out - we’re always happy to connect.
Want to discuss this with our team?
Contact Us →August 2025
The Downtown Reset Gains Momentum.
Office-to-residential conversions are gaining real momentum across major U.S. cities, but progress varies sharply by market. The August Snapshot compares Denver's catalytic DDA funding, Minneapolis's expedited approvals, and New York's combined administrative and financial reforms to identify what actually moves projects from concept to completion. For owners holding underperforming office assets and investors evaluating urban core strategies, the edition examines which policy frameworks are unlocking conversions at scale and which remain stalled.
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 Northstar Center East conversion delivered 216 apartments in 2024, but most other projects remain financially infeasible. Streamlining helps, but without stronger incentives, the pipeline is in limbo. A proposed state tax credit could change the math, but unless and until it’s passed, the conversion pipeline could remain stalled.
NEW YORK CITY IS SETTING THE PACE
In the last five years, conversions of icons like One Wall Street, 55 Broad Street, and 25 Water Street have delivered thousands of new apartments, stripping millions of square feet of obsolete office space out of circulation. A new state tax incentive (467-m) and zoning reforms are fueling the next wave, with projections that more than 10 million square feet could be transformed into badly needed housing. By tackling both administrative and financial barriers, New York City has become a compelling national model for how to make conversions work.
WHY IT MATTERS?
With millions of square feet of office potentially suitable for conversion, these projects not only chip away at vacancies but also help revive neighborhoods that have lost foot traffic, tax revenue and vitality. Minneapolis has shown how administrative relief can help, and Denver is deploying targeted funds to spark activity. But New York City demonstrates that true momentum comes from addressing both red tape and financial incentives at once. Its approach offers the clearest roadmap for other cities looking to transform empty offices into vibrant, livable downtowns.
ON OUR MINDS
i. How vulnerable is the economy?
With the Fed seemingly set to cut rates amid perceived job market risks and rising stagflation fears, will there be turbulence in the economy, or can underlying fundamentals stay afloat?
ii. Hungry for infrastructure.
Big Tech’s infrastructure binge is boosting the US economy: “Capex spending for AI contributed more to growth in the U.S. economy in the past two quarters than all of consumer spending.”
iii. Next-Gen Reactors Rise.
Are we doing enough to stay ahead? As AI drives surging energy demand and data centers stretch the grid, America is turning to nuclear startups and a DOE initiative advancing 11 next-gen reactors to secure power in the hopes of maintaining its AI edge over China.
IN THE SETT
In our work across the Midwest and Mountain West, we’ve seen that decisions about where to locate or expand operations are far more complex than simply finding real estate. Companies weigh long-term access to talent, proximity to supply chains, the availability of incentives and resilience against economic shifts - all factors that ultimately shape cost structures and competitiveness.
This month, we want to highlight the role ofHickey & Associates, whose expertise in site selection and location strategy has been invaluable in helping our clients navigate these challenges. Their team brings deep capabilities in workforce analysis, incentive negotiations and infrastructure due diligence, providing the kind of insights that lead to faster, more focused site searches and meaningful cost savings.
By uncovering opportunities and risks that are often hidden in the process, Hickey has helped our clients make decisions with greater confidence and clarity. To learn more about their work, visit www.hickeyandassociates.com.
We remain grateful for your continued partnership and trust. Whether you're exploring new opportunities or navigating strategic decisions at the asset level, our team is here to support you every step of the way. If you’d like to take a deeper dive into any of the topics covered this month, don’t hesitate to reach out - we’re always happy to connect.
Want to discuss this with our team?
Contact Us →July 2025
Anchor Tenants of the Digital Economy.
Data center demand has gone parabolic, with U.S. vacancy near zero and over 6,000 megawatts under construction—83% pre-leased. The July Snapshot examines how this surge is straining power, water, and fiber infrastructure while reshaping demand for industrial-zoned land, logistics support space, and housing in secondary markets. As tech giants race to build campuses ahead of chip availability, data centers are emerging as anchor tenants of the digital economy and redrawing the national CRE map.
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 while nearby industrial space is in high demand for logistics, staging and supporting vendors. And housing in secondary markets is tightening as thousands of construction and operations workers move in, driving demand and local service growth.
KEY TAKEAWAY: DATA CENTERS ARE NO LONGER A NICHE PRODUCT
They are becoming the anchor tenants of the digital economy and in the process, redrawing the commercial real estate map across the U.S.
ON OUR MINDS
i. Crypto goes (more) mainstream.
The House laid the groundwork for regulated stablecoins - cryptocurrencies pegged to hard assets, most notably the U.S. dollar. Will this be the catalyst that leads to blockchain and crypto adoption in commercial real estate? If so, how impactful will this adoption be and how long until it truly takes root?
ii. The future is dark.
Fully automated Chinese factories operate around the clock with little to no need for humans - or lights. As Amazon is close to using more robots than humans in its factories, how soon until we see these fully automated facilities across the U.S.?
iii. A moment of reflection.
With all the uncertainty in the world today, we’re enjoying these grounding insights from Seth Godin on cultivating meaning and reshaping systems (h/t Tim Ferriss).
IN THE SETT
At SETT, we’re proud to work with clients across industries who are making a real difference in their communities. This month, we’re excited to highlight Restart, Inc., a remarkable nonprofit we recently supported during their office relocation.
Based in the Twin Cities, Restart, Inc. helps adults with traumatic brain injuries live more independently. Since 1986, they’ve provided residential group homes and outreach services that support daily living, health management and social integration.
With a strong focus on dignity and long-term care, Restart fills a critical gap in Minnesota’s support system by empowering individuals to rebuild skills, regain autonomy and stay connected to their communities.
It was a privilege to work with Restart, whose nearly 40 years of service have empowered so many to take meaningful steps toward healing.
To learn more or support their mission, visit restartincmn.org.
We remain grateful for your continued partnership and trust. Whether you're exploring new opportunities or navigating strategic decisions at the asset level, our team is here to support you every step of the way. If you’d like to take a deeper dive into any of the topics covered this month, don’t hesitate to reach out - we’re always happy to connect.
Want to discuss this with our team?
Contact Us →June 2025
The Emerging Industrial Divide.
After years of outperformance, the industrial sector is showing its first meaningful softening in over a decade, with vacancy nearly doubling from its 2022 low. The June Snapshot examines a clear bifurcation underway: rising vacancies concentrated in large-format properties while small-bay facilities remain under 5%. With more than 37% of leases rolling by 2027 against in-place rents trailing market by 33–75%, the edition outlines what this divergence means for tenant strategy and small-bay investment positioning.
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 rise in vacancies is concentrated primarily in larger industrial properties (over 100,000 square feet), while smaller facilities have remained resilient, maintaining sub-5% vacancy rates. This divergence is expected to continue, particularly as lease rollovers collide with the significant rent escalations of recent years. CompStak data shows that over 37% of all U.S. industrial leases are set to roll by the end of 2027, with in-place rents trailing current market levels by 33% to 75%. As a result, many tenants may opt to downsize, further tightening the small-bay market and potentially prompting the demising of larger spaces where feasible.
WHAT DOES THIS MEAN TODAY?
Tenants in smaller industrial properties may have a fleeting opportunity to secure longer-term leases under favorable terms. At the same time, industrial investors may find their first meaningful entry point in years, particularly in the small-bay segment where long term fundamentals remain compelling.
ON OUR MINDS
i. Employment.
Amazon turned heads this month after CEO Andy Jassy told employees that generative AI and AI agents may replace certain jobs and shrink its workforce in the near future. The big question now - could this be the beginning of a broader employment transformation?
ii. Energy.
Another month, another major announcement for nuclear power as New York State announces their intention to build the first major nuclear power plant in the U.S. in the last 15 years. While other energy alternatives are being explored, we expect nuclear to remain at the forefront.
iii. Investment.
Meta is getting serious about AI and associated infrastructure. Signing a 20 year agreement to buy power from an Illinois nuclear power plant. Then aggressively recruiting talent for its new “Superintelligence” lab with $100 million pay packages (not a typo).
IN THE SETT
Lamar recently returned from the Spring 2025 SIOR Conference in Las Vegas. After catching up on some well-earned sleep, he came back with valuable insights for our firm - especially around the growing role of AI in commercial real estate.
Across the industry, AI is rapidly gaining traction as a tool to streamline everything from deal sourcing and underwriting to lease review and due diligence. At our firm, we’ve already begun integrating AI to accelerate market research, unlock deeper insights and automate routine workflows - allowing us to work smarter and move faster.
While the full potential of these technologies is still unfolding - and we remain mindful of emerging safety considerations - one thing is clear: AI is poised to reshape how our industry operates. We're committed to staying ahead of the curve as this new chapter unfolds.
We remain grateful for your continued partnership and trust. Whether you're exploring new opportunities or navigating strategic decisions at the asset level, our team is here to support you every step of the way. If you’d like to take a deeper dive into any of the topics covered this month, don’t hesitate to reach out - we’re always happy to connect.
Want to discuss this with our team?
Contact Us →May 2025
Bouncing Along the Bottom.
Headline-grabbing office sales at 97–98% discounts to prior pricing have raised concerns of a broader doom loop, but the May Snapshot argues these transactions reflect obsolete inventory shedding rather than systemic decline. With return-to-office mandates accelerating, leasing activity rebounding, and substantial dry powder positioned at firms like Brookfield and Blackstone, the edition outlines why opportunistic investors may be facing a rare entry point as demand fundamentals quietly improve beneath distressed headlines.
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. Return-to-office mandates are gaining momentum, leasing activity is rebounding, and employee foot traffic is on the rise. These incremental demand-side improvements are slowly but steadily bolstering market fundamentals. For opportunistic investors, this moment presents a rare window: the chance to acquire well-located assets at deeply distressed pricing, just as the demand outlook turns.
ON OUR MINDS
i. Dry Powder.
Major players are ready to pounce. Among others, Brookfield raised a $16 billion fund and Blackstone sits on a staggering $47 billion of available capital.
ii. Energy.
As discussed last month, nuclear power is re-entering the conversation - a potential game changer for powering the data and AI infrastructure of the future. Germany reversed course and will treat nuclear energy as a green energy source. And in the United States, nuclear energy is gaining traction on the national and local levels.
iii. Social Media to IRL.
Bob Knakal and Strip Mall Guy are proving that digital credibility can drive real-world deal flow (and while we’re here, a shameless plug to follow SETT on LinkedIn!).
IN THE SETT
PropTech Elevated. We are excited to expand our strategic partnership with Aviometry, bringing cutting-edge drone technology into the heart of our asset management and advisory services. By leveraging high-resolution 3D models and 2D aerial maps, we empower property owners and managers to digitally view, analyze and engage with their physical assets - anytime, from anywhere.
Comprehensive Property Insights: High-resolution aerial models provide detailed assessments of roofs, landscaping and hardscape conditions - enhancing due diligence, maintenance planning and insurance documentation.
Remote Measurement & Monitoring: Precise measurements capture and track site changes over time, enabling accurate job scoping, vendor comparisons and proactive asset performance management.
Collaborative Digital Access: Interactive, cloud-based models allow teams to collaborate remotely, improving transparency, coordination and decision-making across all phases of asset management.
Contact us to learn more or schedule a demonstration of how this transformative technology can optimize your asset and portfolio management.
As the market continues to evolve, we remain grateful for your partnership and trust. Whether searching for new opportunities or navigating asset-level strategies and decisions, we are here to help. Don’t hesitate to reach out for a deeper dive into any of the topics covered this month.
Want to discuss this with our team?
Contact Us →April 2025
Inaugural Snapshot.
The inaugural SETT Snapshot examines how shifting U.S. tariff policy and renewed financing uncertainty are reshaping the near-term commercial real estate landscape. As inflation pressures strain development underwriting and major developers scale back forecasts, constrained supply could drive future rent growth across key sectors. The edition also explores early signals of office market recovery, the real estate implications of federal lease terminations, and the growing role of nuclear power in meeting data center energy demand.
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 challengesseemed poised to benefit from a (finally) thawing debt market. Should that trend reverse, it could unlock a wave of distressed sales in 2025 for well-positioned buyers who can weather the short-term volatility.
ON OUR MINDS
i. Is office back?
Despite concerns of new speed bumps, it certainly looks that way. Employees returning to the office. Vacancies decreasing. Properties starting to sell. Time will tell but we take the over on an office recovery and believe employers bringing workers back to the office should outweigh the headwinds of a softening economy.
ii. The DOGE effect.
Layoffs and GSA lease terminations. Government employees called back to the office. Pain for CRE owners, or potentially a net positive as previously vacant buildings become activated?
iii. Energy.
Power is critical to servicing the insatiable demand for Data Centers. Is nuclear power the inevitable solution as some states are exploring? If not, how will the next generation of Generative AI be serviced?
IN THE SETT
SETT has entered a bold new chapter! We are thrilled to welcome two new partners who are expanding our presence across the Mountain West and beyond – ushering in growth and a fresh perspective while deepening our commitment to exceptional client service:
Alex Livadas
Alex brings over 18 years of experience in commercial real estate, specializing in investments, development and asset management. Prior to joining SETT, Alex held key roles at Dostart Development and Tishman Speyer, where he honed his skills in project management and strategic planning.
Brian Cole
With a unique combination of real estate and legal expertise, Brian brings more than 17 years of experience to SETT. He has worked in property management, real estate investments, and litigation, including defending clients against accessibility claims under the Americans with Disabilities Act.
Together, Lamar, Alex and Brian’s complementary skills in real estate, asset management and risk mitigation allow us to deliver exceptional results for our clients. Our hands-on approach and commitment to your success are at the heart of SETT’s mission to maximize value and opportunity.
For more information, please visit our new website.
Thank you for being a valued part of our SETT community. We’re committed to bringing you actionable insights to navigate the ever-evolving CRE market. If you have questions or would like a personalized review of how these trends could impact your properties, please reach out - we’re always here to help.
Want to discuss this with our team?
Contact Us →