Market Intel

Insights

19 Mar 2026

The New Era of Regional Retail

18 Mar 2026

Boston, MA Multifamily Market Report March 2026

17 Mar 2026

Multifamily Supply Paradox: When Oversupply Meets Undersupply

17 Mar 2026

The Emerging Shift: Car Wash M&A Expected to Outpace Greenfield Development in 2026

Featured Podcast Episodes

18 Feb 2026

The Matthews™ Podcast — Bo Kemp

2/4/26

The Matthews™ Podcast — Jeff Enck

Jeff Enck on Southeast Shopping Center Trends In this episode of the Matthews™ Podcast, host Matthew Wallace continues the publication takeover series with Part 3 of the National Shopping Center Overview, breaking down the Southeast with Matthews™ Senior Vice President Jeff Enck. With 25+ years of retail investment sales experience and hundreds of transactions closed across the Southeast, Enck shares why strip centers have moved from underrated to one of the most competitive retail investment categories in the country, and what that means for both private and institutional capital. The Role of Strip Centers as a Primary Asset Class Traditionally, retail real estate was often viewed through the lens of grocery-anchored or power cents. However, Enck notes that over the last decade, and specifically the last two to three years, unanchored strip centers have shifted their strategies to exit grocery-anchored and power centers in favor of strips. Industrial Adoption: Major groups, including the first publicly traded REIT solely focused on strip centers (Curbline), have shifted their strategies to exit grocery-anchored and power centers in favor of strips. The “Apartmentization” of Retail: Investors are increasingly treating strip centers like “retail multifamily”. Because the bays are typically uniform (1,500 to 2,500 square feet), owners expect regular tenant turnover as an opportunity to reset and increase rents. Operational Efficiency: Re-tenanting smaller bays is more capital-efficient than filling large big-box spaces, often requiring less tenant improvement (TI) allowance. Essential Service Retail (ESR) and the Amazon Impact The narrative of the “retail apocalypse” has shifted as investors recognize the durability of “essential service retail”. Recession and Internet Proofing: Success in the space is driven by tenants that cannot be easily replaced by e-commerce, such as urgent care, hair salons, dentists, and local restaurants. The Amazon Synergy: Ironically, the rise of Amazon has helped strip centeres by creating a need for shipping hubs. Many centers now feature UPS or Pack Mail stores to handle the heavy volume of consumer returns. The Human Factor: COVID-19 revealed that local “mom and pop” tenants are often more resilient than national credit tenants because their personal livelihoods are tied to the business, making them more willing to collaborate with landlords during crises. Investment Dynamics of the Southeast Enck highlights the Southeast as a particularly attractive region due to its fundamental economic drivers. Growth Drivers: Tax-friendly states, job importation, and low cost of living have led to a massive influx of population, which in turn fuels the need for retail support. Market Concentration: Major metros like Charlotte, Tampa, Atlanta, Orlando, and Nashville are all performing solidly. Yield Opportunities: While core markets see heavily compressed cap rates, investors are increasingly looking toward secondary markets like Savannah, Knoxville, and Greenville to find better yield The Future of the Asset Class Early Innings of Institutionalization: The strip center market remains highly fragmented. Enck estimates that only about 1.5% to 2% of the approximately 68,000 unanchored centers nationwide are currently institutionally owned. Rent Growth Strategy: The primary attraction for large groups is “mark to market” opportunities—buying seasoned properties (10–30 years old) and raising below-market rents. Supply Constraints: New construction of traditional strips is limited due to high construction costs. Most new development is focused on small 2–4 tenant out-parcels (e.g., Chipotle and Starbucks) where rents are already at their peak, limiting future growth potential. Key Takeaways for CRE Professionals Stick to a Specialization: Enck advises young brokers to choose a property type and geographic focus and stay with it, rather than jumping between asset classes based on what is currently popular. Understand Risk from the Buyer’s Perspective: Learning how buyers evaluate risk, a lesson Enck learned from early struggles with difficult listings, is essential for long-term success Value of Professional Representation: Because 80% of strip center owners only own one or two properties, there is a significant opportunity for brokers to provide professional guidance to private clients.

1/28/26

The Matthews™ Podcast — Amy Rubenstein

The Operational Edge in Workforce Housing with Amy Rubenstein In this episode of the Matthews™ Podcast, host Matthew Wallace is joined by Amy Rubenstein, CEO and Founder of Clear Investment Group, to discuss what it takes to stabilize distressed workforce housing and turn operationally broken assets into durable, livable communities. While the multifamily sector often gets framed through the lens of new development, luxury amenities, and top-tier Class A product, Rubenstein focuses on a different reality. Across the country, millions of renters live in aging properties that have been neglected for years, where operational breakdowns, deferred maintenance, and instability have real consequences for residents and investors alike. Rubenstein believes that restoring these assets is not only a business opportunity but a responsibility. Drawing on decades of experience across ownership, investment strategy, and operations, Rubenstein shares how Clear Investment Group identifies underperforming market-rate workforce housing and turns it into stable, functioning communities through disciplined execution, data-driven decision-making, and operational rigor. The Operational Reality of Distress Workforce housing sits in a unique place in the market. It serves working families and individuals who often earn too much to qualify for subsidized housing, but not enough to absorb constant rent increases. Rubenstein notes that Clear Investment Group typically focuses on households in the $35,000-$85,000 income range, where demand remains durable, but quality supply is limited. The challenge is that distressed workforce assets are rarely distressed for just one reason. Typically, multiple systems fail at once: property management, resident screening, maintenance, collections, and oversight. Fixing that requires a different kind of operator. Restoring Stability and Performance Rather than chasing yield through superficial renovation, Clear Investment Group’s value restoration philosophy is stabilized through fundamentals like: Correcting operational inefficiencies Improving safety and livability Restoring resident trust Reducing delinquency and loss-to-lease Building repeatable processes across assets The Role of Data and AI in Multifamily Operations Clear Investment Group uses data and AI to strengthen both underwriting and operations to: Tighten underwriting assumptions Improve due diligence accuracy Monitor performance in real time Identify early warning signs in delinquency and collections Make operational policy changes based on resident payment behavior Key Takeaways for CRE Professionals Workforce housing is one of the most durable demand drivers in multifamily Distress is often operational, not just physical Value restoration requires discipline, not just capital Data and AI can materially improve underwriting and day-to-day decision-making Real transformation happens through execution and consistency Listen on:

1/7/26

The Matthews™ Podcast — Ed Laycox

Mid-Atlantic Shopping Center Trends with Ed Laycox In this episode of The Matthews™ Podcast, host Matthew Wallace continues the Publication Takeover Series with part two of the National Shopping Center Overview to unpack the trends shaping the Mid-Atlantic with Matthews™ Executive Vice President Ed Laycox. With over 20 years of experience and 200 transactions totaling over $1 Billion, Laycox brings a practical, deal-level view of what’s shaping retail investment decisions right now. He breaks down where capital is moving, how buyer profiles are evolving, and why grocery-anchored centers continue to command outsized attention. A Career Built in Grocery-Anchored Retail Laycox’s career has been defined by a deep focus on grocery-anchored and necessity-based retail, particularly in suburban and tertiary markets through the Mid-Atlantic. Early on, he gravitated toward these assets because of their durability and the consistency of consumer demand. Over time, that focus helped him develop a nuanced understanding of how everyday retail performs across different economic cycles. Rather than chasing headline markets, Laycox spent years building relationships with owners in smaller, less institutional submarkets. That approach allowed him to see firsthand how population growth, income levels, and consumer behavior ultimately drive shopping center performance. Capital is Following Suburban Growth Capital is continuing to shift away from urban cores into surrounding suburban and secondary markets. Laycox points to growth across areas surrounding Washington, D.C., as well as markets like Richmond, Charlottesville, Northern Virginia, and parts of Maryland, where higher-income households are increasingly willing to live farther from city centers. As these areas grow, ownership profiles have changed. What were once predominantly family-owned assets are now attracting larger private equity groups and more institutional-style capital, drawn by population growth and the stability of grocery-anchored retail. Tenant Demand Is Splitting, Not Weakening Laycox describes today’s tenant landscape as increasingly divided between necessity-based uses and discretionary or experiential concepts. Grocery, food, and auto-related tenants continue to anchor centers and provide stability, while uses such as fitness, personal services, and entertainment concepts are often able to support higher rents. At the same time Laycox cautions that not every concept works everywhere. In deeper tertiary markets, there’s often only room for one experimental tenant in a given category. Adding competition too quickly can strain demand and disrupt an otherwise healthy center. Navigating Choppy Capital Markets Financing conditions remain uneven, and Laycox does not shy away from describing the last few years as a bumpy period for retail investment sales. Despite that volatility, he emphasizes that capital hasn’t disappeared. Deals are getting done, particularly when transactions are well structured and thoughtfully executed. He notes that challenging markets often separate active operators and advisors from those who step to the sidelines. Brokers and investors who are willing to stay engaged and problem-solve tend to gain market share when conditions improve. Laycox adds: Having the ability to find ways to get deals done is where the real value of brokerage comes into play in these types of markets. Grocery-Anchored Remains the Leading Thesis Looking ahead, Laycox is clear that grocery-anchored retail remains one of the strongest investment stories in the Mid-Atlantic and nationally. As the cost of dining out continues to rise, consumers are allocating more spending toward groceries, driving consistent sales growth across many stores. One emerging issue he flags is the rising cost of insurance. As premiums increase, insurance is likely to become a more significant factor in lease negotiations and NOI discussions as leases roll. Laycox believes this expense pressure is underappreciated and will play a larger role in investment decisions over the next several years. Understanding the “Solve for X” Mindset In a market where traditional financing often feels like a barrier, Laycox advocates for a proactive, problem-solving approach to brokerage. “Solving for X” means looking beyond the high interest rates to find the specific structures—whether through creative capital sources or lease restructuring—that make a deal viable for both the buyer and the seller. In 2026, this approach is especially essential as pricing expectations reset and both sides get more flexible on structure. Key Takeaways for Investors The Mid-Atlantic opportunity is increasingly defined by where the demand is deepest and how risk is priced. Grocery-anchored centers remain the clearest defensive play, but outcomes hinge on market-by-market execution. The best deals are the ones that match tenant mix to local spending power, account for rising expense pressure like insurance, and use smart structure to bridge the gap between buyer and seller expectations. What Separates Productive Agents in This Cycle The most effective agents are leaning into problem-solving, not just pricing. In a market where capital is selective and execution takes more effort, value comes from understanding risk, setting expectations early, and helping both sides navigate structure. Consistency, local market knowledge, and the willingness to stay engaged through uncertainty are what build trust and sustain long-term relationships.

12/19/25

The Matthews™ Podcast — Will Mitchell

How Automation is Rebuilding Real Estate with Will Mitchell In this episode of the Matthews™ Podcast, host Matthew Wallace is joined by Will Mitchell, CEO and co-founder of Rabbet, for a deep dive into construction finance, one of the most overlooked friction points in commercial real estate. While billions of dollars move through the construction ecosystem every year, much of the industry still relies on spreadsheets, PDFs, and manual processes to manage draws, budgets, and lender reporting. Mitchell believes that the gap between capital and clarity is not just inefficient, it’s holding the industry back. Drawing on firsthand experience as a developer and entrepreneur, Mitchell shares how Rabbet is helping lenders and developers move toward a more connected, transparent, and data-driven workflow. From the Built Environment to Building Technology Mitchell’s career didn’t begin in software. It starts with a fascination with the built environment and a strong belief that real estate should operate more logically than it often does in practice. After working across development projects and entrepreneurial ventures, Mitchell experienced the same pain points again and again—slow draw processes, fragmented information, and a lack of real-time visibility for both lenders and borrowers. Mitchell explains: You’d have one version of the truth for the developer, another for the lender, and everything lived in email threads and Excel files. That’s not a system. That’s survival mode. Those experiences ultimately laid the foundation for Rabbet, a platform designed to centralize construction data, streamline draw management, and create shared visibility across stakeholders. The Early Innnings of Modernization Despite significant innovation across proptech, construction finance remains stubbornly manual. According to Mitchell, that resistance isn’t due to lack of intelligence or capital. It’s due to risk aversion and workflow inertia. Construction lending is high-stakes. Mistakes are costly. As a result, institutions are slow to change unless the upside is undeniable. Mitchell notes: People don’t adopt new technology because it’s marginally better. They adopt it when it’s marginally better, when it saves time, reduces risk, and makes their day-to-day easier. That philosophy shaped how Rabbet approaches product development. The goal isn’t to add another tool to the stack, but to replace inefficient processes entirely. Building Tech That Actually Gets Adopted Driving adoption in a legacy industry requires more than innovation. Technology must earn trust before it can scale. Mitchell explains that successful construction finance software must do three things well: Integrate seamlessly into existing workflows Provide immediate, tangible value Respect the expertise of the people using it Rabbet focuses on structured data rather than document overload, enabling lenders and developers to work from a shared source of truth instead of chasing updates across inboces. Mitchell says: Technology shouldn’t make people feel replaced. It should make them better at what they already do. Key Takeaways for CRE Professionals Construction finance modernization is still in its early stages Adoption depends on trust, clarity, and measurable value Technology must support decision-makers, not replace them Sustainable change happens incrementally, not overnight A Measured Path Forward As capital markets continue to evolve, the infrastructure supporting construction finance evolves in tandem. Mitchell’s perspective underscores a broader truth in commercial real estate: meaningful progress comes from respect for fundamentals, patience with adoption, and a focus on solving real problems.

The New Era of Regional Retail

The U.S. retail market is undergoing a major reset. National tenant profit margins have been shrinking, and many large retailers are struggling to remain efficient and profitable. Higher interest rates, tighter capital, and rising operating costs have forced legacy chains to consolidate, with as many as 80,000 retail stores projected to close by 2026, according to the global finance and research firm, UBS. The contraction of corporate retail has dismantled decades of monotony, opening the door to a more modern and dynamic retail scene. As consumer behavior evolves and demand is shaped by technology and global influence, the line between commerce and culture continues to blur, creating space for a new generation of agile, experiential tenants. How Have Evolving Cultural Trends and Lifestyle Preferences Changed The Way People Interact With Physical Retail Spaces? For much of the 20th century and into the early 2010s, American consumer culture was fairly uniform. Your standard shopping experience was filled with the same chains and tenants that ultimately created a homogenized experience. The digitalization of consumerism has become a fundamental anchor in reprogramming the way people engage with brands and what they expect when they enter a space. The pandemic accelerated that reset. It systemically changed what people value, how they spend their time, and what they expect from retail. The rise of e-commerce instilled a sense of instant gratification in consumers. That convenience didn’t go away, but it did change how people think about physical space. Now, when someone decides to leave home, it has to be for something that feels purposeful. You can see it in the data. E-commerce sales have skyrocketed from $571 billion in 2019 to about $1.22 trillion in 2024, with projections reaching $1.45 trillion by 2026, growing at an annual rate of nearly 9%, according to the U.S. Census Bureau. But rather than replacing brick-and-mortar, that growth has forced it to evolve. On the other side of the board is social media, which has completely democratized discovery. It’s a global gateway with on-demand access, creating a more curious and expressive consumer who expects something different every time. Social platforms are now the mainstream forum intersecting identity, storytelling, and consumer influence in real-time. Over 60% of traditional shoppers now regularly visit brand websites or social channels before purchase, according to Salsify’s 2025 Consumer Research Report. The result? The market’s now defined by experimentation and immersification of the retail experience. Concepts evolve faster, collaboration is the standard, and physical space has become a laboratory for connection, where brands test, learn, and adapt in response to an audience that craves constant novelty. In this new landscape, authenticity outperforms scale. The retailers gaining momentum are the ones who treat their stores as living, shareable expressions of culture. Social media isn’t just shaping taste anymore; it’s replacing storefronts. As discovery and checkout blur into one seamless moment, social commerce sales in the U.S. are expected to surge from $821 billion in 2025 to nearly $1.7 trillion by 2029. As Consumer Expectations Evolve and Legacy Models Fall Behind, How Are Those Pressures Translating Into The Wave of Bankruptcies and Large-Scale Store Closures? For decades, large national chains relied on scale—more stores, more exposure, more leverage with landlords and lenders. They gambled on perpetual consumerism demand, relying on debt to fuel growth. Expansion came easy when capital was cheap, so they signed long-term leases and took on substantial occupancy costs under the assumption that demand would remain consistent. But today? Well, that predictability is gone. The problem is structural. Most legacy retailers are burdened with outdated infrastructures, supply chains, store operations, and IT systems that weren’t built for the pace of change. The default risk for U.S. firms rose to 9.2% at the end of 2024, the highest level since the 2008 financial crisis, according to Moody’s 2025 Asset Management Research report. Those credit pressures have hit retail especially hard, echoing the strain of a broader economic recalibration. We’ve already seen 59 large retail bankruptcy filings in the first half of 2025, nearly 50% higher than the long-term semiannual average, according to Coresight Research. Major operators like Joann, Macy’s, Rite Aid, Walgreens, and Foot Locker are consolidating, restructuring, or closing altogether. S&P Global reports that companies this year are facing a 64-basis-point contraction in profit margins, despite rising revenue expectations, largely due to higher costs across labor, materials, and logistics. It’s the perfect storm for insolvency. But even outside of bankruptcy, contraction is visible across nearly every corner of the sector. These macroeconomic headwinds all stem from the same narrative: digital engagement, real-time feedback, and omnichannel expectations that require operational agility—and most legacy platforms weren’t designed for that. Even high-performing brands are being forced to adapt. Look at Starbucks, the company has closed hundreds of stores and restructured its model as regional coffee brands and boutique operators gain traction with consumers seeking authenticity and experience and something decent to eat. People are willing to drive past convenience if it means connection, culture, or quality. Consumers are also driven by making health-conscious decisions, whether it be avoiding seed oil or seeking organic and natural products. Regional tenants tend to be more agile and better attuned to customer trends than corporate chains. These changing market forces have also raised Chapter 11 filings to their highest level in eight years. Yet, this reset is clearing inefficiencies and making way for leaner, data-driven operators who focus on speed, cultural connection, and financial sustainability. The result is a retail landscape that is more dynamic and agile than ever before. We’re Seeing Local and Regional Operators Not Only Survive But Outperform In Spaces Once Dominated By National Chains. What’s Driving Their Success, and How Are Landloards Recalibrating Their Own Playbooks to Meet This New Kind of Tenant? The tenants backfilling these spaces aren’t placeholders; they’re operators who understand their communities and build brands around the nuances of their market. They move fast, experiment, and don’t wait for corporate approval to try something new. That agility is their advantage. The regional operators leading this wave understand marketing in a way legacy brands never had to. They didn’t have to adapt to the digital era—they’re integrated by proxy. These are founders who grew up on social media, who treat every location as both a business and a content engine. They’re utilizing storytelling, local influencers, and community engagement to transform what was once traditional retail into cultural real estate. Their customers aren’t just shopping, they’re participating in the brand. This new generation of tenants moves fast and connects deep. They know how to create spaces that resonate, coffee shops that double as creative hubs, fitness studios that feel like social clubs, and restaurants that build identity as much as they sell food. That connection is what corporate expansion models can’t replicate. A regional concept that drives consistent foot traffic and community engagement can outperform a national nameplate that’s lost cultural traction. The real question landlords are asking now isn’t “Who can pay the most rent?” It’s “Who can keep this center relevant, busy and sexy?” StormBurger, a regional restaurant that repurposed a former Church’s Chicken, increased sales fivefold, not because the menu was revolutionary, but because the brand felt alive. They utilized social media, local partnerships, and genuine storytelling to create something people wanted to rally behind. Two of the hottest tenant segments are pilates and coffee, both of which address the post-COVID need for connection and consistency. Pilates is about self-investment and belonging; coffee is about ritual and community. They’re everyday anchors that bring people in and keep them coming back. You’re seeing experiential tenants, boutique entertainment, and family concepts transform former anchor spaces into vibrant areas of activity. They fragment the big boxes, diversify risk, and extend dwell time. They make centers feel dynamic again. What’s happening now is that landlords are rethinking the definition of “value.” The strongest centers today aren’t just collections of leases; they’re curated ecosystems. The focus is on energy, synergy, and demographic diversity.

Michael Pakravan

Senior Vice President & National Director

3/19/26

Boston, MA Multifamily Market Report March 2026

Boston’s multifamily market remains resilient despite a robust wave of new construction that has pushed conditions off recent highs. Over the past year, deliveries outpaced absorption, lifting vacancy to 7.4% in early 2026, though leasing has remained active enough to support overall fundamentals. In the last 12 months, the market absorbed 6,733 units while delivering 12,410 units, with particularly strong demand in Everett/Malden/Medford/Melrose, East Boston/Chelsea, Route 1 North, and 495 South. Leasing has also improved in South Boston/Seaport, signaling renewed renter demand in select urban areas. Boston continues to outperform the broader U.S. multifamily market, with vacancy remaining about 200 basis points below the national average. Rent growth has moderated, with asking rents flat year over year, as the market absorbs recent supply additions. Even so, Boston’s strong renter base, high barriers to entry, and steady investor demand should support stability as construction slows, with vacancy expected to peak near 7.5% before easing. Key Findings Boston’s multifamily investment market remains active despite elevated interest rates and broader capital market volatility. Over the past year, 16,594 units traded for a total of $4.6 billion, reflecting resilient investor demand across the market. As of March 2026, vacancy reached 7.4% as recent deliveries have outpaced absorption over the last year. However, this remains 200 basis points below the national average. Market rents average roughly $2,900 per unit, among the highest in the nation, though year-over-year rent growth has flattened as new supply enters the market. Boston Multifamily Supply & Demand Dynamics Source: CoStar Group, Inc. Greater Boston MSA Demographics Source: CoStar Group, Inc. Unemployment Rate: 4.6% Current Population: 5,067,470 Households: 1,995,759 Median Household Income: $121,697 Greater Boston MSA Population, Labor, & Income Growth Source: CoStar Group, Inc. Greater Boston MSA Construction The development pipeline remains active, though construction levels are beginning to trend lower. After delivering roughly 8,100 units in 2024 and more than 9,300 units in 2025, the market is expected to add around 7,700 units by year-end 2026, keeping supply growth generally in line with recent trends. Boston currently has about 10,000 units under construction, representing roughly 3.4% of existing inventory, with a large share concentrated in northern submarkets near downtown, particularly Somerville/Charlestown and Everett/Malden/Medford/Melrose. The composition of new development is also shifting, with nearly 40% of units underway classified as 3-star properties, signaling a gradual move away from the predominantly luxury-focused construction that characterized earlier cycles. Unit Construction Starts Source: CoStar Group, Inc. Units Under Construction Source: CoStar Group, Inc. Sales Boston’s multifamily investment market remains active despite elevated interest rates and broader capital market volatility. Over the past year, 16,594 units traded for a total of $4.6 billion, reflecting resilient investor demand across the market. Pricing averages roughly $450,000 per unit, nearly double the national average, while cap rates have held near 5.1%. Private capital remains especially active, though institutional and public buyers continue to account for a significant share of large transactions. As investors remain selective across other asset classes, multifamily continues to stand out as one of Boston’s most favored investment sectors. Boston Multifamily Sales Volume Source: CoStar Group, Inc.

Nick Jasinski

Vice President

3/18/26

Multifamily Supply Paradox: When Oversupply Meets Undersupply

The U.S. multifamily market finds itself at an inflection point. On a national level, the country remains structurally undersupplied relative to long-term housing demand. Many institutions report that the U.S. still faces a deficit of three to five million housing units, especially for renters earning below median income. Yet, at the same time, many major multifamily metros are grappling with elevated vacancy, slowing rent growth, and historically aggressive concessions due to over building. This contradiction has raised the question of whether today’s softness represents a fundamental shift in renter demand or merely a temporary imbalance in the supply cycle. The core paradox shaping today’s market is the coexistence of a national housing shortage with localized oversupply in a handful of major metros. Between 2023 and 2025, high-growth markets experienced an unprecedented surge in multifamily deliveries. Developers responded to the postpandemic signals, rapid household formation, record-low vacancy, and double-digit rent growth, by launching the largest construction pipeline in decades. However, this supply was delivered in a highly concentrated manner. Rather than evenly addressing the national housing shortfall, new construction clustered in select metros and largely targeted the Class A segment. While population growth and job creation in these markets remained healthy, they were not sufficient to absorb the volume of new units immediately upon delivery. The result has been a lag between supply delivery and demand absorption that has weighed on nearterm fundamentals. The current imbalance is most acute in a handful of large, high-supply Sunbelt markets where new deliveries have clearly outpaced near-term demand. Austin stands out as the most severe case, with falling occupancy, sharp rent resets, and elevated concessions reflecting a prolonged period of capital overshooting fundamentals. DFW and Atlanta follow in scale, where massive delivery volumes have overwhelmed absorption despite long-term population and employment growth, limiting pricing power and keeping vacancy elevated. Phoenix remains the classic supply-stress market, as post-pandemic development materially exceeded household formation, forcing operators to prioritize occupancy over rent. Denver, while smaller, is increasingly constrained by flat employment growth, removing a key demand backstop and prolonging oversupply conditions. While these markets retain strong long-term growth narratives, the data clearly shows that near-term fundamentals remain under pressure, with normalization dependent on sustained absorption and a meaningful slowdown in new supply, despite positive employment gains. The True State of Fundamentals Vacancy rates across many supply-heavy markets have risen by roughly 100 basis points or more over the past 12 to 18 months, with stabilized vacancy generally hovering in the mid-to-high 7% range. In 2026, vacancy is expected to tighten an additional 30 to 50 basis points, driven primarily by stabilized assets rather than newly delivered properties still in lease-up. Once concessions, bad debt and non-paying tenants are factored in, economic vacancy is often materially higher. Class A properties, in particular, face extended lease-up timelines, and aggressive incentives are often more economical than allowing physical vacancy to spike. Concessions have become a defining feature of the current leasing environment. Across many Sunbelt markets, operators are offering six to eight weeks of free rent not only on new leases but increasingly on renewals as well. What was once a tactical lease-up strategy has evolved into a widespread tool for occupancy preservation. Rising delinquency and missed payments also reflect nearterm affordability stress rather than a collapse in renter demand, underscoring the cyclical nature of the current environment and reflecting the late-cycle dynamics of oversupply. National rent data reinforces this interpretation. According to CoStar Group, U.S. rents declined month-over-month in November 2025 at the steepest pace in more than 15 years (0.18%), extending a run of flatto-negative monthly growth. While headlines focus on the weakness, these metrics are consistent with a market digesting temporary supply, rather than entering a prolonged downturn. Rent growth is expected to fall in the 2% to 3% range by year-end 2026. The 2026 Inflection Point Elevated construction costs, limited availability of construction financing, and materially tighter underwriting standards since 2023 have caused new starts to fall dramatically. Additionally, permitting activity across most major metros points to an increasingly thin pipeline, with new deliveries set to decline meaningfully in 2026. Markets that overshot the most, such as Austin, Phoenix, Nashville, Dallas, and Denver, are likely to experience a longer absorption runway. In contrast, much of the Midwest and parts of the Northeast, where new supply has been more measured, appear positioned to stabilize sooner. Importantly, any increase in construction activity sparked by improving capital market conditions will begin from a historically low baseline, limiting the risk of another supply surge before 2027 at the earliest. Demand Signals to Watch As supply pressure eases, the timing of recovery will hinge on three key demand indicators that historically precede tightening fundamentals: Population Growth, particularly amoung prime renting age cohorts. Job Growth, with emphasis on professional and service sector. Net in-migration Despite near-term softness, migration into many Southeast markets remains positive, reinforcing long-term demand durability even as rent growth pauses. Once equilibrium is reached, rent growth is expected to resume at a modest but sustainable pace, while concessions gradually burn off as occupancy normalizes. Risks That Could Delay the Timeline While the outlook is constructive, several risks could push the absorption-equilibrium timeline further out. Prolonged weakness in consumer balance sheets, rising delinquency, or increased renter “doubling up” could slow household formation. Affordability pressures have pushed some renters to delay household formation, take on roommates, or temporarily move back in with family. Job losses or slower hiring in supply-heavy markets would also extend lease-up periods. That said, these risks remain cyclical rather than structural and are unlikely to derail the long-term demand backdrop. A Healthier Cost of Capital Environment Capital markets conditions are quietly improving. Both short- and long-term interest rates are expected to drift lower through 2026, settling into a new equilibrium in the 4%-5% range rather than returning to the ultra-low rates of the prior decade. This shift should unlock pent-up transaction volume, narrow bid-ask spreads, and drive refinance activity for assets with 2025-2027 maturities. Many owner decisions today remain maturitydriven. Borrowers without near-term loan expirations continue to defer transactions, contributing to suppressed sales volume. As financing costs ease and valuation expectations stabilize, this logjam is likely to break. Transaction activity is expected to increase meaningfully in 2026, supported by improving lender sentiment and expanded agency allocations. Lower short-term rates will also reduce the cost of floating-rate construction loans, encouraging selective new starts. Importantly, any new development will deliver into a materially tighter market, rather than exacerbating oversupply. Implications for Investors, Developers and Operators For investors, the current window offers an opportunity to acquire assets ahead of meaningful fundamental improvements. As bidask spreads narrow, transaction velocity should increase, particularly for well-located assets with near-term upside. Developers face a narrower but more rational window beginning in late 2026 and 2027. Projects initiated during this period are more likely to deliver into a balanced market with healthier rent growth. Operators stand to benefit from stabilizing occupancy, declining concessions, and the ability to push rents modestly. A more predictable expense environment and improved access to capital should support NOI growth and balance sheet repair. Bottom Line: The multifamily market is recalibrating. As supply pressure fades and capital markets heal, 2026 is shaping up to a critical inflection point that resets the sector for its next cycle of sustainable growth.

David Treadwell

First Vice President

3/17/26

The Emerging Shift: Car Wash M&A Expected to Outpace Greenfield Development in 2026

For several years, the growth at all costs mantra led the car wash industry to note an influx of greenfield development. Throughout the rest of 2026, the strategy has fundamentally shifted. The “easy” dirt is gone, and the easy money has tightened. Today, private equity and regional multi-site operators have swapped their shovels for checkbooks. The market is noting an aggressive deployment of capital across the Southeast, but the target has changed: it’s no longer about where owners can build, but who they can buy. The Shift from Development to Consolidation The 2026 landscape is defined by a scarcity of quality inventory. Strategic buyers are no longer interested in the ramp-up risk of new builds. Instead, they are paying premium multiples for stabilized, high-performing express and flex-serve operations. Speed to Market: In a competitive region like the Southeast, buying a site with an established customer base is faster than navigating 18 months, if not longer, of permitting and construction. The Saturation Moat: Many Tier 1 and Tier 2 markets in the Southeast have reached a built out state. Zoning laws have tightened, and prime corners are gone. Buyers are paying a premium for these sites because they represent defensible territory. It is increasingly difficult for a competitor to enter the trade area and dilute the car count. Proven Resilience: Buyers are looking for fortress locations that have already weathered economic fluctuations. The Scalability Premium: Multi-site operators aren’t just buying cash flow; they are buying data, membership bases, and regional density that makes their entire platform more valuable. The $2M Swing: Operational Excellence as a Valuation Lever In the current market, the difference between an average exit and a premium exit isn’t just luck, it’s math. We are seeing that even incremental improvements in core KPIs can swing a valuation by $500k to over $2M. To capture the interest of institutional capital, operators must consider these five levers: Key Value Driver Why It Matters to Investors (2026) Membership Penetration Recurring revenue remains central to underwriting. Penetration rates above 50% provide revenue visibility, dampen weather volatility, and create a durable earnings base. Churn Rate Investors look at the leaky bucket. A 1% reduction in monthly churn can exponentially increase the Lifetime Value (LTV) of your customer base. Monthly average churn rates typically float around the 7%-9% range. Reducing this by a percentage or two per month can add an additional $100k-$200k of value to your business. Labor Efficiency With rising wages, the most valuable washes are those that leverage automation to keep labor costs below 15-20% of revenue. Capture Rate Traffic alone does not determine performance. Site design, ingress/egress, and local marketing effectiveness drive the ability to convert passing vehicles into recurring customers. High capture rates reinforce competitive positioning within the trade area. Operating Margin In 2026, growth is a given, but profitability is the requirement. EBITDA margins of 40-50% are the benchmark for premium pricing. A high margin indicates that the operator has mastered the low variable cost model, where every additional washed car drops additional profit to the bottom line. The Bottom Line The Gold Rush era of the car wash industry has matured into the Operational Era. For investors, the Southeast remains one of the most attractive corridors for deployment, provided the assets show a clear path to scalability. For operators, the message is clear: the work done inside the tunnel today to tighten margins and solidify membership bases is exactly what will dictate exit prices tomorrow.

Haidyn DeJean

Associate

3/17/26

New Construction Continues to Outperform the Resale Home Market

New home sales slowed nationally in October as the market entered its typical seasonal cooldown and affordability pressures continued to limit buyer activity. Builders sold new homes at an annualized pace of just over 700,000 units during the month, down from late-summer levels. Even with that monthly slowdown, sales remained approximately 13% higher than a year earlier, underscoring how new construction continues to outperform the slower recovery in the resale market. Real home prices increased just 1.8% on average in 2025, a pace that fell below inflation and helped prevent price growth from becoming a larger affordability obstacle. Looking ahead, market forecasts point to a potential rebound in home sales in 2026, with volumes expected to rise by roughly 7% as mortgage rates move closer to 6% and overall conditions normalize. Why New Construction Is Carrying the Market Despite modest price growth, affordability remains a central challenge. Rising non-mortgage costs have placed growing pressure on household budgets, with expenses such as insurance, utilities, and property taxes increasing by roughly 30% in 2025. Insurance premiums alone are expected to climb another 8% in 2026, once again outpacing inflation and limiting any relief created by slower home price appreciation. In this environment, new construction has continued to play a critical role in supplying available inventory. Limited resale supply across much of the country has kept builders focused on incentives rather than higher prices. Mortgage rate buydowns and closing cost assistance have helped support absorption and sustain sales activity, even as many buyers remain cautious. Southern California Follows National Trend Southern California followed a similar trajectory in October. Across the six-county region, Los Angeles, Orange, Riverside, San Bernardino, San Diego, and Ventura, buyers completed approximately 14,600 home sales during the month, reflecting a measured and seasonally typical pace. That volume aligns with historical norms for Southern California at this point in the year. The California Association of Realtors reported that regional home sales rose about 5.6% year-over-year in October, marking a modest improvement from last year despite persistent affordability constraints. Price growth in much of the state has been muted but relatively stable, with statewide median prices only slightly lower or flat compared to a year ago even as some Southern California counties have seen small gains; overall, pricing hasn’t collapsed but hasn’t surged either. Looking ahead, C.A.R.’s 2026 forecast anticipates modest price growth, with the California median home price projected to rise about 3.6% next year, suggesting a gradual upward trend in values alongside improving sales activity. New construction continued to support overall activity, particularly as resale listings remained scarce. Buyers showed stronger interest in more affordable inland markets, while higher-priced coastal submarkets experienced longer marketing times. Entry-level and attached homes (i.e. Townhomes) attracted the most attention as buyers prioritized manageable monthly payments over square footage. Looking Ahead As Southern California enters the heart of the winter season, new home sales continue to hold at a steady but subdued pace. Affordability constraints are keeping builder strategies focused on incentives and targeted product offerings as buyers wait for clearer improvement in borrowing conditions. Lower mortgage rates could still bring many sidelined shoppers back into the market, particularly first-time buyers, according to a recent BPG Inspections survey. Nearly two-thirds of first-time buyers said they would actively begin house hunting if mortgage rates fall to what they consider an affordable level. Respondents identified 4.86% as the highest manageable rate for a 30-year fixed mortgage. First-time buyer preferences point to a strong desire for flexibility and control. About one-third (33%) said they prefer new construction, while 29% expressed interest in fixer-uppers. Another 16% favored flipped homes, and 22% remained open to other housing options. Affordability continues to stand as the primary barrier to homeownership. More than eight in ten first-time buyers (83%) report that high housing costs have prevented them from purchasing a home, while fewer than one in ten say they prefer renting, underscoring that demand for ownership remains strong, but is constrained by pricing rather than preference.

Stewart I. Weston

Executive Vice President

3/13/26

The Rise of Convenience Stores in Net Lease Deal Flow

The net lease investment market has entered 2026 in a more selective environment. Higher interest rates and tighter underwriting have slowed activity across several traditional net lease categories. Yet one property type has quietly moved to the forefront of deal flow: convenience stores. Convenience store listings within the net lease market have increased significantly in recent months, with inventory rising roughly 27% since mid-2025. At the same time, cap rates have begun drifting upward and pricing dispersion across assets has widened. While these trends may appear contradictory, they reflect a broader shift in how investors are positioning capital within the net lease sector. Necessity Retail Continues to Command Attention Convenience stores occupy a unique position within retail real estate. Unlike many discretionary retail formats, c-stores serve a daily-needs function. Fuel, packaged goods, quick-service food, and convenience retail create consistent consumer traffic regardless of broader economic cycles. For net lease investors seeking stable income streams, this necessity-based demand profile is particularly attractive in today’s environment. Properties leased to established operators often feature long-term triple-net leases and predictable cash flow characteristics, which align well with the defensive strategies many buyers are prioritizing in 2026. As investors continue reallocating capital toward resilient retail formats, c-stores have emerged as a natural landing spot. Rising Inventory Reflects a More Active Market The recent increase in c-store listings is not solely a function of weaker demand. In many cases, it reflects the opposite: a more active transaction pipeline. Several factors are contributing to this increase in supply: Operators pursuing sale-leaseback transactions to unlock capital Consolidation within the convenience retail sector Private owners monetizing assets amid strong investor interest These dynamics have created a steady flow of product entering the net lease market, making convenience stores one of the most visible asset types in current deal pipelines. Pricing Is Beginning to Diverge Even with strong investor demand, the sector is not immune to broader capital market pressures. Rising interest rates and more disciplined underwriting are gradually pushing cap rates higher across portions of the net lease market. At the same time, pricing dispersion between assets is becoming more pronounced. Top-tier convenience store properties, particularly those with strong operators, new construction, and long-term leases, continue to command aggressive pricing. Meanwhile, assets tied to weaker operators or shorter lease terms are seeing more conservative valuations. This growing spread reflects a broader shift happening across net lease investing: buyers are increasingly differentiating between assets rather than pricing entire sectors uniformly. What This Signals for the Net Lease Market The growing prominence of convenience stores in deal flow highlights a larger theme shaping the net lease market in 2026. Investors are prioritizing durable income, necessity-based tenants, and operational resilience. Convenience stores check many of those boxes. Their combination of daily-use retail, fuel demand, and evolving foodservice offerings provides a level of stability that many other retail categories struggle to match. As capital continues to seek defensive yield opportunities, c-stores are likely to remain a prominent feature of the net lease investment landscape.

Daniel Gonzalez

First Vice President & Associate Director

3/13/26

The Rise of Small-Bay Industrial

The industrial sector has seen a significant change following the post-pandemic surge, which resulted in an oversupply of large-scale distribution centers that are 200,000 square feet or greater. Developers responded to the e-commerce boom and low interest rates, and added a record-breaking 1.8 billion square feet of industrial supply across the U.S. since 2020. The new additions outpaced demand as the pandemic slowed down, which led to climbing vacancy rates in the big-box segment. As the market struggled to absorb this massive influx of large product, developers and investors shifted their focus on small- to mid-sized industrial properties, specifically those ranging from 5,000 to 50,000 square feet. This smaller-scale, or “small-bay,” product remains incredibly tight, with a national vacancy rate near historical lows around 3% to 4%, demonstrating its resilience and importance to last-mile logistics, small businesses, and trade-focused users. The shift highlights a key trend in the evolving industrial sector. While large warehouse development slows, with a vacancy rate around 6%, the demand for smaller, flexible facilities is driving a building boom that reflects the diversity of activity across industrial. National Small-Bay Trends A variety of tenants are seeking properties between 5,000 to 50,000 square feet. The demand represents a move away from traditional heavy manufacturing toward specialized, knowledge-based services and high-tech operators. This user base includes local trade businesses—such as plumbers, electricians, and HVAC contractors—and small distributors focused on last-mile logistics who seek infill locations closer to their residential customer base. Additionally, these small- to mid-sized spaces are essential for the growth of modern tech firms. Startups in robotics, drone technology, and specialized R&D require flexible, functional space for prototyping, light assembly, and system testing without the massive footprint of a traditional factory. This newer user base often prefers shorter lease terms than the 10- to 15-year commitments of large distribution centers, allowing for the agility to scale operations quickly with buildouts as their technology matures. Across the country, the Sunbelt states, as well as markets with high population growth and limited supply, are experiencing the most acute demand and lowest availability. While urban centers like Los Angeles and New York’s outer boroughs remain tight, high-growth metros across the country, including Phoenix’s East Valley, Houston, Atlanta, and Central Florida, are seeing particularly low vacancy rates for this product type. The national availability for industrial spaces under 50,000 square feet is very tight at roughly 3.4%, which is well below big-box levels. Competition and Constrained Supply The structural scarcity and increased demand for industrial spaces under 50,000 square feet are hindered by construction costs. While overall industrial construction prices have stabilized from their pandemic peaks, the cost per square foot for smaller, multi-tenant industrial projects is higher than for large big-box distribution centers. Small industrial properties recorded an average sales price of $142 per square foot, increasing by 17% over the previous year. In contrast, large industrial projects averaged around $75 per square foot, a lower level that dropped by 4.2% in one year. This disparity is driven by factors like more extensive site work, complex utility infrastructure, a greater number of individual tenant build-outs, and increased costs for specialized labor. The expense of small-bay construction, coupled with high land costs in infill locations, creates significant barriers to entry for developers, limiting new supply and pushing a variety of highly-qualified tenants into further competition for the existing, limited inventory. San Francisco: Top Metro for Smaller Footprints The San Francisco Bay Area is a prime example of the high demand and scarcity driving the small-bay industrial market’s outperformance. The Bay Area is a prominent metro for its land limitations and consistent demand from high-value, specialized companies. These factors create an environment where the price per square foot and rental rates for the sub-50,000-square-foot segment have demonstrated greater stability and often faster growth than large-scale facilities, which have seen more volatility due to oversupply in other national markets. The essential need for local logistics, high-tech R&D support, and vital trade services means tenants are willing to pay a premium to secure space close to the metro’s talent and consumer base. Next-generation tenants are increasingly fueling this demand. While traditional logistics remain active, the region has seen an influx of AI and robotics firms securing smaller footprints for computer power and flex lab setups, often displacing traditional tenants. One example is the metro’s Peninsula submarket. Here, land is the most limited because it is home to several R&D, life sciences, and specialized tech operators, and the area often outpaces Silicon Valley in conversion activity. These users require older industrial stock that can be repurposed to meet high electrical power and specialized utility needs. Meanwhile, the Oakland/East Bay submarket provides a lower-cost option. Fueled by activity at the Port of Oakland and last-mile distribution requirements, small-bay facilities here are essential for fabrication, local logistics, and distribution that serve other locations across the metro. Further south, San Jose/Silicon Valley is seeing increased demand driven by advanced R&D and manufacturing support services, with data center growth also adding to these expansions. While new additions here are consuming significant industrial land for large, power-intensive facilities, the demand also creates a large domain of support and technical services that rely on flexible, smaller industrial spaces. Price per SF Rises Since Pandemic Metrowide, But Has Since Stabilized *up to 50,000 SF | Source: CoStar Group, Inc. A Foundation for the Future Economy The small-bay segment demonstrates the essential, high demand backbone of modern industrial. Unlike the large-format sector, which grappled with post-pandemic oversupply, the small-bay market is characterized by essential demand outpacing scarce supply. With a variety of tenants, from specialized R&D firms and high-tech startups to local contractors and last-mile logistics providers, their operations require proximity to urban centers. While new, Class A small-bay facilities command premium rents, the competition is increasingly driving smaller businesses to seek more affordable Class B and C industrial properties. This flight to quality underscores a core structural issue—the limited supply of small-bay facilities. Developers are beginning to explore solutions, like multi-story industrial construction in land-constrained urban markets. While this model is effective for maximizing floor space on a small footprint, its high construction cost means it can only deliver high-end, Class A product, which does not meet demand. The gap between this new, high-cost supply and the consistent need for affordable flex and Class B/C space suggests that the small-bay segment will remain the most increasingly sought-after industrial asset for the foreseeable future.

Belall Ahmed

Senior Associate

3/12/26

Why Most People Fail Despite Knowing Exactly What to Do

Success is rarely mysterious. In most professions the formula is visible to anyone willing to look: identify the fundamentals, repeat them relentlessly, and refuse to stop. Yet despite how obvious this sounds, very few people manage to execute on it. The reason is not confusion. It is not a lack of tools, training, or information. The reason is far more human. The work required to succeed is simple. What is not simple is doing it every day. Knowing the Formula Has Never Been the Problem If you ask almost anyone struggling in their career what they should be doing differently, they can answer without hesitation. They know they should be making more calls, following up faster, preparing more thoroughly, staying more organized, or being more disciplined with their time. The problem is rarely ignorance. The problem is endurance. Performing the same tasks day after day with little immediate gratification is emotionally taxing. Rejection accumulates. Motivation fades. Discomfort sets in. Over time, small compromises begin to feel justified. One skipped day becomes two, becomes three, and so on. A neglected process turns into a habit. Eventually the very plan they once understood perfectly becomes something they “used to do.” Discipline Fails Long Before Knowledge Does That is why most people fail despite knowing exactly what to do. Understanding the job and enduring the job are not the same thing. Understanding is intellectual. Enduring is emotional. Understanding says, “I know what is required.” Enduring says, “I will do it anyway.” Most people are capable of discipline in short bursts: a week, a month, maybe a quarter. Very few can sustain it for years. And yet that is precisely what success demands. The difficult truth is that achievement in any competitive field is less about brilliance and far more about the willingness to live through monotony, frustration, and discomfort every single day. This is why discipline is the ultimate competitive advantage. People spend their careers searching for edges. Better technology, better markets, better scripts, better strategies. They believe that some external tool will unlock their potential, but in reality, the most powerful advantage has always been internal. Discipline is what keeps you working when enthusiasm disappears. Discipline is what keeps you consistent when results are invisible. Discipline is what makes you reliable in environments that reward persistence over talent. Discipline is what separates professionals from pretenders. Routine Creates Outcomes Careers are not built in dramatic moments. They are built in quiet, repetitive actions. The extra follow-up call that nobody notices. The additional hour of preparation that no one asked for. The meeting taken when it would have been easier to postpone. Individually these efforts appear insignificant. Compounded over months and years, they become the entire difference between average and exceptional. Most people want results, but few are willing to embrace routines. Yet it is routines, repeated without exception, that ultimately determine outcomes. Nowhere is this truer than in sales. Many people are attracted to sales because they imagine freedom: flexible schedules, independence, and unlimited upside. What they often fail to recognize is that professional sales is not defined by hours on a clock. It is defined by mindset. The best salespeople do not turn their effort on at nine and off at five. They think about clients while commuting. They strategize on weekends. They prepare long before the workday begins. Not because someone forces them to, but because they have chosen a lifestyle where persistence is a permanent state of mind. The conversations may occur during business hours, but the preparation and discipline extend far beyond them. In truth, succeeding in sales is less a job choice and more a life choice. There Are No Substitutes for Showing Up This is the reality most people do not want to hear. There are no hacks, no shortcuts, and no magic systems that replace showing up. The fundamentals never change. Make the calls. Do the follow-ups. Stay organized. Prepare thoroughly. Repeat tomorrow. What separates winners from everyone else is not what they know, but what they are willing to endure when the work becomes boring, uncomfortable, or discouraging. Success does not belong to the smartest. It belongs to the most consistent. And consistency is not a personality trait. It is a daily decision. The work will always be simple. The challenge will always be doing it again. Tomorrow.

Cory Rosenthal

Executive Managing Director & National Director of Multifamily

3/12/26

Reawakening Generations: The Modernization of Multi-Tenant Retail Assets

Whether you have owned a shopping center for 15+ years or have recently acquired a legacy property, here are some ways modernizing your asset can revitalize its appeal and long-term value. Retail investment has reignited, as the sector posted one of its strongest quarters in Q3 2025 with sales volume up 33.4% YOY to $17.2 billion, according to a recent RCA analysis. Nearly half of this activity came from shopping center acquisitions alone. As retail investment demand increases, investors are turning their attention to legacy shopping centers held by families or individual owners, often for generations. Many of these properties, having been owned for 15-20 years, feature older lease structures, rents that have not been recently adjusted, and/or limited professional management. By implementing new leases, tenants, and operational efficiencies, new and existing owners can unlock hidden value and reawaken the opportunity these assets have held onto for generations. How to Unlock Value Through Asset Revival Lease Optimization By updating an asset’s lease structure to include NNN structures, rent escalations, CAM recoveries, etc., it will pass the majority of property-related expenses (i.e. taxes, insurance, and maintenance) to tenants. This creates a highly predictable, stable source of income for landlords. Replacing/optimizing outdated agreements will also generate significant financial and operational benefits. Many of these properties have tenants in place with below-market rents. An updated lease structure minimizes the potential for risks associated with fluctuating operational costs and ensures a reliable cash flow; critical for investors seeking passive involvement and efficient asset management. Refreshing the Mix New owners of generational assets have a unique opportunity to bring fresh vision and energy to shopping centers, leveraging both their leasing agent and a hands-on approach when engaging with tenants. By actively collaborating with leasing teams, owners can identify and attract a mix of high-quality national tenants that elevate the center’s profile and draw broader customer traffic. At the same time, direct access to existing tenants allows them to understand local needs and community preferences, making it possible to introduce a synergistic mix of service-oriented tenants that enhance convenience and relevance for shoppers. This dual approach of combining strategic Property Enhancements national leasing with thoughtful local service additions can refresh the tenant mix, increase foot traffic, and ultimately maximize the value of the property while maintaining its long-term legacy. Property Enhancements Property enhancements such as façade improvements, signage upgrade, lighting and landscaping can take a property to the next level, completely repositioning these shopping centers, both visually and competitively. These visual updates elevate an asset’s perceived value and attract retailers seeking vibrant, high-visibility retail environments by reinstating the center’s investment potential. By strategically investing in property enhancements, owners can transform legacy shopping centers into not only high yielding, but exciting and captivating places for customers to dine and shop. Professional Management as a Catalyst Leveraging deep industry relationships, managers of large portfolios have a unique opportunity to implement active, professional management systems. Experienced managers proactively manage tenant risk, renew leases early, and adjust rents to market conditions, reducing vacancies and strengthening collections. Through tenant engagement and strategic mix planning, professional oversight builds a vibrant, stable base that enhances long-term asset value. Properties that proactively engage tenants early see renewal rates improve from 80% to 92% with targeted incentives. Active management leverages market data to guide rent and tenant decisions to keep properties aligned with consumer trends and competitive dynamics for optimal revenue. Professional teams, with the right resources, can also implement custom budgeting, cost monitoring, and preventive maintenance programs that reduce expenses and increase NOI. Their ability to adapt established management practices to each unique property further minimizes risk and maximizes operational efficiencies, directly impacting returns and property value. An efficient management system can unlock latent potential by consistently converting operational improvements into enhanced revenue, resulting in minimized costs and asset growth that is both measurable and sustainable. A Win-Win Strategy Repositioned shopping centers can achieve 20% to 40% rent growth and significant NOI expansion, supported by improving regional retail fundamentals that enhance long-term yield and appreciation. Renovated Shopping Centers Capture Premium Rents and Are Not Slowing Down Source: Matthews™ Research, CoStar Group, Inc. Investors who can support generational transitions in ownership and operations provide liquidity and simplified estate management for legacy owners, while unlocking new growth and operational potential. This creates opportunities for structures like UPREIT contributions (§721 exchanges), allowing sellers to defer taxes while providing ongoing income via distributions, access to professional management and economies of scale, and the opportunity to participate in future appreciation. This structure can be especially advantageous for estate planning, allowing owners to preserve and transfer wealth efficiently, while turning a management intensive property into a more passive, long-term investment. Redefining the Future of Retail The Southeast region offers a rare combination of stability and untapped upside in generational shopping centers owned by individual operators. By strategically reinvesting, through modern lease structures, targeted property upgrades, and professional management, investors can unlock hidden value and significantly enhance NOI. This opportunity goes beyond simple repositioning; it represents a chance to redefine the future of community retail, both regionally and nationally, by creating vibrant, sustainable shopping destinations that meet evolving consumer needs. Those who move swiftly to acquire, modernize, and professionally operate these assets will be well positioned to generate strong returns and long-term appreciation while shaping the retail landscape for years to come. Consumer Trends: How Shopper Behavior and Store Dynamics Drive Retail Asset Modernization Consumers demand more than just products; they want inviting environments, convenience, and a clear sense of place that generational centers have the potential to provide. Revitalizing these assets to keep up with rising demand presents a profitable opportunity for investors. Here are the facts: Shopper Dynamics: The New Visit Pattern 8-10% more store trips since 2023 12-15% shorter average dwell time Placer.ai 2025 Snapshot: Grocery-anchored centers now exceed pre-pandemic traffic levels, led by California and Washington. As consumer expectations evolve, foot traffic patterns reveal that shoppers are more active yet increasingly time-conscious, favoring retail environments that deliver convenience, efficiency, and experiential value in every visit. Staff & Experience: The Human Advantage 3.5% conversion gain with staff engagement training (BLS) As automation and convenience reshape shopping, the human element remains a critical advantage—engaged, service-driven teams elevate the in-store experience, deepen loyalty, and drive measurable sales gains. Hospitality is becoming the differentiator in everyday retail. The Importance of an Optimal Tenant Mix A shopping center in Georgia increased occupancy from 88% to 99% after focusing on service-oriented tenants (such as salons, pet-care, chiropractic) alongside traditional anchors (ICSC) In today’s evolving retail landscape, centers with an optimized blend of national anchors with service- and experience-oriented tenants, outperform peers and attract substantially more shopper stops per visit. Summary Insight Today’s retail revival is consumer led. Shoppers crave speed, experience, and connection, creating a powerful tailwind for investors modernizing legacy centers with professional management, strong tenant curation, and upgraded experiences.

Ashleigh Liguori

Associate

3/12/26

2026 Jacksonville IOS Market Outlook

Jacksonville’s IOS sector continues to stand out as one of the Southeast’s most resilient submarkets. What began as a fragmented, private-capital sandbox has rapidly matured into a core institutional target. Anchored by JAXPORT expansions and a 23% population boom over the last decade, true IOS properties, strictly defined by a Floor Area Ratio under 0.30, are commanding massive premiums. While broader shallow-bay industrial vacancy has crept up toward 6.9%, pure-play paved yards remain highly scarce, triggering aggressive capital deployment from mega-LPs. Executive Summary: 10 Key Trends for 2026 The JPM-Led Capital Flood J.P. Morgan Asset Management set the gold standard as the mega-LP backing the rapid scale-ups of platforms like Alterra and Zenith. This blueprint is now being followed by other capital giants, such as Blackstone and Clarion, to fund local aggregators, driving severe cap rate compression for Class A yards. The Far <0.30 Constraint Properties with a Floor Area Ratio under 0.30 are trading as pure-play IOS, commanding institutional premiums due to minimal structural CapEx requirements. Pricing Reality Check While average core usable acres trade between $500K and $800K, institutional funds will stretch to $1.5M+ per usable acre for fully paved, heavily zoned sites near major corridors. Rent Growth Moderation Rent growth is stabilizing at 4 to 6% annually, down from the 6 to 10% pandemic-era peaks, with base rents holding strong at around $3.9K to $4.5K per usable acre/month. Owner-Users Dictate the Ceiling Corporate end-users, like Salem Leasing and PBM Constructors, are outbidding institutional funds for move-in-ready assets, ignoring traditional cap rates to secure mission-critical space. Paving is the Ultimate Arbitrage Value-add paving, security, and stormwater retention upgrades on Class C dirt offer the highest IRR in the sector, as raw dirt faces severe debt liquidity constraints. Sale-Leaseback Velocity Legacy local businesses are cashing out at peak valuations while retaining operational control via NNN leases. The Portfolio Premium Single assets are actively being rolled into 5- to 10-property portfolios by middle-market aggregators, like Axis IOS, to be flipped to mega-funds, such as Realterm, for an immediate pricing premium. Zoning Moats Grandfathered heavy industrial zoning is becoming the most critical underwriting metric as local municipalities push back heavily on new outdoor storage entitlements. Contamination Friction Soil contamination is severely prolonging deal timelines and crushing valuations for legacy automotive and scrap yards. Verified Jacksonville IOS Deal Database | 2023-2025 Address Submarket Usable Acres Buyer (LP Backer) Purchase Price Price per Usable Acre 5919 Commonwealth Ave Westside 3.01 Alterra IOS (JPM/Truist) $4,800,000.00 $1,594,684.00 11530 Davis Creek Ct Southside 4.35 Realterm $4,500,000.00 $1,034,482.000 4371 Sportsman Club Rd Westside 8.95 Salem Leasing $8,500,000.00 $949,720.00 12163 New Berlin Rd Northside 6.63 PBM Constructors $5,750,000.00 $867,269.00 560 Cynthia St Westside 3.62 Jadian (Blackstone) $2,850,000.00 $787,292.00 5196 Pickett Dr Westside 9.19 Albany Road RE $3,500,000.00 $700,000.00 7800 Old Kings Rd Westside 4.61 APEX IOS (Clarion) $2,890,000.00 $626,898.00 6491 Powers Ave Southside 3.75 Greenspring Realty $2,300,000.00 $613,333.00 1343 Bulls Bay Hwy Westside 9.3 Freedom 1 Trucking $985,000.00 $105,913.00 *Note: Pricing metrics are anchored to the price per usable acre due to the negligible building footprints characteristic of pure-play IOS.* Company Activity Profiles: The LP/GP Capital Dynamic J.P. Morgan Asset Management (The Pioneer LP) JPM acts as the foundational funding giant for the sector. They directly fueled the rise of Zenith IOS via a $700 million JV and Alterra IOS, backing their massive Sunbelt aggregation before a recent $490 million exit to Peakstone. JPM also acquires heavily through its own JPMREIT. Alterra IOS Executing a surgical strategy using their JPM and Truist-backed war chests, Alterra isn’t afraid to pay sub-5.5% cap rates for prime dirt. Their $4.8 million acquisition of Commonwealth Ave, at $1.59 million per usable acre, proves they will pay extreme premiums for heavy industrial zoning and credit cash flow. Jadian Capital (JIOS) Replicating the JPM model, Jadian is backed by Blackstone debt (BREDS) and their own $2 billion fund. They target value-add sites like Cynthia Street, utilizing massive credit facilities to execute yard upgrades and push rents upon lease rollover. Apex IOS Led by Alex Olshansky and backed by Clarion Partners, APEX made a calculated bet by selecting Jacksonville (Old Kings Rd) for their initial platform acquisition in early 2026. This JV signals profound institutional confidence in Jacksonville’s terminal liquidity. Realterm and Axis IOS Axis operates as a nimble, high-yield aggregator, while Realterm acts as the institutional takeout. Axis bought Davis Creek Ct for $2.37 million and flipped it to Realterm 14 months later for $4.5 million, defining the current exit strategy for mid-tier buyers. 2026 Scenarios and Debt Markets Base Case Rents grow 4–6% annually with steady leasing velocity. Cap rates stabilize at 7.0 to 7.5% for standard assets. Traditional banks remain selective at 60 to 70% LTV, but institutional debt funds aggressively bridge the gap for aggregated portfolios, keeping Class A cap rates compressed. Upside Case Accelerated JAXPORT volume surges, stressing chassis and container storage capacity. Drayage operators panic-lease infill sites, pushing Northside rents past $5,000 per acre on a monthly basis. Class A cap rates compress a further 25 to 50 basis points on prime I-295 adjacent sites. Downside Case A prolonged freight recession causes mid-tier trucking tenants to default, pushing vacancy to 8 to 12% on marginal sites. Unimproved dirt sites become entirely illiquid as debt markets refuse to finance non-income-producing land. Recommendations for 2026 Buyers Focus strictly on sub-0.25 FAR infill sites along the I-10 Westside and JAXPORT corridors. Underwrite $500K to $700K per acre for core assets, with the understanding that owner-users may outbid in competitive situations unless off-market sale-leaseback opportunities are sourced from legacy service businesses. Sellers List stabilized, low-FAR assets proactively to capitalize on the current institutional capital flood. Highlight usable acres, heavy zoning, and functional upgrades. Avoid selling single assets to local buyers when properties can be packaged with neighboring parcels to attract a mega-LP premium. Owners (Refi/Lease-Up) Extend and renew leases pre-refi to lock in escalations. The ROI on crushed concrete, perimeter security, and high-mast lighting is immediate and vastly increases the pool of institutional lenders if regional banks tighten.

Mike Salik

Senior Vice President

3/12/26

Sippin’ on California’s Coffee Market

Coffee shops have emerged as a “third place,” neither home nor work, where customers have the option to grab a drink, or use the location to relax, work, and enjoy their free time. Recent National Coffee Association data shows that in 2025, 66% of American adults drink coffee daily, and consume an average of three cups per day. Specialty coffee consumption has reached a 14-year high, with 46% of American adults having specialty coffee in the past day, surpassing traditional coffee consumption. As demand for premium coffee experiences intensified, national and regional operators are finding room to thrive, even in saturated markets already dominated by major chains, like California. Coffee tenants continue to expand rapidly across the state, with Southern California noting increased developments from coffee retailers. These tenants are actively seeking spaces that range from 1,000 to 4,000 square feet, attracting national brands and local operators. For shopping center landlords, securing a quality coffee tenant can increase traffic and enhance the value of their center. Demographics and location are top priorities for coffee tenants with signalized intersections, strong car counts, and pedestrian inflows being factors that improve a coffee shop’s success. Outparcels or pads remain highly desirable, offering convenience and visibility. Drive-thru locations, end caps, and even select inline spaces are increasingly in demand as operators look to capture center traffic and attract more consumers. While shopping pads and drive-thru locations are favorable, mixed-use spaces also prove beneficial for coffee shops. The ground-floor component creates vibrant street-level activity, and the mix with office and/or multifamily guarantees demand. For coffee shop operators, securing space within a mixed-use property allows for access to residents, office workers, and everyday consumers, guaranteeing built-in customers and traffic upon opening. National Coffee Shop Monthly Visits Source: Placer.AI, January 2019-October 2025 National Tenant Movement in SoCal Footprint sizes for coffee shops across the region vary widely depending on format. Small kiosk/drive-thru concepts note locations under 1,000 square feet, while freestanding locations can reach up to 4,000 square feet. Starbucks, in particular, leads national coffee tenants with the most locations in California. The coffee giant has a strong focus on Southern California, with 155 locations in Los Angeles, 131 stores in San Diego, and over 100 across Orange County. In order to maintain its positive performance in the region, Starbucks has begun new initiatives across its stores, including renovating locations to align with the Back to Starbucks plan. CEO Brian Niccol launched the initiative in September 2024 to bring more customers back to stores across the country. New features of the plan include lounge seating, warmer lighting, and reintroducing ceramic mugs for in-store orders. The goal of this plan is to create a community feel within their locations. A new site with these features has already opened in Los Angeles at the intersection of Sunset and Palisades Village. Dutch Bros has become one of the fastest-growing national coffee chains across Southern California. The tenant first began operations in 2022 when it opened a location in San Diego County. Since then, it has spread to cities like Barstow, Apple Valley, Victorville, Baldwin Park, and Palmdale. Dutch Bros is planning its move in the Los Angeles metro, with a store under construction near the University of Southern California campus. The location will be similar to its other stores featuring a walk-up window, and it is expected for completion by year-end 2025. Other new sites for Dutch Bros across Southern California include Carson and Temecula, with both shops already approved for construction. Starbucks Dominates National Tenants Across California Source: Placer.AI A Cup of Local Brew Regional coffee shops attract consumers seeking high-quality products, with goods like specialty beverages or artisan-roasted beans. Younger consumers, like Gen Z, often drive visits as they are willing to pay more for premium, trending goods. These locations offer a unique setting that reflects the local population, attracting consumers that seek an authentic and community-focused experience. While national operators offer a convenient visit, regional operators create competition by prioritizing quality, community, and exclusive experiences. California is home to the greatest number of coffee shops across the country, with local tenants playing a significant role in the state’s coffee performance. Regional coffee tenants most often lease 800- to 1,500-square-foot spaces with in-line or end-cap formats, as seen with regional operator Better Buzz. The coffee chain, which started as a coffee cart in San Diego, has become a staple in Southern California. Most of its locations are found in San Diego and Orange County, reaching as north as Fullerton. Upon its success in Southern California, the company has also expanded to Nevada and Arizona, with its first out-of-state store located in Phoenix. Better Buzz has around 40 locations across the three states, and it plans to double its size in the next few years. Regional tenants that feature Vietnamese coffee are also aiding coffee shop activity. The nation’s coffee began to grow internationally in the 1990s when it became one of the world’s largest coffee producers. Since then, it has maintained its popularity for creating a unique coffee culture for consumers in the Southern California market. Trung Nguyen Legend Café, originally from Vietnam, began U.S. operations in 2023 with its Westminster location. The company is still growing across Southern California, with Matthews™ recently securing a 2,700-square-foot space for them in Huntington Beach. The coffee shop sought this location because of the end cap, visibility, patio and large seating area, as well as the community impact. Blk Dot Coffee has also expanded the presence of Vietnamese coffee in Southern California. The company is a family-run business with a focus on providing traditional Vietnamese coffee, as well as some food items. Its first location opened at the Orange County Google offices in 2015, and has had a strong presence across the county ever since. Locations range from areas like Irvine, Newport Coast, Fountain Valley, and Long Beach, with many of its stores placed in shopping centers to take advantage of high foot traffic levels. Tierra Mia Coffee opened its first location in 2008, and has since expanded its reach to both Los Angeles and Orange counties. Known for roasting its coffee and baking their pastries in store, as well as serving Latin specialty drinks and unique latte art, the company has now grown to 20 stores. Roasting Robust Results The national coffee market is projected for continued growth as consumers seek coffee shops for a third place experience. The U.S. coffee market size was estimated at $47.8 billion in 2024, and is forecast to grow at a CAGR of 9.5% to 2030. By providing free Wi-Fi, coffee shops continue to attract work-from-home employees, as well as create an environment for other consumers to relax and socialize. Further growth across the sector will be aided by consumers seeking more unique flavors and high-quality products. This movement is advantageous for local operators as they can adjust menus to provide enticing options not found at national brands. To stay competitive, national tenants are prioritizing loyalty programs and drive- thru convenience, while local tenants leverage community connection and handcrafted goods to maintain performance levels.

Matthew Sundberg

Vice President & Associate Director

3/11/26

Institutional Capital Returns To Multifamily

After several cautious years, institutional investors, large, professionally managed funds such as private equity groups, pension funds, and insurance companies, are decisively returning to the multifamily market. In the first quarter of 2025 alone, U.S. multifamily investment totaled $28.8 billion, with institutions representing a substantial portion of that volume. Momentum accelerated through mid-year and into the fall, with apartment sales rising 13% year-over-year in the third quarter to $43.8 billion. Together, these figures underscore a renewed confidence in multifamily fundamentals and the broader capital markets. Evidence of this institutional re-engagement is already visible across the public REIT landscape, where capital deployment has meaningfully increased. AvalonBay Communities (AVB) has completed $618.5 million in year-to-date acquisitions, including the purchase of six Dallas–Fort Worth communities totaling 1,844 units for $431.5 million, a clear signal that major operators are once again pursuing scale in high-growth markets. Similarly, Equity Residential (EQR) executed one of the largest multifamily trades of 2025, acquiring a stabilized Atlanta portfolio of 2,064 units for approximately $533.8 million at a 5.1% acquisition cap rate. The move marks the company’s strategic re-entry into key Sunbelt markets and aligns with its thesis that fundamentals in select growth metros are strengthening. These transactions validate what private-market investors are beginning to experience in real time: capital is flowing back into multifamily, underwriting is recalibrating to the new rate environment, and institutional conviction is returning. Setting the Tone for the Market Institutional capital doesn’t just participate in the market, it helps define it. These investors establish pricing benchmarks, influence underwriting standards, and restore liquidity when they re-engage. As large funds return, their activity helps narrow bid-ask spreads, reprice assets more accurately, and reignite stalled deal flow. They also serve as early indicators of sentiment. When institutions retreat, it often precedes a broader slowdown. When they return, it signals that investors once again see an opportunity worth pursuing. For 2026, this renewed participation suggests that the worst of the correction may be behind the multifamily sector. Institutional activity effectively sets the tone for the entire industry. Their re-entry signals that confidence is rebuilding and valuations are stabilizing. As more funds re-engage, competition for quality assets will likely increase, gradually pushing prices upward, especially in markets with strong fundamentals. This uptick in deal flow also clarifies pricing benchmarks, improves liquidity, and encourages reinvestment in property quality. Over time, that benefits not only investors but renters as well, through better-managed, modernized communities. From Pullback to Reentry Between 2022 and 2024, rising interest rates and tightening credit made financing more expensive and constrained deal flow. Sellers held out for 2021-level pricing, while buyers needed discounts to offset higher borrowing costs. Economic uncertainty, slower rent growth, and rising construction expenses compounded hesitation on both sides. Transaction volumes fell sharply as many funds shifted from acquisitions to asset management. Some firms focused on operational improvements, while others simplified their portfolios, selling top-performing properties to raise liquidity. For a time, sitting on the sidelines felt safer than overpaying in an unpredictable market. That caution began to ease as prices reset and underwriting discipline took hold. Property values adjusted to more sustainable levels, rent growth stabilized, and buyer competition thinned, giving patient, well-capitalized investors a clear window to re-enter. Today, institutions are positioning for long-term ownership, emphasizing stability over speculation. Where Capital Is Flowing The map of institutional investment in 2025 looks more balanced than in previous cycles. Sunbelt and Growth Markets: Metros such as Dallas, Atlanta, Tampa, and Nashville continue to draw attention for their job and population growth. However, investors are far more selective than in past years, steering clear of submarkets facing oversupply or softening rent trends.Several of the sector’s strongest performers are signaling improving fundamentals, with UDR’s CEO noting that “third-quarter operational results… exceeded our expectations and drove our second FFOA per share guidance raise of 2025.” This growing confidence reinforces why capital continues to gravitate toward markets where performance momentum is beginning to firm. Secondary and Midwest Markets: Secondary metros including Kansas City, Columbus, and Raleigh are gaining traction for their relative affordability and resilient fundamentals. In the Midwest, places like Indianapolis, Minneapolis, and Omaha, stable performance, limited new supply, and strong occupancy are reinforcing investor confidence. Coastal Gateways: Some institutions are cautiously returning to traditional gateway markets such as New York, Northern New Jersey, and Boston, but mainly for core, stabilized assets where pricing has reset and cash flow is durable. What’s notable about this cycle is how targeted that re-entry has become within the gateway universe. The PwC/ULI Emerging Trends 2026 rankings place the broader NYC ecosystem among the most institutionally favored areas in the country, with Jersey City emerging as a top national market to watch (ranked #2 overall) and Northern New Jersey also landing in the leading tier of U.S. markets. For multifamily, the survey sentiment skews positive toward apartment acquisitions in North Jersey, reinforcing that institutions see the North Jersey/Jersey City corridor as a near-gateway location where renter demand, commuter connectivity, and long-term liquidity still justify fresh allocations. Institutional Priorities Within Multifamily Class A: Core Strength and Stability Newer, high-quality properties in prime locations remain the cornerstone of institutional portfolios. Typically built within the last five years and supported by strong employment and income demographics, these assets offer consistent cash flow and low operational risk. Institutions value these assets for their predictability and inflation resilience, often using them as portfolio anchors. For example, a newly delivered high-rise in a prime urban employment corridor, featuring rooftop amenities, coworking suites, and EV-charging stations, can maintain exceptionally high occupancy and command premium rents due to strong demographic fundamentals. Class B: Upside Through Execution Class B assets have become strategic targets for value creation. Pricing for this segment has corrected more sharply than for newer assets, allowing institutions to drive returns through operational execution rather than market timing. The focus is on steady repositioning over several years, moderate rent growth through modernization while maintaining affordability relative to new construction. Workforce and Affordable Housing: Durable Demand, Lasting Impact Properties serving middle-income renters continue to attract institutional attention. Undersupply in this segment and limited new construction make it one of the most resilient asset classes. These investments align with ESG priorities while offering consistent performance across cycles. Recent REIT activity in Q3 2025 underscores the trend, with several public funds increasing exposure to workforce housing due to strong occupancy and dependable rent collections. Looking Ahead In 2026, institutions are closely tracking interest rates, rent growth, employment trends, and new construction activity. With greater stability emerging across these indicators, the year is shaping up to be the next phase of capital deployment, defined by selective acquisitions, creative financing, and disciplined, fundamentals-driven expansion. The overarching message remains clear: institutional investors are not pursuing quick wins. They are building portfolios engineered for resilience, emphasizing stable income and long-term value creation. Their renewed engagement reinforces a lasting truth, multifamily continues to be one of the most reliable asset classes in commercial real estate. Investment strategies are being anchored in fundamentals that outlast cyclical volatility. Markets with expanding job bases, steady population inflows, and limited new supply are capturing the most attention. Institutions are also focused on durability, assembling portfolios that perform through full cycles rather than just during upswings. This requires prioritizing cash-flow consistency, maintaining prudent leverage, and emphasizing operational excellence. The mindset for 2026 is deliberate and measured: grow steadily, manage risk thoughtfully, and avoid the excesses that characterized the last expansion.

David Ferber, CPA

First Vice President & Director

3/10/26

Las Vegas, NV Self-Storage Market Report Q4 2025

Self-storage activity in the Las Vegas market softened during 2025 as elevated supply and moderating demand placed downward pressure on advertised rental rates. Year-over-year rent growth for the mix of main unit types declined approximately 3.9%, placing Las Vegas among the weaker performing markets nationally. Performance varies across unit types, with smaller and medium non-climate-controlled units experiencing some of the largest pricing declines. Climate-controlled units have generally performed more resiliently across the industry as newer facilities increasingly emphasize these product types. Across many Sunbelt markets, including Las Vegas, demand growth has struggled to keep pace with recent development activity, resulting in greater reliance on promotional pricing and rate concessions to attract tenants. As the market continues to absorb recently delivered inventory, pricing stability is expected to gradually improve, although near-term performance will likely remain constrained. Highlights Elevated development activity continues to pressure the Las Vegas self-storage market, with recent supply additions significantly expanding inventory over the past several years. Advertised rental rates declined year-over-year as operators adjusted pricing strategies to maintain occupancy amid softer demand. While population growth and in-migration historically supported the market, slower migration trends and a large lease-up pipeline have created a near-term imbalance between supply and demand. Las Vegas Demographics Source: CoStar Group, Inc. Unemployment Rate: 6.0% Current Population: 2,438,253 Households: 909,002 Median Household Income: $82,410 Las Vegas Self-Storage Rents Advertised self-storage rents in Las Vegas declined during 2025 as operators adjusted pricing in response to elevated supply levels and softer demand conditions. As of early 2026, the market’s average advertised rate for main unit types stood at approximately $15.39 per square foot, reflecting a 0.4% month-over-month decline from December and a 3.9% year-over-year decrease. Much of the downward pressure has been driven by aggressive pricing competition among newly delivered facilities as they move through the lease-up phase. Smaller and non-climate-controlled units have experienced some of the most pronounced declines. Las Vegas Self-Storage Vacancy Vacancy levels in the Las Vegas self-storage market have increased in recent years as a significant wave of new development expanded available inventory. Over the past three years, new deliveries have equaled roughly 14.8% of the market’s starting inventory, placing Las Vegas among the most supply-heavy storage markets nationally. This surge in supply has created a sizable lease-up pipeline that continues to weigh on occupancy levels as recently completed properties compete for tenants. Las Vegas Self-Storage Construction New development has been the dominant factor shaping Las Vegas’ self-storage market conditions over the past several years. Over the last 36 months, new deliveries equaled approximately 14.8% of the market’s starting inventory, placing Las Vegas among the most supply-heavy storage markets in the country. Recent construction activity has continued to expand inventory, with 3.5% of existing stock delivered within the past 12 months. This surge in supply has created a sizable lease-up pipeline that operators are still working to absorb. Las Vegas Self-Storage Sales Investment activity in the self-storage sector has moderated nationally as higher interest rates and uncertain operating performance have made pricing discovery more challenging. Although transaction volume remains below peak levels seen earlier in the decade, institutional and private investors continue to view self-storage as a relatively resilient property type with stable long-term demand drivers. In Las Vegas specifically, investor sentiment has been shaped by the market’s elevated supply pipeline and recent rent declines. Buyers have become more selective, focusing on stabilized assets with strong occupancy and favorable locations near population growth corridors. Assets currently in lease-up or located in highly competitive submarkets may face longer marketing timelines or require pricing adjustments to attract investors. Cap rates across the self-storage sector have generally expanded alongside higher borrowing costs, which has tempered pricing for newly marketed assets. By the Numbers Q4 2025 | Source: CoStar Group, Inc. Sales Volume: $103M Cap Rate: 5.7% Price Per SF: $210 Dec. 2025 Average Street Rate PSF: $15.45 Jan. 2026 Average Street Rate PSF: $15.39 Month-Over-Month Change: -0.4% NRSF Delivered Last 12 Mo. (% of Starting Inventory): 3.5% Year-Over-Year Growth: -3.9%

Andre Acosta

Associate

3/9/26

Roofing M&A: Where Value Is Being Rewarded, and Where It’s Being Discounted

The roofing M&A market continues to reward operators with scale, clean earnings, and limited owner dependency. Buyer interest remains active across both strategic and financial groups, but underwriting standards have tightened significantly. Today’s market is less about headline growth and more about the durability of earnings and the operational risk required to sustain them. The result is not the compression of multiples, but widening dispersion between businesses that meet institutional standards and those that do not. What Buyers Are Focusing On Right Now Recent buyer diligence has become more granular, particularly around how earnings are generated and who is responsible for generating them. EBITDA quality has moved to the forefront : Buyers are scrutinizing the sustainability of margins rather than accepting historical performance at face value. One-time storm spikes, aggressive add-backs, and deferred operating costs are being challenged earlier in the process and stabilized more conservatively. Management depth matters more than ever : Businesses that rely heavily on a single owner for estimating, customer relationships, or field supervision are facing higher perceived risk. Buyers place real value on second-layer leadership, documented processes, and the ability to operate without daily owner involvement. Revenue composition is under the microscope : The mix between recurring service work and project-based revenue is influencing both valuation and deal certainty. Buyers increasingly favor a visible contract base, repeat customers, and backlog clarity over episodic, storm-driven volume. Geographic concentration and storm exposure are being underwritten more carefully : While weather events can drive outsized revenue years, they also introduce volatility. Markets with heavy exposure to a single geography or weather pattern are seeing more conservative assumptions around forward earnings. Together, these factors are determining which businesses receive premium attention and which require pricing adjustments to offset perceived risk. Multiples Are Diverging, Not Collapsing Multiples are not compressing across the sector. They are separating. Well-positioned roofing companies continue to attract strong interest, competitive processes, and favorable deal terms. At the same time, businesses with similar top-line revenue but weaker infrastructure are experiencing re-trades tied to normalization, customer concentration, or owner reliance. This divergence explains why two companies with comparable revenue can arrive at materially different outcomes. In today’s market, value is less about size alone and more about how repeatable and transferable the earnings truly are. What This Means for Owners Most owners have a reasonable sense of what their business should be worth. Buyers, however, underwrite value through a different lens, one that focuses on normalized EBITDA, risk-adjusted cash flow, and post-close scalability. The gap between these perspectives is where value is either protected or eroded. Understanding where a company falls on this spectrum requires more than a rule-of-thumb multiple. A properly structured Broker Opinion of Value (BOV) evaluates earnings quality, operational dependencies, revenue durability, and risk adjustments in the same way buyers do. For owners considering a sale in the next 12 to 36 months, this insight often separates reactive negotiations from proactive positioning that supports premium outcomes.

Jahshua Jackson

Associate

3/6/26

What the QSR Cap Rate Plateau Is Really Signaling

Quick service restaurant real estate has long occupied a unique place in the net lease market. Small deal sizes, strong consumer demand, and nationally recognized brands have made QSR properties one of the most consistently liquid segments within retail investment sales. Entering 2026, that liquidity remains intact. Cap rates across the sector have held relatively steady, a notable level of stability in a market still adjusting to higher interest rates and more selective capital. But beneath that stability, the market is quietly becoming more discerning. What appears at first glance to be a flat pricing environment is increasingly defined by greater separation between assets rather than a uniform shift across the sector. Stability Does Not Mean Uniform Pricing For years, QSR properties often traded within a relatively tight pricing band. Investors frequently viewed the category itself as a proxy for stability, with many drive-thru concepts benefiting from predictable traffic patterns and resilient consumer demand. Today, that assumption is evolving. Instead of pricing the sector broadly, investors are placing greater emphasis on the specific fundamentals behind each property. Brand strength, lease structure, remaining term, and franchisee credit are carrying more weight in underwriting decisions than they did in prior cycles. The result is a widening gap between best-in-class assets and the rest of the market. Top-tier brands with strong unit economics and long-term leases continue to attract aggressive pricing and deep investor demand. Meanwhile, properties tied to smaller operators, shorter lease terms, or weaker credit profiles are facing noticeably softer pricing. The sector itself remains attractive. The difference is that investors are no longer treating all QSR assets as interchangeable. A More Selective Buyer Environment This shift reflects broader changes in the net lease investment landscape. Over the past several years, rising interest rates and a more cautious lending environment have forced investors to think more carefully about risk. As a result, underwriting has become more granular across nearly every net lease category. For QSR assets, that means closer attention to the durability of the income stream rather than simply the presence of a recognizable brand. Buyers are asking different questions today: How dependent is the location on a single franchisee? How long will the existing lease structure protect cash flow? Does the operator have a track record of long-term success within the concept? These factors are not new to underwriting, but they are now playing a larger role in determining where pricing ultimately lands. The Market Is Repricing Quality Importantly, this dynamic does not necessarily indicate weakness in the QSR sector. In many ways, the opposite is true. Demand for well-located, high-performing drive-thru properties remains strong, supported by consumer habits that continue to favor convenience and quick service formats. Investors still view the sector as one of the most durable forms of single-tenant retail. What has changed is the level of selectivity. Rather than moving in unison, the market is increasingly rewarding assets that meet institutional standards while applying more conservative pricing to those that fall outside that tier. For investors, that shift is an important signal. The QSR sector is not broadly repricing. Instead, the market is beginning to differentiate more clearly between quality and everything else. As capital continues to prioritize income durability over headline growth, that distinction is likely to become even more pronounced.

Daniel Gonzalez

First Vice President & Associate Director

3/6/26

Tenant Radar: 10 Retailers Driving National Growth

Despite a wave of store closures at the beginning of 2025, retail recorded an absorption comeback in the second half of the year. The median timeframe to lease fell to under seven months, a historic low, with high-quality locations leasing in less than five months. Leasing volume throughout 2025 was dominated by smaller-format and in-line spaces, followed by properties over 25,000 square feet. This report highlights top tenants to watch through 2026. These tenants vary from small-format to large-format properties, and have demonstrated the ability to grow despite economic headwinds and maintain stability in order to best serve consumers. U.S. Retail Bounced Back in H2 2025 Source: CoStar Group, Inc. | 2020-Q4 2025 QTD Tracking QSR Developments Dutch Bros Originally from Oregon, Dutch Bros began operations in 1992. The popular coffee chain has since branched out to several states, including Florida, Georgia, Louisiana, South Carolina, Ohio, and Indiana. Now, Dutch Bros is growing in the Midwest and East Coast, expanding operations in Virginia, Missouri, and Illinois. Since 2019, Dutch Bros visits are up nearly 300%, partly due to its smaller starting footprint. The brand benefits from a broader rise of grab-and-go dining and short visits, which dominates U.S. food service behavior. The small-format, drive-thru focused model also matches consumer preferences for speed and convenience. This format aligns the most with Gen Z, which drives the majority of visits at Dutch Bros locations. Dutch Bros’ expansion goals include doubling its footprint by 2029, which would lead it to record 2,029 locations by that year—one of the most aggressive growth plans in the coffee sector. The chain also projects reaching $2.6 billion in revenue and $197.4 million in earnings by 2028. This plan would require 21.8% yearly revenue growth and a $140.2 million increase in earnings from the current $57.2 million. In order to achieve this momentum, Dutch Bros plans on growing its food offerings, focusing on mobile ordering, and launching consumer packaged goods to increase its appeal. Dutch Bros Records 270% Growth in Monthly Visits From 2019-2025 Source: Placer.ai | January 2019-October 2025 Raising Cane’s The popular fried chicken chain exceeded its goal of opening 100 stores in 2024 and opened 118 restaurants instead. Its top-performing locations have been Dallas-Fort Worth, Orlando, and Atlanta, with suburban strip centers and drive-thru sites recording the most traffic. High visits per revenue contribute to above-average restaurant profitability relative to many other fast casual and QSR concepts. Raising Cane’s recorded visits grew from about 189.5 million in 2019 to 490.3 million in 2024, almost double the foot traffic in five years. The chain also stands out from other competitors as a majority of locations are company-owned. When current leadership joined, about 25% of locations were franchised. Today, only about 3% are franchised, a rare structure in the QSR sector. As Raising Cane’s grows, its long-term goals include having over 1,600 restaurants across the U.S. New additions will be focused on New Jersey, Connecticut, Delaware, Ohio, Florida, Washington, D.C., and New York. To meet its goals, Raising Cane’s is prioritizing building restaurants in high-traffic areas, as well as developing more drive-thru sites. Other moves include growing its presence in stadiums, airports, and near college campuses. One example is its addition in Seattle’s University District, which is slated to open in early 2026 and will also be one of the chain’s first locations in Washington. Raising Cane’s Dominates Visits Within National Chicken QSRs Source: Placer.ai | YTD, January 2025 to November 2025 CAVA Since opening as a full-service Mediterranean restaurant in 2006, CAVA has become a QSR chain with 439 locations across 29 states. Its growth has been focused on adding sites in suburban markets, and increasing its drive-thru lanes and digital ordering to boost foot traffic. With this movement, CAVA is on track to reach its goal of at least 1,000 locations by 2032. CAVA acquired Zoës Kitchen in 2018 for $300 million to aid its growth plans. Conversions for the acquired locations began in 2020, and more than 250 sites were transformed. Other growth methods include the investment in AI-assisted prep and kitchen display systems to improve guests’ experiences and increase visits. CAVA has also added new menu options to grow consumer appeal, like the addition of grilled steak and chicken shawarma. With CAVA focusing its growth on suburban markets, its visitor demographics set the tenant up for success in its expansions. Since 2019, CAVA noted the median household income for its visitors decreased from around $120K to $95K in 2025. The decline demonstrates how the chain is increasingly targeting middle-income families in the suburbs. Additionally, CAVA’s focus on suburban areas has aided its operations to prioritize speed and convenience. The addition of drive-thrus in its suburban stores dropped its dwell time to 28 minutes in Q3 2025. This new dwell time is significant as it demonstrates CAVA’s ability to serve its customers that dine in, together with those that get their order to go. CAVA’s Dwell Time Reflects Efficiency and Suburban Prioritization Source: Placer.ai McDonald’s While the U.S. houses more than 13,000 McDonald’s locations, the chain plans to open 900 new restaurants by 2027. Its new additions will be focused on suburban and exurban areas that record population growth. The chain first announced its strategy for growth in 2020, with its focus on the three D’s: digital, delivery, and drive-thru. The digital growth method includes the implementation of the “MyMcDonald’s” mobile app. Customers will have the option to join a loyalty program and order food for pickup via MyMcDonald’s. The app will also aid the delivery segment of the chain’s growth plans as users can order food to their homes, and the company’s partnership with Uber Eats and DoorDash will create additional delivery options. With about 95% of its U.S. locations featuring a drive-thru, McDonald’s has begun testing new ways to make the ordering process more convenient at these sites. Enhancements to its drive-thru restaurants include a pickup lane for online orders. As pickup orders are separate from the regular lane, these formats reduce confusion and shorten wait times. The commitment to upgrading the physical format increases the value of the real estate by improving site efficiency, transaction capacity, and overall revenue potential per location. McDonald’s Annual Revenue Performance Source: Stock Analysis Grocers Aid Shopping Center Performance Sprouts In order to achieve its long-term goal of opening 1,400 locations nationwide, Sprouts recently grew its headquarters in Phoenix to aid its expansion efforts and also began adding stores across the metro. Apart from growing in its home state, Sprouts is targeting the Midwest and Northeast for expansions. New additions in both regions will be added in 2026 and 2027. As part of its expansion plan, Sprouts has focused on opening stores within 250 miles of a distribution center to create efficient supply chains. Locations near distribution centers lead to a quicker delivery, ensuring that the produce and goods are fresh for arrival at the store. In order to attract more customers, Sprouts is prioritizing new stores in areas with a high population density. The grocer also launched Sprouts Rewards in summer 2025—a loyalty program to maintain and expand its consumer base. The long-term goal of opening 1,400 stores creates substantial demand for new retail space, driving up property values and securing long-term leases for landlords in high population density areas where Sprouts is prioritizing its sites. Its real estate strategy of clustering new stores within 250 miles of a distribution center makes these specific locations more desirable and valuable to developers and investors. This focus on supply chain efficiency minimizes operational risks for the tenant, ensuring the store remains consistently profitable, which translates to stable rental income and a high-quality anchor tenant that increases foot traffic and value for surrounding retail properties. Aldi The discount grocer increasingly developed new locations across the country in recent years, due to its customer appeal for lower-priced goods and its acquisition methods. Aldi’s major acquisitions occurred in 2023 when it bought Southeastern Grocers, which included Winn-Dixie and Harveys Supermarket stores. All of the acquired locations are expected to be fully transformed to the Aldi brand by 2027. Together with the acquired stores, Aldi plans on opening more than 800 locations nationally by 2028. Its primary areas for growth are the Southeast, Northeast, and West Coast. Aldi has begun remodeling and updating its existing stores to improve customers’ experiences and reach its expansion goal. Updates across the grocer include expanding the product assortment, with a significant increase in fresh food options to meet evolving consumer demand. Between 2019 and 2024, while overall grocery foot traffic increased by 11%, Aldi’s surged by more than 51%, demonstrating rapid acceleration in consumer adoption. Through November 2025, its U.S. stores attracted 865 million visits, making it one of the most visited grocers nationally, despite only having around 2% of U.S. grocery market share. With double-digit growth in foot traffic, Aldi is a powerful anchor for shopping centers. For investors, its long-term NNN leases and corporate-owned models offer a stable, low management, and reliable income stream. Aldi Leads Discount Grocer Visits Source: Placer.ai | YTD, January 2025 to November 2025 Discount Chains Thrive on Consumer Demand Five Below Consumers have increased their visits to Five Below for its variety of lower-priced products, including toys, apparel, snacks, accessories, and more. As visits have risen, Five Below has shifted its long-term goal to opening 3,500 stores by 2030. The retailer is focusing its efforts on entering new markets like the Pacific Northwest, with eight locations across Washington and one in Oregon. To increase its product options, the retailer has implemented the “Five Beyond” concept across its stores. This method includes selling products priced between $5 and $10, including tech goods, clothing, and home decor. Five Below has also begun investing in building distribution centers across the country to aid its growth, with one of the newest facilities located in Buckeye, Arizona. With the high cost of goods, Five Below is set to benefit from consumers searching for lower-priced items. With customers attracted to Five Below for its value-driven and expansive product assortment, the tenant will continue to enhance the overall value and desirability of its respective shopping center. Five Below Sets Bold Goal: 3,500 Stores by 2030 Dollar General With more than 20,000 stores nationwide, Dollar General is one of the top-performing discount stores. About 20% of its total locations have been developed since 2020, with the chain adding around 900 stores each year. However, Dollar General decelerated growth in 2024, but rose again in 2025 with the addition of about 500 stores. Looking ahead, the chain plans on opening 575 stores in 2026. Part of Dollar General’s successful expansions can be attributed to its Project Elevate initiative. The movement involves remodeling around 2,250 existing locations to enhance merchandise and the store’s location, as well as fully remodeling about 2,000 sites. Dollar General has allocated over $1 billion in order to support its growth. Another new refinement method is same-day delivery. Dollar General is testing out this service across 75 locations and plans to expand it to thousands of its stores if results prove to be successful. Expansions have resulted in significant rent increases. Across new stores, rents rose by 15.05% in 2024, due to the remodeling initiative, persistent inflation, and the price to build. Dollar General stores on the West Coast recorded the greatest jump in rents, with rent averages of $190,125 in 2025. However, new stores will boost investor appeal by including 15-year NNN leases with 5% escalations every five years. Remodeling of 2,250 Stores Outpaces Dollar Tree’s Remodel of 2,000 Locations 7-Eleven’s New Look 7-Eleven is transforming its locations to become more modern, increasing consumer appeal. The remodeled sites will feature a larger product assortment and expanded food and beverage options, including in-store restaurants and seating areas, with the goal of enhancing customers’ experiences and boosting sales. With this movement in mind, 7-Eleven aims to open around 1,300 stores in North America by 2030, adding 200 locations per year. Another part of the goal will be the debut of 500 new food-focused stores opening between 2025 and 2027. These locations are dubbed “New Standard” stores, and will include features like increased fuel offerings and convenient digital payment methods for goods. New Standard stores will also feature a 7-Eleven branded QSR, like Laredo Taco, as well as freshly made grab-and-go offerings like breaded chicken salads and smoked turkey sandwiches, along with 7-Eleven’s famed egg sandwiches. The newly-opened stores with this format have already proved their success. In August, Seven & i Holdings Co. President and CEO Stephen Dacus said these new locations were bringing in 45% higher sales per store than the retailer’s traditional stores. As the revamped format continues to attract more customers, 7-Eleven will vacate around 1,000 of its stores built before 2000 in order to prioritize the growth of New Standard locations. An additional part of 7-Eleven’s growth plan is extending its reach to serve truck drivers across the country. Its first truck stops began operating in 2021, and current sites include over 392 Speedway locations and select 7-Eleven stores across 26 states, with plans to grow to over 500 locations. These properties will cater to logistics companies by offering fuel card programs like its Mastercard that will provide discounts for businesses to track fuel expenses, together with amenities for truck drivers. Revamped Models Feature Long-Term Leases with High Value The Expansion of Take 5 Oil Change Take 5 Oil Change has steadily risen in franchise ranking, climbing from No. 42 in 2022 to No. 27 in 2025 on Entrepreneur’s fastest-growing franchises list. The Louisiana-based firm has attracted consumers for its promise to fulfill a convenient drive-thru, five-minute oil change, which has led to more than 1,200 locations nationwide under its parent company, Driven Brands. Take 5’s growth began with its purchase of Fast Track Oil Change Centers in 2019, acquiring 27 stores. Now, Driven Brands has stated its goal is to double the number of Take 5 locations by early 2029. A significant portion of recent additions are developed by franchisees who have signed agreements for hundreds of new stores. Throughout 2025, several notable trends shaped the tenant’s performance and market positioning. Franchise brands reported a 2.3% decline in revenue, driven by a reduction in the weighted average royalty rate, while acquisition activity around Take 5 Oil Change sites remained strong. This activity was largely fueled by bonus depreciation, which continued to attract investors seeking accelerated first-year tax advantages. Pricing for these assets has held steady, with corporate-guaranteed leases trading around a 5.92% cap rate since early 2024 and franchisee-backed stores trading 30 to 35 basis points wider. Operationally, the tenant’s adjusted EBITDA margin fell by 85 basis points in Q3 2025 compared to the prior year, reflecting increased store-level expenses and the impact of ongoing growth initiatives. For investors navigating the automotive net lease sector, Take 5 offers a rare mix of stability, scalability, and upside. In a market that rewards clarity and fundamentals, few brands are moving as fast as Take 5. Its growth and proven model speak for themselves, and with strong credit, solid residual value, and market liquidity, these assets continue to stand out as prime investment opportunities. Take 5 Financial Overview Source: GuruFocus | Q3 2025 Revenue: $535.7M, up 6.6% YOY Free Cash Flow: $51.9M Same-Store Sales Growth: 3% overall. 19th consecutive quarter of growth Net New Stores: 167 over the last 12 months, including 39 additions in Q3 2025 Resilience and Progress: Retail’s Next Chapter The performance of these 10 national retailers underscores the resilience and strategic growth defining the retail sector. Despite a challenging start to 2025, the market rebounded strongly, demonstrating that consumer demand remains robust for convenience, value, and experience. From the aggressive drive-thru and digital-focused expansion of QSR chains, to the targeted new market focus of grocers like Sprouts and Aldi, a clear pattern emerges: the tenants driving national growth are those prioritizing adaptability, efficiency, and customers’ experiences. For investors, developers, and landlords, monitoring the footprints of these companies will be essential to capitalizing on the sector’s continued upward trajectory.

Daniel Gonzalez

First Vice President & Associate Director

3/6/26

Top 10 Multifamily Markets in 2026

New York, NY By the Numbers 2025 | Source: Matthews™ Research Sales Volume: $8.3B Average Price Per Unit: $404.5K Cap Rate: 5.3% Vacancy Rate: 3.0% Annual Rent Growth: 7.0% Annual Net Absorption: 14,580 Units New York’s multifamily sector remains one of the tightest and most resilient leasing markets in the country, supported by strong fundamentals and sustained investor interest. Manhattan continues to assert itself as the premium rental market with effective rents surpassing pre-pandemic highs, while Brooklyn has evolved into a primary economic hub, attracting a younger, renter base that’s driving competition across the borough. Year-to-date total sales volume in New York has reached $8.3 billion, paired with an average price per units of $404, 500, reflecting continued confidence in the market despite elevated borrowing costs. Performance remains competitive with a 5.3% cap rate, underscoring New York’s status as a high-barrier metro. While investors have retreated from Manhattan’s most expensive core submarkets, capital is aggressively targeting high-yield opportunities in areas like Harlem and the Financial District, where redevelopment potential and discounted pricing remain compelling. The borough’s cap rates have stabilized between 6.0% and 6.3%, with per-unit pricing rising for six consecutive quarters, signaling the early stages of recovery. Brooklyn has also seen sales accelerate, with institutions accounting for a growing share of activity. Cap rates have compressed modestly, now aligning with Manhattan in the low 6%- range, while pricing remains elevated for waterfront assets. Operating conditions continue to outperform national benchmarks. The market’s 3.0% vacancy rate is well below the U.S. average, driven by structural undersupply, muted construction, and stable in-migration. Manhattan’s limited construction is hampered by construction costs and regulatory hurdles, causing a sharp drop in building filings. This is keeping the borough’s vacancy rate low, and is expected to fall to roughly 2.4% by 2026. Brooklyn, despite experiencing the highest level of completions in more than a decade, maintains one of the lowest vacancy rates nationally at 2%, supported by demographic tailwinds and demand for larger floor plans. These dynamics have propelled strong rent momentum market wide. Annual growth sits at 7.0%, with Manhattan expected to post gains near 6.8% by year-end 2025 and Brooklyn recording 6.7% growth alongside a cumulative 44% rent increase since 2019. Demand remains healthy across all boroughs, evidenced by 14,850 units of annual net absorption, supported by a strengthening labor market. New York City is projected to add 38,000 jobs in 2025, and in-person office attendance (particularly in Manhattan) has surged to 95% of its 2019 levels. The workers returning to office is amplifying demand for centrally located, premium rental housing. Looking ahead to 2026, slow entitlement processes, ongoing supply constraints, and durable demand drivers will continue to support low vacancy and positive rent growth. Manhattan’s long-term development opportunities increasingly lie in conversions, value-add repositioning and niche submarket plays, while Brooklyn’s most compelling strategies focus on delivering larger, family-sized units through reconfigurations of existing small stock. The recent election of Mayor Zohran Mamdani introduces increased attention around affordability and tenant protection policies, including the discussion of a rent freeze for stabilized units. While these proposals may influence sentiment at the margins, the market’s global prominence, economic depth continue to anchor its long-term performance. Maintaining quality of life is Manhattan is a demand driver that has been top of mind for developers and investors alike. Police Commissioner Jessica Tisch has agreed to remain in her role, and under her leadership the NYPD recently reported the fewest shooting incidents for the month of October since safety and private sector investment will be key in ensuring New York City’s prosperity for the years to come.” -Brock Emmetsberger, Executive Vice President Brooklyn, Manhattan, & U.S. Rent Growth Source: Matthews™ Research, CoStar Group, Inc. New York Vacancies Remain Well Below U.S. Norms Source: Matthews™ Research, CoStar Group, Inc. Bay Area: San Francisco & San Jose By the Numbers 2025 | Source: Matthews™ Research San Francisco Sales Volume: $8.3B Average Price Per Unit: $404.5K Cap Rate: 5.3% Vacancy Rate: 3.0% Annual Rent Growth: 7.0% Annual Net Absorption: 14,580 Units San Jose Sales Volume: $8.3B Average Price Per Unit: $404.5K Cap Rate: 5.3% Vacancy Rate: 3.0% Annual Rent Growth: 7.0% Annual Net Absorption: 14,580 Units The San Francisco Bay Area is entering 2026 on new footing, reasserting itself as one of the nation’s most dynamic multifamily markets. Supported by a powerful combination of tech-led job creation, population stabilization, and strengthening investor confidence, demand has reinvigorated investment. Across the region, demand is being reshaped by the rapid expansion of the AI ecosystem. San Francisco is experiencing a sharper and more immediate surge in activity driven by AI firms expanding office footprints and accelerating hiring. In comparison, San Jose’s performance is tied to Silicon Valley’s long-standing economic gravity and a renter base shaped by decades of exceptional wage growth and high barriers to homeownership. AI companies (databricks, openAI, and anthropic being a few of the many) have pushed office vacancy way down and helped increase multifamily rent growth. [In addition,] San Francisco’s unemployment rate compared to the rest of California, was around 3.5% [with] California’s above 5%. This has helped bring private and institutional buyers back to the market. – Jack Markey, Associate San Francisco posted $2.3 billion in annual sales volume, with assets trading at an average of $428,000 per unit and cap rates compressing to 4.5%, signaling investors’ increasing willingness to price in near-term rent acceleration tied to AI-driven demand. San Jose recorded $1.9 billion in sales, with average pricing at $488,000 per unit and slightly higher cap rates at 4.6%. While San Francisco is seeing faster cap rate compression amid strong bidding for well-located product, San Jose continues to attract capital seeking stability, income durability, and access to one of the wealthiest and most credit-stable renter populations in the nation. Across both metros, the investment narrative is improving, but San Francisco’s upside thesis is more growth-oriented, while San Jose’s is grounded in consistency and long-term absorption. Operating conditions are tightening throughout the Bay Area. San Francisco’s vacancy rate fell to 3.3% and annual rent growth reached 5.3%. This strength is supported by renewed population gains, limited new supply, and an inflow of high-income workers in the AI sector. The market’s acute supply-demand imbalance is highlighted by the absorption of 4,094 units outpaced deliveries. San Jose posted slightly higher vacancy at 3.6%, paired with 3.1% annual rent growth and a similar 4,191 units of net absorption. This is one of the strongest demand performances the metro has recorded in the past decade. Supply levels remain constrained across both metros, though San Francisco faces the most severe development limitations. Rising construction costs, zoning restrictions, and protracted entitlement timelines continue to suppress new starts, allowing demand to outpace completions and strengthening landlords’ pricing power. San Jose’s supply environment, while also tight, is less structurally constrained. The metro’s pressure comes from decades of undersupply relative to household formation and for-sale housing costs that consistently rank among the highest in the country. With mortgage rates near 7% and home prices continuing to climb, San Jose now has the nation’s largest rent-versus-own affordability gap, pushing new households directly into the renter pool and reinforcing long-term multifamily stability. Looking ahead to 2026, the AI sector plays a pivotal role in reshaping the market’s trajectory and both cities are well positioned. The expanding cluster of major AI and tech firms has fueled renewed office activity, contributed to a 1.3% uptick in population, and supported what is shaping up to be the strongest demand cycle since before the pandemic. Constrained supply, tech-driven job creation, and mounting investor interest positions the Bay Area as one of the top multifamily markets to watch, particularly for those looking to capitalize on the momentum of the burgeoning AI economy. Bay Area Rent Growth Leads California Source: Matthews™ Research, CoStar Group, Inc. Boston, MA By the Numbers 2025 | Source: Matthews™ Research Sales Volume: $3.1B Average Price Per Unit: $499K Cap Rate: 5.1% Vacancy Rate: 3.8% Annual Rent Growth: 0.2% Annual Net Absorption: 5,982 Units The Boston MSA enters 2026 as one of the most stable and opportunity-rich multifamily markets in the country, supported by strong population gains, a deep reservoir of high-earning renters, and a rapidly expanding tech, life sciences, and employment base Unlike many Sunbelt metros that are still absorbing a surge of new construction, Boston’s fundamentals benefit from a more measured supply pipeline, despite strong employment pull. Major employers, including Meta, Google, and Amazon, continue to scale engineering and R&D operations across the market, attracting high-earning renters and reinforcing the metro’s appeal as a premier innovation hub. This strength helped drive $3.1B in sales volume, average pricing of $499,000 per unit, which is nearly double the U.S. average, and a market cap rate of 5.1%. 34% of transaction volume over the previous five years involved public and institutional buyers. Within the same period, private capital accounted for 65% of seller volume and nearly half of buy-side volume. The delta between the average sale price of $13.6 million and trailing four quarters’ median sale price of $2.4 million, suggests that while public and institutional players continue to be involved in a smaller amount of large deals, smaller private buyers account for the majority of deal activity. Across the market, leasing has remained steady with annual net absorption reaching 5,982 units. The vacancy rate is about 200 basis points below the national rate of 8.4%, at 6.5%. These conditions indicate that new and existing renters are quickly filling available units, and underscores the structural demand. At the same time, Boston’s renter preferences are shifting decisively toward higher-tier apartments. While rent growth has decreased from 2022 double-digit, rents remain among the highest nationally and growth exceeds the U.S. average. Class A units maintain the highest rents and continue to post meaningful absorption. This trend, combined with steady investor activity and a development pipeline increasingly concentrated in desirable urban nodes, reinforces the market’s long-term stability. With a highly educated, growing population and sustained demand from the region’s thriving tech and innovation sectors, Boston is poised for tightening fundamentals and improved rent performance in 2026. While political attention around housing affordability remains heightened, with discussions around rent stabilization drawing close scrutiny, market conditions remain fundamentally sound. Renter Appetite for Class A Apartments is Evident, Outpacing Class B Absorption Source: Matthews™ Research, CoStar Group, Inc. Boston’s Net Population Sees Spike in the Last Year Source: Matthews™ Research, CoStar Group, Inc. Chicago, IL By the Numbers 2025 | Source: Matthews™ Research Sales Volume: $3.1B Average Price Per Unit: $499K Cap Rate: 5.1% Vacancy Rate: 3.8% Annual Rent Growth: 0.2% Annual Net Absorption: 5,982 Units Chicago’s multifamily market enters 2026 as one of the most undersupplied and demand-driven major metros in the country. Demand continues to outpace new supply, with the region absorbing roughly 7,500 units in 2025, well above the 4,800 units delivered in the same period, pushing vacancy down to 3.5%. This supply imbalance is expected to intensify in 2026 as only 10,000 units remain under construction, representing just 1.8% of total inventory, far below the national average and the market’s long-term average. With scheduled deliveries projected to fall to some of the lowest levels since 2012, Chicago is set for continued vacancy compression and rent gains. Rents are accelerating across every submarket and asset class. Annual rent growth reached 3.7% market-wide, with premium Class A properties posting a stronger 4.0% increase as renters demonstrate a pronounced “flight to quality” in a constrained supply environment. Demand remains strong in Downtown Chicago and the North Lakefront, accounting for more than one-third of total absorption and continuing to benefit from their concentration of employment, transit access, and amenity-rich neighborhoods. Investment activity mirrors this optimism: sales volume has risen sharply to $3.8B in 2025, cap rates average 6.7%, and premier assets often trade at even tighter yields as investors price in ongoing rent growth and stable occupancy. Major employers across finance, consulting, healthcare, manufacturing, and life sciences continue to deepen their presence, while transformative projects such as the Illinois Quantum and Microelectronic Park further elevate Chicago’s position as a tech and research hub. This enhances the market’s ability to attract and retain a high-earning renter pool. Together, these forces of a high-income renter pool, strong absorption, and limited new supply, position Chicago as one of the nation’s top-performing multifamily markets heading into 2026. Chicago Leads the Nation in Apartments Rent Growth Source: Matthews™ Research, CoStar Group, Inc. Deliveries Decreased Significantly Over the Last 12 Months Source: Matthews™ Research, CoStar Group, Inc. Miami, FL By the Numbers 2025 | Source: Matthews™ Research Sales Volume: $1.7B Average Price Per Unit: $330K Cap Rate: 5.3% Vacancy Rate: 4.3% Annual Rent Growth: 0.7% Annual Net Absorption: 5,846 Units Miami enters 2026 as one of the nation’s most demographically advantaged multifamily markets, supported by strong fundamentals and one of the deepest in-migration pipelines in the country. The region continues to attract high-income households, young professionals, and remote workers drawn to Miami’s tax advantages, lifestyle appeal, and growing corporate presence. More recently, high-income policy refugees are anticipated to leave New York and choose Florida markets like Palm Beach and Miami. This adds a new layer of durable, upper-income demand that will help solidify the rent floor and support the next phase of growth. These powerful demographic forces helped fuel 5,846 units of net absorption in 2025, keeping vacancy at a healthy 4.3% despite substantial new deliveries across the metro. While rent growth moderated to 0.7% in 2025 due to the heavy wave of new deliveries, Miami is expected to regain momentum in 2026 as supply pressure eases and demand continues to deepen. Much of the elevated pipeline is beginning to taper, setting the stage for improved performance as thousands of new units lease up and population inflows remain robust. Investor activity remains strong, with $1.7B in sales volume, an average price per unit of $330,000, and cap rates holding at 5.3%, signaling sustained confidence in Miami’s long-term growth trajectory. Miami’s expanding finance, technology, hospitality, and healthcare sectors, reinforced by ongoing corporate relocations and international investment, continue to diversify the local economy and strengthen the renter base. With absorption outpacing expectations, vacancy tightening, and supply set to normalize, Miami enters 2026 with the foundation for renewed rent growth and sustained investor interest, placing it firmly among the top multifamily markets to watch. Asking Rents in Miami Trend Higher than the U.S. Average Source: Matthews™ Research, CoStar Group, Inc. The Sunshine State is the No. 1 Destination for Migrating New Yorkers Source: Matthews™ Research, MovingPlace Atlanta, GA By the Numbers 2025 | Source: Matthews™ Research Sales Volume: $16.5B Average Price Per Unit: $174.5K Cap Rate: 5.2% Vacancy Rate: 6% Annual Rent Growth: 0.6% Annual Net Absorption: 20,576 Units Atlanta enters 2026 from a position of emerging strength as the market begins to stabilize after several years of historically elevated supply. Despite vacancy averaging 6% in 2025 and rent growth holding at a modest 0.6%, the metro posted a substantial 20,576 units of net absorption, signaling renewed momentum as demand once again outpaced new deliveries. Investor confidence remained firmly intact, with $16.5B in multifamily sales, an average price per unit of $174,500, and cap rates at a competitive 5.2%, underscoring long-term conviction in the region’s demographic and economic fundamentals. The market’s near-term challenges, primarily elevated vacancy and competitive lease-up conditions, are beginning to recede. The development pipeline is contracting sharply, with expected 2025 deliveries down roughly 40% from the prior year’s peak, marking a decisive shift toward more balanced supply conditions. This moderation is pivotal: for the first time since 2021, absorption is poised to consistently keep pace with, and potentially exceed, new supply. Demand drivers remain firmly entrenched. Metro Atlanta continues to outperform in population and household growth, supported by a broad-based employment ecosystem spanning logistics, education and health services, technology, and professional services. Even as certain office-using sectors cooled in 2025, the region’s overall economic profile remained resilient, ensuring a steady inflow of renters seeking relative affordability and proximity to expanding job centers. Growth nodes such as Midtown, West Midtown, and North Fulton continue to benefit from ongoing corporate relocations and high-skill employment announcements. Atlanta’s strong absorption, moderating construction pipeline, and durable economic base position the metro for a meaningful inflection in 2026. We’re optimistic that we will see an increase in transactional velocity in 2026 – Connor Kerns & Austin Graham, First Vice Presidents & Associate Directors With rent growth expected to return to positive territory by mid-year and investor appetite remaining elevated, Atlanta stands out as one of the nation’s most compelling multifamily markets heading into the next cycle. Atlanta Multifamily Demand Nears Pandemic-Era Peak Source: Matthews™ Research, CoStar Group, Inc. Atlanta Multifamily Transaction Volume Source: Matthews™ Research CoStar Group, Inc. Washington, D.C. By the Numbers 2025 | Source: Matthews™ Research Sales Volume: $4.4B Average Price Per Unit: $313K Cap Rate: 5.6% Vacancy Rate: 4.1% Annual Rent Growth: 0.8% Annual Net Absorption: 7,709 Units Washington, D.C. enters 2026 with strengthening multifamily fundamentals supported by one of the most stable, recession-resistant demand bases in the country. The region experienced a temporary pause in rent growth in 2025 due to elevated deliveries, yet leasing performance remained exceptionally resilient. The market absorbed a substantial 7,709 units over the last year, pushing vacancy down to 4.1% and reaffirming the region’s depth and durability. Investor activity remained robust, with $4.4B in sales volume, an average price per unit of $313,000, and cap rates holding at 5.6%, reflecting long-term confidence in the metro’s steady leasing velocity and strong income stability. Demand continues to be anchored by the region’s diversified economic foundation. Federal government agencies, legal services, education and research institutions, and professional and business services collectively sustain one of the country’s most reliable employment ecosystems. These sectors not only support consistent household formation but also create a resilient base of high-credit renters who value proximity to major job centers, transit infrastructure, and urban amenities. Even as portions of the national economy softened in 2025, D.C.’s employment profile remained steady, enabling the market to absorb new supply at a pace that outperformed expectations. Looking ahead to 2026, D.C.’s outlook is bolstered by several key tailwinds. Supply growth is set to moderate from its recent highs, reducing pressure on vacancy and setting the stage for a more balanced leasing environment. Population and job growth remain concentrated in high-income, urban neighborhoods with sustained demand for quality rental housing. The market’s ability to quickly absorb new units in 2025, combined with its structurally stable employment base and durable renter demographics, positions Washington, D.C. for above-average investment appeal as it heads into 2026. D.C.’s Population Growth Follows National Trends, But Continues to Outperform Source: Matthews™ Research, CoStar Group, Inc. Northern New Jersey By the Numbers 2025 | Newark & Hudson County | Source: CoStar Group, Inc. Sales Volume: $1.1B Average Price Per Unit: $314K Cap Rate: 5.7% Vacancy Rate: 3.0% Annual Rent Growth: 6.2% Annual Net Absorption: 4,329 Units Northern New Jersey’s multifamily market is shaping up for a standout 2026 as it benefits from powerful cross-currents of demand, ranging from New York City spillover to robust local household formation and an increasingly affluent renter base. After another year of exceptional performance the market enters 2026 with some of the enters 2026 with robust fundamentals. Net absorption reached 4,329 units, easily outpacing new supply and driving vacancy down to just 3.0%. Vacancy tightened across every major submarket over the past year, falling 150 basis points in Newark, 190 basis points in Jersey City, and 90 basis points in Hoboken. Rent growth surged to 6.2% in 2025, one of the strongest increases among major U.S. metros. Hudson County commands rents $1,200 to $1,500 above Newark due to superior transit access to Manhattan. Yet relative affordability still favors New Jersey, a dynamic that is likely to intensify if New York expands rent regulations. Rent growth has not recorded negative performance since 2017, marking Northern New Jersey as one of the very few metros to post consistent gains throughout the pandemic and recovery period. With $1.1B in sales volume, $314,000 average price per unit, and cap rates at 5.7% reflect a market that offers both near-term momentum and long-term durability. Should new rent controls be implemented in NYC, demand is expected to shift even more aggressively into Northern New Jersey’s nonregulated stock, accelerating rent growth and further tightening occupancy. Employment conditions further reinforce the market’s trajectory. While statewide job growth has appeared modest, Northern New Jersey’s economy tells a more robust story of diversification and resilience. Education and health services, along with the trade, transportation, and utilities sectors tied to the Port of Newark-Elizabeth, create a massive, stable base of employment. Northern New Jersey is also nearing the peak of its construction cycle. Nearly 7,700 units were delivered over the past 12 months, yet developers have started just 5,500 units over the same period. Looking ahead, Northern New Jersey is poised to maintain this strength in 2026 as several tailwinds converge. Limited construction activity across most submarkets will keep supply pressures minimal, allowing rents to continue rising from a position of already tight occupancy. At the same time, ongoing in-migration from Manhattan, driven by relative affordability, new luxury development in places like Jersey City and the Gold Coast, and expanding transit-oriented districts, is expected to sustain deep demand for high-quality rentals. Northern New Jersey enters 2026 with a compelling foundation for continued outperformance. Northern NJ Sees Highest Cap Rate in a Decade Source: Matthews™ Research, CoStar Group, Inc. San Diego, CA By the Numbers 2025 | Source: Matthews™ Research Sales Volume: $2.2B Average Price Per Unit: $403K Cap Rate: 4.7% Vacancy Rate: 4.1% Annual Rent Growth: (0.2%) Annual Net Absorption: 4,763 Units San Diego enters 2026 with one of the most stable and supply-constrained multifamily landscapes on the West Coast. In 2025, the market absorbed 4,763 units, enough to keep vacancy at a tight 4.1% despite a recent wave of deliveries, as a 20-year high of roughly 5,600 units have been completed so far this year. Although annual rent growth temporarily dipped 0.2%, the region’s underlying demand drivers remain among the strongest in the nation. These drivers include a high-income workforce, continued population gains, and a steady influx of renters priced out of homeownership in one of the nation’s least affordable for-sale housing markets. Investor confidence mirrors these fundamentals, with $2.2B in sales volume, an average price per unit of $403,000, and cap rates at 4.7%, signaling long-term optimism about the market’s trajectory. Conditions are set to strengthen further in 2026 as construction activity begins to moderate and the market rebalances. Much of the elevated supply delivered in 2024-2025 has already seen strong lease-up, particularly in coastal and infill submarkets where land scarcity and restrictive zoning limit future development. In addition, developers have notably pivoted towards smaller units. With fewer projects breaking ground and structural barriers keeping pipeline growth in check, vacancy is expected to tighten further over the next year. At the same time, the region’s expanding life science, defense, biotech, and technology sectors continue to attract high-earning talent. These dynamics point to a market poised for renewed rent growth, sustained occupancy strength, and competitive investor interest in 2026. San Diego Multifamily Supply & Demand Dynamics Source: Matthews™ Research, CoStar Group, Inc. Orange County, CA By the Numbers 2025 | Source: Matthews™ Research Sales Volume: $917M Average Price Per Unit: $453K Cap Rate: 4.4% Vacancy Rate: 4.2% Annual Rent Growth: 1.3% Annual Net Absorption: 4,725 Units Orange County continues to distinguish itself as one of Southern California’s most resilient multifamily markets, supported by exceptionally tight vacancies, durable renter demand, and a pronounced “flight to quality” that is reshaping leasing trends. The county benefits from structural supply constraints, high household incomes, and steady population drivers—all of which position it for strong performance in 2026. The median household income is almost $120K compared to the national average of about $89K, as the labor market continues to attract new residents. Orange County boasts an unemployment rate of -0.09% in comparison to the US rate of 0.54%. Investor sentiment remains confident despite elevated borrowing costs. Sales activity reached $917M in 2025, supported by sustained institutional interest. At $453,000 per unit, Orange County remains among the nation’s most expensive apartment markets, with pricing reinforced by limited land availability and consistent buyer competition. Cap rates hold firm at 4.4%, among the lowest in the country, underscoring the depth of capital targeting high quality, well-located assets. Operationally, the market is anchored by a 4.2% vacancy rate, which is materially below the national average and supported by steady demand from employment centers in Irvine, Costa Mesa, and the coastal submarkets. Even with moderate annual rent growth of 1.3%, absorption remains healthy, with 4,725 units absorbed, nearly matching new deliveries. Importantly, the market’s “flight to quality” trend continues to favor newly built, amenity-rich Class A properties, which are capturing a disproportionate share of leasing activity as high-income renters pursue upgraded, amenity-rich products in a limited-supply environment. With development heavily concentrated in Irvine and minimal new supply elsewhere, Orange County is poised to maintain tight occupancy levels into 2026. With this flight to quality, we are seeing more and more deals sell with negative leverage. We believe this to be a testament to the strength of Orange County multifamily. -Mark Bridge, Executive Vice President With a constrained pipeline, rising household incomes, and rebounding in-migration, Orange County is positioned for firmer rent growth and strengthening investment performance in 2026. As supply remains concentrated in only a handful of submarkets while demand deepens across the county, the market is set to maintain its standing as one of the most competitive and stable multifamily markets in the nation. OC Defies National Trends with Steady Apartment Development Source: CoStar Group, Inc. *Data was compiled through the research via Real Capital Analytics, CoStar Group, Inc. and Real Page, Inc.

Mark Bridge

Executive Vice President & Senior Director

3/5/26

Early Education M&A: What 2025 Taught Us and What to Expect in 2026

Throughout 2025, the early education and childcare sector continued to demonstrate why it remains one of the most complex, growth-oriented, and exciting sectors in the middle-market M&A landscape. Despite persistent challenges with wage inflation and changing policy dynamics, transaction activity remained steady. Demographic growth across many U.S. markets, combined with the industry’s highly fragmented structure, continued to attract interest from both strategic operators and institutional investors. 2025 Market Recap: A Resilient but Selective Environment Broad macroeconomic uncertainty and industry-specific challenges drove a notable flight to quality across the childcare M&A market. While deal volume was steady, we are by no means in a buying frenzy and buyer behavior reflected discipline rather than urgency. Strategic buyers were committed to strict underwriting and focused on acquisitions that aligned with their long-term operating model. Several key themes we took note of this year: High-quality centers traded efficiently: Centers meeting the core criteria of large consolidators, including stable and growing enrollment, experienced leadership, and predominantly private-pay revenue, continued to attract multiple bidders and transact on strong timelines at top-of-market pricing. Spotlight on small portfolios: Regional operators with 3+ locations proved especially attractive, due to the operational efficiency, risk mitigation, and ability to capture significant market share that comes with a multi-unit acquisition Single-unit operators remained active sellers and faced significant market competition: There is no shortage of independent owners nearing retirement or ready to exit the business due to operational challenges. To beat out the market competition, sellers and brokers needed to focus on preparing updated and organized financials, pricing based on defendable and realistic underwriting, and painting a picture of future sustainability and upside. Arguably most importantly – given many mom-and-pop schools may not be a fit for corporate consolidation, it is vital to have an understanding of who the local and regional buyers are. Multiples on subsidy-heavy deals compressed: Buyers across the spectrum showed a clear preference for private-pay models over subsidy-dependent revenue. This reflected heightened awareness of the operational and regulatory risks tied to subsidy programs, including reimbursement variability and funding uncertainty. While subsidy-driven schools are a vital part of many communities around the country and can be a great business model for a mom-and-pop operator, it is important for sellers to manage their expectations and understand there is a narrower buyer pool and, in turn, lower market multiples. What to Expect in 2026: How These Trends Are Evolving Continued institutional and private equity investment in the childcare sector, combined with stabilization in the interest rate environment and broader capital markets landscape, positions the industry for another strong year in M&A activity. Ongoing Consolidation: As independent owners approach retirement and become more familiar with strategic exit options, the supply of independent owner-operator sellers is expected to increase. Stable Real Estate Valuations: REITs, private real estate funds, and developers are increasingly interested in partnering with strategic operators to purchase high-performing childcare assets through joint ventures or acquisition sale-leasebacks. Net-lease childcare has also seen increased buyer activity, supported by expansion from top operators (KinderCare’s initial public offering, The Learning Experience’s 600+ unit development pipeline, etc.) and broader industry growth projections. Together, these dynamics continue to support competitive valuations for real estate sold alongside operations. Greater Emphasis on Operating Fundamentals: Enrollment pressure driven by affordability constraints, wage inflation, and changes to subsidy programs has shifted buyer attention to fundamentals and long-term sustainability. Buyers will have an increasing focus on the demographics and competitive tuition cost analysis of any given potential acquisition, as opposed to a sole focus on the school’s historical financials. While this refocus will create a competitive environment for sellers and constrain business valuations, it will ultimately ensure buyers are able to successfully operate the schools they acquire and provide the highest quality childcare for their communities. What This Means for Sellers Practical advice for owners considering a sale in the next few years: Prepare early: Clean, well-organized financial statements, ideally with monthly detail for the most recent year, build buyer confidence, streamline diligence, and support stronger outcomes. Prioritize sustainability: Buyers are evaluating long-term operational sustainability, not just historical results. Businesses operating at margins that cannot be realistically sustained post-transaction are unlikely to command top-of-market pricing. Maintain performance: Maintaining stable or growing performance heading into a sale process is essential. Declining revenue or enrollment raises concerns around transferability and often results in multiple compression. Consistency remains one of the most effective ways to protect value and position a business favorably with buyers.

Levi Veleanu

Associate

3/5/26

How Matthews™ Set Brokers Up for Success

At Matthews™, brokers are not simply hired. They are developed with intention. The platform is designed to equip professionals at every stage of their careers with the tools, training, and leadership support necessary to build sustainable, high-level production. Matthews™ is the fastest growing commercial real estate and technology company in the nation, built on a culture of teamwork, integrity, and excellence. The firm’s growth is not accidental. It is the result of a deliberate strategy to develop high-performing professionals through structure, mentorship, innovation, and accountability. Mentorship That Builds Confidence and Competence A defining characteristic of the Matthews™ model is its hands-on mentorship strategy. Emerging brokers are paired with a senior broker who serves as a dedicated mentor throughout the early stages of their career. This structured shadowing approach provides direct exposure to live transactions, underwriting strategy, client negotiations, and business development planning. Rather than navigating the industry alone, developing brokers learn directly from top producers. They observe real-time deal execution, participate in client conversations, and receive consistent coaching and feedback. This apprenticeship-style model accelerates learning, reinforces best practices, and builds both competence and confidence. The result is a clear path from entry-level training to independent production, guided by leadership that remains actively involved in the brokerage process. Matthews™ University: A Foundation for Long-Term Success Growth and learning are central to the Matthews™ mission. Every professional participates in Matthews™ University, the firm’s award-winning training platform designed to transform motivated individuals into confident, knowledgeable advisors. Matthews™ University provides structured education across investment sales, leasing, capital markets, financial underwriting, market research, and professional development. Participants gain a deep understanding of property valuation, investment analysis, and sales strategy, while also developing the discipline and communication skills required to build a client base. The program combines classroom-style instruction with real-world application. Brokers practice lead generation techniques, such as cold calling and research, analyze live market data, and learn to present opportunities with clarity and conviction. Ongoing workshops, executive-led sessions, and performance coaching ensure continuous development beyond initial onboarding. This structured approach creates professionals who are technically skilled, strategically minded, and prepared to compete at a high level. Technology That Improves Performance Matthews™ has made an industry-leading commitment to technology and innovation. The firm has invested millions into proprietary, AI-driven tools that streamline marketing execution, client outreach, research, and performance analytics. Brokers leverage advanced client relationship management systems, data platforms, and marketing technologies that enhance efficiency and provide actionable insights. These tools allow professionals to manage pipelines effectively, refine underwriting assumptions, and maximize market exposure for their listings. By combining hard work with innovative systems, Matthews™ enables brokers to operate with greater precision and productivity in an increasingly competitive marketplace. Culture Rooted in Teamwork, Integrity, and Excellence The culture at Matthews™ reinforces the firm’s development strategy. Success is earned through effort, determination, and integrity. Collaboration is prioritized over internal competition, and professionals are encouraged to win together. Agents work alongside market leaders, managing directors, executives, and top producers who remain accessible and engaged. The environment celebrates curiosity, discipline, resilience, and continuous improvement. High standards are expected, and ambition is rewarded. This culture creates alignment across the organization and supports long-term career growth rather than short-term transactional focus. A Launchpad for Ambitious Professionals Whether entering the industry through the Matthews™ internship program or joining as a developing broker seeking structure and mentorship, professionals step into an environment designed for long-term success. Through professional development, innovative technology, and a collaborative culture, Matthews™ equips brokers to build durable, relationship-driven businesses. The firm’s model empowers individuals to think entrepreneurially while benefiting from institutional-level resources and leadership. Matthews™ is more than a brokerage. It is an environment intentionally built to develop elite commercial real estate professionals and accelerate meaningful, lasting careers. Apply now. Build your future here.

What Veterinary Real Estate Conversations Signal for Medical Office in 2026

Held February 15–18 in Las Vegas, the WVC Annual Conference once again highlighted the scale and momentum of the veterinary industry. As one of the largest gatherings of veterinary professionals in the country, WVC has become more than a clinical and operational forum. It’s a useful barometer for broader trends shaping healthcare real estate, particularly within the medical office and specialty care sectors. This year’s conversations reflected an industry that remains fundamentally growth-oriented, but increasingly disciplined in how and where it expands. Veterinary Demand Continues to Support Real Estate Fundamentals Veterinary care remains one of the most resilient segments within outpatient healthcare. Pet ownership levels remain elevated and total spending on animal health, projected to reach approximately $150 billion in 2026, continues to outpace broader consumer trends. At WVC, operators consistently pointed to strong patient volumes and durable demand, even as costs related to labor, insurance, and equipment continue to rise. From a real estate perspective, this demand profile supports long-term occupancy and stable cash flow for well-located veterinary facilities, particularly those embedded within dense suburban trade areas or adjacent to complementary retail and medical uses. Real Estate Strategy Is Becoming More Intentional One of the more notable themes emerging from discussions at WVC was the shift away from rapid, footprint-driven expansion toward more selective real estate decision-making. Veterinary groups are placing greater emphasis on: Site functionality, including parking, ingress/egress, and high visibility Floor plans that support higher-acuity services and advanced specialty care Long-term flexibility within leases to accommodate evolving medical equipment and staffing needs Rather than simply adding locations, many operators are optimizing existing clinics or consolidating into higher-quality facilities that better support operational efficiency. Parallels with Broader Medical Office Trends The veterinary sector’s evolution closely mirrors trends playing out across the wider medical office landscape. Across healthcare real estate, tenants are prioritizing assets that support outpatient delivery, operational control, and patient experience, while landlords are increasingly focused on credit quality, lease structure, and long-term viability. Veterinary clinics, like other medical users, tend to favor single-story or easily accessible space, strong demographics, and locations insulated from new supply. As a result, well-positioned veterinary real estate continues to attract interest from investors seeking defensive income within healthcare. What This Means for Owners and Investors The takeaway from WVC is not a story of aggressive expansion, but one of maturity. Veterinary operators are behaving more like institutional healthcare tenants, with real estate decisions grounded in performance, efficiency, and long-term planning rather. For owners and investors, this reinforces several key points: Quality and location matter more than ever. Assets aligned with modern veterinary operations are likely to remain highly liquid. Long-term demand fundamentals remain intact, even as underwriting becomes more conservative. Looking Ahead As the veterinary industry continues to professionalize and integrate with broader healthcare delivery models, its real estate footprint is likely to remain a bright spot within medical offices. The conversations at WVC suggest a sector that is stable, growing, and increasingly thoughtful about how physical space supports animal care. For those tracking medical office and specialty healthcare real estate, WVC offers a valuable lens into where tenant demand is headed and why veterinary assets continue to command attention within the investment landscape.

Why New Medical Office Development is Keeping Rents High

A common trend that occurred across the healthcare and medical real estate space over the past six years was the rise of market rents, with most markets experiencing 20%+ growth in asking rents compared to pre-COVID-19 levels. As the cost to build specialized medical space has continued to rise, a meaningful rent gap has emerged between new developments and pre-COVID construction. For developers, investors, and surgery center operators, understanding the drivers behind this gap is critical to navigating today’s market. The Ongoing Rent Gap in Medical Real Estate The cost of delivering new medical office space has reached unprecedented levels. Facilities designed for complex outpatient care, ambulatory surgery, and advanced imaging require specialized HVAC, plumbing, and electrical systems well beyond those of traditional office buildings. In addition, higher structural requirements, stricter life-safety standards, extensive regulatory approvals, longer permitting timelines, and rising labor and material costs have pushed total project costs materially higher. Highly-specialized, tenant-specific buildouts further limit flexibility, making new medical construction increasingly difficult to pencil at legacy rental rates. Across the healthcare sector, total development costs for medical office buildings now commonly range from $400 to $500 per square foot, with some buildouts north of $1,000 per square foot. To justify these costs, developers must price rents at a premium, creating a clear gap between new and older construction market rents. How Cap Rates Impact Asking Rents With construction costs elevated across the board, developers are forced to pass these higher costs on to tenants. To create value, projects are underwritten to a stabilized build yield roughly 200 basis points higher than the expected exit cap rate, with that spread representing the developer’s profit. Medical office buildings continue to trade at attractive cap rates—generally in the 6% to 7% range. To achieve these exit yields on a materially higher cost basis, developers must generate greater NOI, which is accomplished by pricing rents higher at delivery. As a result, new construction is delivered at a significant rent premium relative to older second- or third-generation medical properties that were built at much lower costs. New Construction Compared to Existing Spaces The gap between new and older medical offices is growing. Throughout 2025, the rent premium for new construction outpaced the general market. Specifically for new medical offices, the rent per square foot rose from around $26 to $35 over seven years, which is around a 30% increase. During the same timeframe, existing medical office rents increased from $22 to $25, approximately a 15% rise. With national medical office vacancy around 6%, the lack of affordable supply means that rent momentum will stay robust across the sector, even as new builds push the rate higher. Construction and Financing Headwinds New medical office buildings haven’t moderated their rent demand because ground-up construction has fundamentally changed. Developers are navigating sustained cost pressures that make delivering a project at traditional price levels increasingly difficult. While specialized materials—such as advanced HVAC systems, medical-grade electrical systems, and complex MEP infrastructure—are essential to clinical functionality, their prices have remained elevated even as some broad material indices have stabilized. Persistently tight supply chains, higher wages for skilled labor, and strong demand for healthcare construction keep input costs well above pre-pandemic norms. Beyond the baseline cost of materials and labor, recent tariff policies have added another layer of expenses. Broad tariffs on imported construction inputs, such as steel, aluminum, and other key components, have lifted the landed cost of materials and driven contractors to raise prices to offset those duties. Industry analysis suggests that these trade measures may increase construction material costs by roughly 9% compared to 2024 levels, and overall project costs by a few percentage points as tariff impacts pass through the supply chain. At the same time, the healthcare construction labor pool remains small and competitive, with shortages of experienced tradespeople pushing wage rates higher. The combination of elevated skill costs and immigration-related workforce constraints further limits downward pressure on overall build pricing. Compounding these headwinds, the cost of capital has also created challenges. Elevated interest rates have increased the price of construction loans and overall financing, prompting lenders to tighten underwriting criteria and often require stricter pre-leasing commitments before financing is approved. This adds both time and cost to the development cycle. When developers are spending around $500 per square foot, or more in high-complexity markets, to make their buildings operational, rents must be set above existing market averages to cover essential costs and achieve a viable return on investment. Advantage for Existing Surgery Centers and Medical Offices This bifurcation in the market has created a clear advantage for owners of existing medical properties—particularly those housing licensed surgery centers or high-acuity outpatient clinics. Buildings delivered prior to the recent surge in construction and financing costs can offer rents meaningfully below those required for new construction. This pricing flexibility allows landlords to retain tenants without pushing rents to replacement-cost levels, giving them significantly greater control in lease negotiations and renewals. This advantage is even more pronounced in states governed by Certificate of Need laws. In these markets, licensed surgery centers and regulated medical practices function as protected assets. The time, cost, and uncertainty associated with obtaining new licenses severely limit new supply, making existing facilities scarce and highly valuable. For investors, these regulatory barriers reduce competitive risk and support long-term occupancy, as new entrants cannot easily replicate or replace these locations. Medical facilities also benefit from strong tenant stickiness due to the capital intensity required to operate. Providers routinely invest millions into interior buildouts, specialized equipment, and licensing tied to a specific address, making relocation both costly and disruptive. As a result, medical tenants demonstrate materially higher renewal rates than traditional office users, with approximately 85% of medical office leases renewing as operators often choose to reinvest in their existing footprint rather than relocate. For property owners, these dynamics translate into durable, lower-risk income streams. Landlords can focus on targeted capital improvements to maintain a high-quality, Class A experience without needing to match the elevated rental rates required by new construction. As a result, established medical assets remain well-positioned to capture steady demand driven by an aging population, while staying insulated from the construction cost inflation and financing volatility impacting ground-up development today. New Construction Rents Increase, While Existing Structures Retain Value Rising rents tied to new development have split the market into two tiers: newly-built medical facilities with significantly higher rental rates needed to offset construction and financing costs, and established medical properties offering lower, more sustainable rents. This shift has strengthened demand for existing medical offices, as many providers find the cost of relocating to new construction increasingly difficult to justify. For investors and owners, this split in the market highlights a strategic value play in older structures. While new builds are seeking $35 per square foot rents to meet their exit cap rate targets, existing properties can maintain healthy margins at $25 to $28 per square foot. This price advantage makes established buildings highly resilient. Tenants in these buildings are less likely to be taken by new developments because the rental increase and the required capital for a moveout are too high. Existing medical real estate often contains locked-in value that is expensive to replicate. For example, an older surgery center already has the reinforced flooring, specialized plumbing, and HVAC systems required by health codes. Recreating this in a new building would require a large tenant improvement allowance. As existing owners have already amortized these costs, they can offer different opportunities for medical groups looking to expand without the delay of ground-up construction. Investing in stabilized, existing medical real estate offers a level of predictability that is not seen in new development. Owners of established assets aren’t as sensitive to the volatility of material costs affecting the construction sector in 2026. Instead, they benefit from a high national renewal rate that ensures consistent cash flow. With these economic factors in place, those who own existing spaces where patients are already accustomed to receiving care are set to thrive. Key Takeaways The rise in new construction costs has strengthened the value of existing medical real estate, creating a barrier against new competition. While incoming developments push the limits of what tenants can pay, established owners are in a convenient spot as they offer the necessary infrastructure without having to adjust to the high cost environment. For investors, focusing on the acquisition and renovation of stabilized medical assets offers a path to predictable returns with significantly lower capital expenditure risk.

Jake Allen

Associate Vice President

3/4/26