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Tuesday, October 13, 2026 · Daily Edition

CRE Blurb: Tuesday, October 13, 2026

The daily commercial real estate briefing for students and professionalsDaily CRE briefing for students

The Brief

  1. Investors are no longer banking on Fed rate cuts to rescue deals, and are pricing properties on today's costs instead. GlobeSt.com
  2. San Francisco keeps pushing to turn empty offices into housing, trying to fix a downtown with too much vacant space. The Business Times
  3. Fewer CMBS loans are late overall, but more borrowers are just starting to miss payments, an early warning sign. GlobeSt.com

Market Snapshot

10-Year Treasury
5.24%+2 bps
Benchmark for long-term property loans
SOFR
3.87%0 bps
Base rate for floating-rate property loans
Real estate stocks (VNQ)
$91.36+0.8%
A fund holding about 150 REITs (as of Oct 12)

Rates as of Oct 9 close. Full market data

Top Story

Investors stop waiting on rate cuts

GlobeSt reports that commercial real estate buyers have stopped assuming lower rates will bail out deals, and now underwrite properties at current borrowing costs. That means lower prices offered, not optimistic ones. GlobeSt.com

Why it matters Sellers who still expect yesterday's prices will sit unsold, so the gap between buyer and seller keeps deal volume low.

BXP advances $2B Midtown office project

BXP's $2B office development in Midtown Manhattan has reached podium level, the base floors that carry the tower above, GlobeSt reports. The project is pressing ahead despite a soft office market. GlobeSt.com

Why it matters: A developer committing billions to new offices signals that top-tier Manhattan space still draws tenants, even as older buildings sit empty.

Microsoft sues JLL over NYC office injury

Microsoft has sued the brokerage JLL, asking it to cover any damages from a lawsuit by a construction worker hurt at its Fifth Avenue office project, Bisnow reports. The fight is over who is responsible for the forklift accident. Bisnow

Why it matters: Tenants and their vendors are pushing injury liability onto each other, a reminder that build-out contracts decide who pays when something goes wrong.

Lennar's Millrose accused of buying and renting homes at a loss

The Real Deal reports that Millrose, a company Lennar spun off to hold land, allegedly bought finished homes and rented them below cost instead. The claim questions how the vehicle was actually run. The Real Deal

Why it matters: How a land-banking spinoff uses its cash affects its investors, and sets a precedent other homebuilders copying the model will watch.

San Francisco keeps pushing office-to-housing

San Francisco is still trying to convert empty offices into homes, The Business Times reports, even though the math on such conversions is hard. The city sees housing as a way to refill a hollowed-out downtown. The Business Times

Why it matters: Conversions cut office supply and add apartments, which helps landlords of remaining offices and gives residents more places to live.

Coffee chat talking points

Talking points you can use in networking conversations

  1. Developers are still committing to giant projects like BXP's $2B Midtown tower even as buyers stop counting on cheaper debt. GlobeSt.com
  2. A $550M refinancing at Century City shows lenders still fund trophy offices even as more loans slip into early delinquency, so credit favors strong sponsors. Yahoo Finance

Debt Markets

Fewer commercial mortgage bonds are behind on payments, but GlobeSt reports a rise in loans that have just slipped into early delinquency. That early-stage trouble often turns into bigger problems months later. GlobeSt.com

Why it matters: Lenders watch early misses to guess future losses, so a rising count makes them stricter on new loans.

Apartment owners can find plenty of debt, but GlobeSt says equity, the owner's own cash in a deal, is scarce. Buyers struggle to raise the down-payment portion even when a bank will lend the rest. GlobeSt.com

Why it matters: Without new equity, multifamily sales stall, which slows price discovery and leaves sellers waiting.

GlobeSt looks at when it stops paying to keep extending a troubled office loan, the "extend and pretend" tactic lenders use to avoid taking a loss. At some point the math no longer works. GlobeSt.com

Why it matters: When extensions end, lenders foreclose or sell at a loss, which puts more discounted office buildings on the market.

Higher rates and rising costs are pushing more commercial real estate loans into distress, according to new reporting. Loans taken out in cheaper times now cost more to refinance, and climbing expenses leave owners with less cash to cover their payments. More borrowers are falling behind or asking lenders for relief. GlobeSt.com.

Why it matters: Distress means a loan is close to default, so more distress signals lenders could take losses and buyers could find discounted properties for sale.

Distress Watch: The loan tied to the former Seattle Times office has been sent to a special servicer, The Business Journals reports. A special servicer is the workout team that steps in when a borrower cannot pay as agreed. The Business Journals

Market Watch

West Coast

An owner refinanced 1800 Avenue of the Stars in Century City with a $550M loan, Yahoo Finance reports. A refinancing replaces an old loan with a new one, often when the old one comes due. Yahoo Finance

Why it matters: A completed refi on prime LA office tells other owners that strong buildings can still find lenders, even in a weak office market.

Quick Hits

  • WP Carey bought the British International School's campus in Chicago's South Loop for $71M, adding a leased school to its single-tenant portfolio. The Real Deal
  • The former Wells Fargo tower in Charlotte is set for redevelopment after winning historic designation. Charlotte Observer Historic status can unlock tax credits that help pay for an expensive reuse of an old building.
  • Buchanan and Vault formed a joint venture to build a high-power industrial project inside Houston's Beltway 8. The Business Journals A joint venture lets two firms pool money and skills to tackle a project neither would build alone.
  • Healthcare REITs are shifting toward senior housing, and private investors are buying up the medical office buildings they leave behind. Bisnow When established landlords sell off a property type, private buyers who still want steady rent step in to take it.
  • New York's Mamdani administration is backing a planned rollout of a pied-à-terre tax, a levy on second homes owners do not live in. The Real Deal A new tax on second homes could cool demand for luxury condos and shift what developers choose to build.
  • Two industrial sales in Will County, Illinois, including a Penny Pritzker deal, together topped $146M. The Real Deal Steady warehouse sales near Chicago show investors still trust demand for shipping and storage space.
  • An AI-driven surge in demand has Hunter Partners planning a new office project at Cityline in Sunnyvale. The Real Deal Fresh tenant demand from AI firms is reviving office construction in parts of Silicon Valley.

AI Infrastructure

TeraWulf is pivoting from bitcoin mining to leasing out AI data centers, signing $27B in long-term contracts, Pluang reports. Data centers are warehouses full of servers that run AI models, and they need huge amounts of power and space. Converting a mining operation into leased AI capacity gives landlords and power providers a hungry new tenant, while straining local electric grids that must supply it. Pluang

The Numbers

Every number is filled in automatically from public data.

Rates

10-Year TreasuryBenchmark for long-term property loans
5.24%+2 bps
5-Year TreasuryBenchmark for many 5-year commercial mortgages
5.02%+3 bps
2-Year TreasuryTracks where the Fed is expected to set rates
4.80%+5 bps
10Y-2Y curveNegative = short-term rates above long-term, often a slowdown signal
44 bps-3 bps
SOFRBase rate for floating-rate property loans
3.87%0 bps
Fed FundsThe Fed's target for overnight bank lending; other rates key off it
3.75% to 4.00%0 bps
30-Year Mortgage30-year home mortgage rate (Freddie Mac); a housing-demand gauge, not a CRE loan rate (as of Oct 8)
7.40%+12 bps

Rates as of Oct 9 close.

Line chart of the 10-Year Treasury yield, from 4.75% on Aug 31 to 5.24% on Oct 9.
10-Year Treasury yield, last 45 days.
Line chart of Treasury yields by maturity. On Oct 9: 2Y 4.80%, 5Y 5.02%, 10Y 5.24%, 30Y 5.60%. A month ago (Sep 9): 2Y 4.43%, 5Y 4.61%, 10Y 4.83%, 30Y 5.28%.
Treasury yields by maturity, latest close vs. a month ago. Upward slope = longer loans cost more.
Line chart of the 30-year mortgage rate over the last six months, from 6.30% on Apr 16 to 7.40% on Oct 8.
30-year mortgage rate, last six months (Freddie Mac).

Federal Reserve

FOMC: next Fed meetingWhen the Fed next decides on rates
Oct 28
Odds of a cutChance rates go down. Prediction-market odds from Polymarket traders
0.6%
Odds of a holdChance rates stay the same
79.5%
Odds of a hikeChance rates go up
19.9%

Kalshi: hold 78.3%

Stacked bar of prediction-market odds for the Oct 28 Fed meeting: cut 0.6%, hold 79.5%, hike 19.9%.
What prediction markets expect at the next Fed meeting. Odds as of Oct 13.

REITs

Real estate stocks (VNQ)A fund holding about 150 REITs (as of Oct 12)
$91.36+0.8%
Biggest gain todayOwns warehouses and distribution centers (as of Oct 12)
Prologis (PLD)+2.3%
Biggest drop todayOwns West Coast apartments (as of Oct 12)
Essex Property Trust (ESS)-0.4%
REIT dividend yieldYearly income per $100 invested in VNQ
3.80%
REIT yield vs. 10-Year TreasuryBelow zero: Treasuries out-yield REIT dividends, so REITs look pricey vs. bonds
-144 bps
Bar chart of moves for the Oct 12 close for 16 REITs, best to worst: PLD +2.3%, WELL +2.1%, HPP +1.8%, STAG +1.2%, SPG +1.0%, O +1.0%, BXP +0.8%, NNN +0.8%, DLR +0.8%, VICI +0.7%, EQIX +0.6%, VNO +0.5%, ADC +0.3%, MAA -0.3%, UDR -0.3%, ESS -0.4%.
Daily move, Oct 12 close, for the REITs we track. Shows which property types had a good day.

What it means: Rates were little changed, so borrowing costs for buyers and owners refinancing are about where they have been. Deals still have to work at today's levels, not cheaper ones.

Why Prologis (PLD) moved: No company-specific news today; it may have moved with other warehouse REITs.

Why Essex Property Trust (ESS) moved: No company-specific news today; it may have moved with other apartment REITs.

Term of the Day

GP/LP

Two roles in a real estate deal. The general partner (GP) finds, buys and runs the property, and puts in a small slice of the cash. Limited partners (LPs) are passive investors who supply most of the money and share the profits, but do not manage anything. For example, a GP might put in $1M and raise $9M from LPs on a $10M purchase.

Data Room

Slower-moving credit data. Rows marked Updated changed since the last issue.

High-yield spread (Oct 12) UpdatedExtra interest risky companies pay over Treasuries; higher = lenders more nervous
3.11%0 bps
Bank CRE loans (Sep 30)Total commercial property loans banks hold
$3,142B+0.1%
Bank CRE delinquency (Q2 2026)Share of banks' commercial property loans that are behind on payments
1.53%-3 bps
CMBS delinquency (Sept 2026)Share of commercial property loans in bonds that are behind on payments
8.02%+17 bps

Data checks: REIT prices came from a single source today. Treasury yields matched across FRED and Treasury.gov. Fed odds in line with Kalshi.

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