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23 Jun 2026

Authenticity Isn’t Optional in a Relationship Business

23 Jun 2026

Chicago, IL Industrial Market Report Q1 2026

23 Jun 2026

The Sale-Leaseback Surge

22 Jun 2026

The Revitalization of Urban Retail

Authenticity Isn’t Optional in a Relationship Business

One of the worst pieces of career advice young people receive is that they need to “sell themselves.” The problem isn’t the concept, it’s what most people do with it. Far too many people hear the words “sell yourself to me” and immediately create a version of themselves they believe everyone else wants to meet. They lower their voice. They force confidence they don’t possess. They memorize lines and suppress opinions. They become a collection of rehearsed mannerisms and borrowed phrases designed to project success rather than demonstrate competence. In other words, they put on a sales persona. That persona may carry them through a first meeting or an interview, but it rarely survives the second, the tenth, or the hundredth interaction. Eventually, the mask slips and those “relationships” reveal themselves as performance. Relationship businesses don’t reward people for appearing authentic. They reward people for actually being authentic. That distinction matters. There is no winning personality type The longer I’ve spent in sales and around successful producers, the more convinced I’ve become that there is no universal personality type that wins business. The analytical advisor wins because clients believe every recommendation has been carefully considered. The naturally outgoing personality wins because people feel energized in their presence. The calm, understated professional wins because they project stability when circumstances are uncertain. The intense competitor wins because clients believe nobody will outwork them. The storyteller wins because they make complexity feel manageable. The quiet listener wins because they make clients feel genuinely understood. None of these people succeed because they are the same. They succeed because they lean into who they are. Imitation rarely produces conviction Too often, young professionals think they have to become someone else to succeed. They watch the highest producer in the office and begin copying vocabulary, gestures, cadence, even personality traits. It almost never works. Not because those habits are bad, but because imitation rarely produces conviction. Clients are remarkably perceptive. They may not identify exactly what feels off, but they can sense when someone is presenting rather than communicating. They can tell when answers sound memorized instead of believed, when confidence is manufactured rather than earned. Trust is built in authenticity. And trust, not charisma, is ultimately what clients are buying. Authenticity requires self-awareness Ironically, authenticity is often mistaken for simply “being yourself.” That advice, while directionally correct, is incomplete. Authenticity is not saying whatever comes into your head. It is not refusing feedback. It is not using honesty as an excuse for a lack of professionalism or emotional intelligence. Real authenticity requires self-awareness. It requires understanding your own strengths and weaknesses, a clear sense of how other people perceive you, and enough confidence that your words consistently align with your beliefs and your actions. Self-awareness creates advisory credibility because clients can quickly identify someone who understands their own limitations. I’ve trusted countless professionals who have looked me in the eye and said, “I don’t know, but I’ll find out.” I’ve immediately distrusted others who clearly didn’t know but desperately wanted me to think they did. The first demonstrated confidence. The second demonstrated insecurity. Ironically, vulnerability, handled well, often projects more authority than false certainty could. Focus on the problem, not the impression The strongest advisors I’ve worked with are not trying to impress people. They are trying to solve problems. Their attention remains external rather than internal, and that’s a subtle but enormous distinction. When you’re worried about how you sound, you’re thinking about yourself. When you’re focused on helping someone else make a better decision, you’re thinking about them. Clients notice. Perhaps the greatest misconception in modern sales is the belief that people are persuaded primarily by charisma. Of course, communication skills matter. Presence matters. Confidence matters. But clients do not need another polished personality. They need conviction. They need someone willing to push back against things that aren’t in their best interest and against unrealistic expectations. They need someone willing to deliver uncomfortable truths instead of convenient ones. Conviction cannot be manufactured because it comes from belief, and belief becomes visible. People can feel it in your tone, your pace, your willingness to pause before answering, and your comfort saying something unpopular when you know it’s right. The most persuasive professionals I’ve ever met were rarely the loudest people in the room, they were simply the people who genuinely believed what they were saying. Over enough years and enough interactions, authenticity compounds in exactly the same way trust compounds. People know what to expect from you. Your advice, your character, your motives become predictable. And in a relationship business, predictability is another word for trust. The remarkable thing is that authenticity isn’t just better for your clients, it’s better for you. Pretending to be someone else is exhausting. Keeping track of the version of yourself each audience is supposed to see is exhausting. Constantly filtering every interaction through the lens of perception instead of principle is exhausting. There is an incredible amount of freedom in simply becoming exceptionally good at being yourself. Not the unpolished or complacent version, but the self-aware, continually improving authentic version. In the long run, people aren’t looking for a salesperson. They’re looking for someone they believe. And those are rarely the same person.

Cory Rosenthal

Executive Managing Director & National Director, Multifamily

6/23/26

Chicago, IL Industrial Market Report Q1 2026

Chicago’s industrial market remained fundamentally healthy in Q1 2026. Vacancy ended the quarter at 5.4%, reflecting a relatively tight market despite ongoing supply additions. Net absorption totaled 3.8 million square feet, demonstrating continued tenant demand and supporting stable occupancy levels. Market asking rents reached $10.08 per square foot, while annual rent growth measured 4.8%. Demand continues to concentrate in newer, large-format facilities that offer modern specifications, higher clear heights, and enhanced operational efficiency. Leasing activity remains strongest among logistics-oriented users, while older and less functional properties continue to face greater competitive pressure. Positive absorption and steady leasing activity have helped offset the impact of new deliveries and maintain balanced market conditions. Key Findings Chicago recorded 3.8 million square feet of net absorption during Q1 2026, while vacancy remained relatively tight at 5.4%, supported by continued demand for modern logistics space. The market had 19.9 million square feet under construction at quarter-end, while 1.1 million square feet delivered during the quarter, reflecting continued but measured supply growth. Industrial investment activity totaled $1.1 billion in Q1 2026, with assets trading at an average of $100 per square foot and an average 8.1% cap rate amid a disciplined capital markets environment. Chicago Industrial Supply & Demand Dynamics Source: CoStar Group, Inc. Chicago Demographics Source: CoStar Group, Inc. Unemployment Rate: 4.8% Current Population: 9,415,732 Households: 3,714,389 Median Household Income: $94,733 Chicago remains one of the nation’s premier logistics hubs, benefiting from extensive rail, interstate, air cargo, and intermodal infrastructure. The region’s diverse economy and large transportation workforce continue to support demand from logistics, manufacturing, and distribution users. Looking ahead, ongoing investment in advanced manufacturing and technology initiatives should further strengthen the market’s long-term industrial fundamentals. Top Tenant Leases Elogistics Service Corp Peopleworks PepsiCo Hyundai Mobis Population, Labor Force, & Income Growth Source: CoStar Group, Inc. Chicago Industrial Construction Development activity remained active during Q1 2026, with 19.9 million square feet under construction and 1.1 million square feet delivered during the quarter. New development continues to focus on major logistics corridors, where tenant demand remains strongest. Developers remain focused on larger-format facilities that align with modern distribution requirements. While the pipeline remains elevated, positive absorption and ongoing leasing activity have helped maintain market balance. As a result, current construction levels are not expected to materially disrupt fundamentals in the near term. SF Construction Starts Source: CoStar Group, Inc. SF Under Construction Source: CoStar Group, Inc. Chicago Industrial Sales Industrial investment activity totaled $1.1 billion during Q1 2026. The average sale price reached $100 per square foot, while market cap rates averaged 8.1%. Investor demand remained strongest for modern logistics facilities with stable occupancy and long-term income streams. Although higher borrowing costs and more conservative underwriting continue to influence transaction activity, Chicago remains one of the nation’s most liquid industrial investment markets. Institutional and private investors remain active participants, attracted by the market’s scale, infrastructure advantages, and long-term demand drivers. Pricing has generally remained resilient for high-quality logistics assets, while older and functionally obsolete properties have experienced greater pricing pressure. Chicago Industrial Sales Volume Source: CoStar Group, Inc. By the Numbers Q4 2025 | Source: CoStar Group, Inc. Sales Volume: $1.1B Price Per SF: $100 Cap Rate: 8.1% Vacancy Rate:5.4% Rent Growth: 4.8% Asking Rent Per SF: $10.08 SF Under Construction: 19.9M SF Delivered: 1.1M SF Absorbed: 3.8M

The Sale-Leaseback Surge

An investor’s guide to separating opportunity from risk in today’s net lease market Sale-leasebacks have shifted from a niche balance sheet tool to a core capital strategy across Corporate America, particularly in retail and other operationally intensive sectors. CoStar reports sales volume for sale-leaseback transactions increasing by 19% YOY from 2024 to 2025. In addition to this transactional growth, trends in the US population point to many Boomers retiring within the next few years, with a current rate of roughly 11,000 retirees a day according to the U.S. Census Bureau. The rise in sale-leasebacks will continue to accelerate, as older business owners step out of the job market and sell their holdings. Boomers make up 23% of the total U.S. population Source: U.S. Census Bureau | 2026 In a landscape defined by higher interest rates, tighter credit, and pressure to improve returns on capital, companies are increasingly turning to the real estate under their operations as a source of liquidity and flexibility. The backdrop is clear: borrowing costs are elevated, lenders are more selective, and investors are demanding greater capital discipline. Monetizing owned real estate through a sale-leaseback allows operators to convert an illiquid asset into cash without disrupting the business. The building trades hands; the tenant keeps running the store. For sellers, this is a timely way to unlock capital and strengthen balance sheets. For buyers, the headline yields can look compelling until you look into tenant credit, lease structure, and real estate fundamentals in a slower, more uncertain cycle. The underwriting environment is more complex than it seems. This article offers an investor framework for navigating that complexity. $13.4T in U.S. Corporate-Owned Real Estate Source: Board of Governors of the Federal Reserve System | 2025 As companies monetize real estate through sale-leasebacks, investors gain access to long-term, income-generating assets backed by operating businesses. Why Corporations Are Selling Now At its core, the sale-leaseback is about monetizing owned real estate to fund higher return uses. Instead of locking equity in bricks and mortar, companies convert that value into cash and redeploy it into operations, balance-sheet repair, or shareholder returns. In practice, proceeds often fund growth initiatives such as remodel programs, technology and logistics upgrades, or expansion into new formats and markets. They are also frequently used to reduce debt and interest expenses or to support dividends and share repurchases that enhance total shareholder return. In a higher-rate environment, traditional financing is both more expensive and often more restrictive than in prior cycles. A sale-leaseback can be a relatively attractive alternative to new debt. The company trades ownership for a long-term lease obligation, typically with fixed escalations that are easier to plan around than floating interest costs or uncertain refinancing conditions. For many operators, shifting from an ownership model to an “asset-light” model is as much a strategic decision as a financial one. Certain sectors are especially active in this surge. Retailers, restaurant groups, automotive chains and healthcare operators often sit on sizable real estate portfolios that can be selectively monetized without undermining operations. Within retail, margin compression, e-commerce competition, and ongoing store rationalization make capital efficiency a priority. Locations may be strategically indispensable from a revenue standpoint but no longer need to be owned to be considered valuable. Accounting also plays a role. Under ASC 842, many sale-leasebacks receive operating lease treatment, which can improve balance sheet optics and certain credit metrics even as companies relinquish fee-simple ownership. For corporate finance teams, that combination of liquidity, flexibility and presentation is powerful, and it helps explain why sale-leasebacks have moved from occasional transactions to a standing item in the capital allocation toolkit. What’s Hitting the Market and What to Watch This corporate pivot is producing a visible surge of sale-leaseback offerings across the net lease sector. Investors are seeing a wave of product, including single-tenant retail across grocery, discount, and specialty categories, big-box locations as chains rethink long-term ownership, and a growing number of outparcels tied to grocery-anchored and power centers. Quick-service restaurant portfolios are also prevalent as operators raise capital for reinvestment and deleveraging. Simultaneously, cap rates are still adjusting to a higher-rate environment, and competition for strong-credit tenants with long-term leases remains intense. This influx is creating a clear split in the market. Institutional capital continues to favor stable, credit-backed income streams, while a growing share of offerings fall into more opportunistic territory, where tenant credit or business fundamentals are less certain. As a result, investors must work harder than in prior cycles to sort through a larger pipeline and distinguish durable income from higher-risk yield. A key distinction lies between strategic sellers, credit-strong companies selectively monetizing assets, and stressed operators using sale-leasebacks as a last-resort liquidity tool. Warning signs such as overleveraged balance sheets, thin coverage ratios, below-market rents that create future rollover risk, short lease terms, and limited renewal options require careful consideration. Investors must also guard against “synthetic credit risk,” where strong real estate fundamentals can obscure a weakening tenant or business model. With more product coming to market, the net lease sector is being shaped as much by corporate capital strategy as by interest rates. Reading that signal, and filtering for assets that can perform through a full cycle, is now a critical advantage. Underwriting the Next Cycle In this environment, disciplined underwriting is not a box-checking exercise; it is the investment thesis. A practical framework centers on four familiar pillars: tenant credit, lease structure, real estate fundamentals and exit liquidity. The bar within each pillar has moved higher. Lease Structure Lease terms ultimately define risk allocation. Key considerations include lease duration, renewal options, rent escalations, and clauses such as co-tenancy or termination rights. Sale-leasebacks often favor the seller, making careful review of lease language critical. Property Fundamentals Investors need to underwrite not just the income stream, but also the asset’s underlying value and how re-tenantable it is, should the tenant decide to leave. That analysis extends to location quality, visibility, access, traffic patterns and the strength of the trade area, as well as the depth of the tenant pool that could reasonably backfill the space. The physical adaptability of the building, whether the box can be repurposed for different users or formats without excessive cost, also influences both downside protection and long-term upside. In a world where retailer footprints and formats are evolving, flexible boxes and infill locations command a premium. Exit Liquidity Investors should think ahead to how the asset will refinance or trade in five, seven or ten years. Lender appetite, buyer pools, and cap rates will not be static over the hold period. Assets that combine solid tenant credit, clear and financeable lease structures and adaptable real estate tend to maintain better liquidity and pricing, even in risk-off environments. From a practical standpoint, that means underwriting not just the current loan but the likely takeout and asking whether the next buyer will see the same story, or a tougher one. The overarching message is that attractive yields are not enough. The deal must remain rational if rates normalize, cap rates move out, or tenant performance softens. Underwriting the next cycle means assuming some things will go wrong and ensuring the asset can still perform. Tenant Credit Investors must look beyond brand recognition and evaluate true financial durability, including leverage, coverage ratios, and cash flow stability. Understanding the tenant’s business model and sector positioning is equally important. Stress-testing rent coverage under downside scenarios helps determine lease durability. Separating Good Deals From Great Ones With more product in the pipeline, the goal is no longer to find deals that pencil; it is to identify those that can outperform on a risk-adjusted basis and remain liquid through multiple market regimes. For commercial real estate investors building durable portfolios, distinction matters. Credit durability separates good from great. Top deals feature tenants whose credit aligns with the full lease term. Map terms against business inflection points, store fleet rankings, and strategic shifts in format/omnichannel priorities to assess renewal likelihood. A long lease only works if the tenant stays relevant. Lease structures that manage rather than amplify risk stand out. Beyond NNN vs. modified gross, scrutinize CAM, capital repairs, roofs/HVAC obligations, and SNDA provisions, these dictate net returns and the ability to finance through distress. M&A-flipped leases often push more risk to landlords. Sector vulnerabilities provide another filter. Sale-leasebacks flow heavily from pressured segments like discretionary retail and casual dining, where shifting consumer behavior and digital competition erode resilience. Clean leases in structurally challenged categories rarely deliver, despite strong real estate. Capital markets alignment is the final test. Great deals offer sufficient remaining term for broad lender/buyer pools, predictable rent bumps for valuation growth, and pricing that reflects true risks, not just brand hype. Master lease vs. site-by-site and corporate vs. franchisee guarantees create dramatically different profiles even for similar locations. Capitalizing on the Surge Today’s sale-leaseback surge presents both complexity and opportunity for investors. The volume of offerings has expanded significantly, with wide variation in credit, lease quality, and real estate fundamentals. At the same time, a broader inventory and more motivated sellers create room for disciplined buyers to be selective while still deploying capital. A practical response is to apply a consistent framework through assessing tenant durability, lease structure, real estate value, and future liquidity. When those elements align and pricing reflects true risk, investors can move forward with confidence. Those who combine rigorous underwriting with speed and selectivity will be best positioned to capitalize. This is not a temporary spike, but a structural shift in corporate real estate strategy, offering a compelling entry point for building durable, long-term portfolios.

The Revitalization of Urban Retail

Urban retail is entering a period of reinvention. Across major metropolitan markets, spaces that once struggled with vacancy or declining foot traffic are finding new life through creative repositioning and adaptive reuse. Shifts in consumer behavior, the growth of e-commerce, and evolving lifestyle preferences have reshaped how people interact with retail environments, particularly in dense urban cores. For many properties, these changes initially presented challenges. Traditional retail formats built for an earlier era of shopping have had to compete with shifting demand and changing tenant requirements. Yet those same pressures are now driving a wave of innovation. Owners, developers, and city leaders are increasingly reimagining underperforming retail assets, transforming them into dynamic spaces that better reflect how people live, work, and gather today. In many cities, this transformation represents urban retail’s “second act”, one defined not by traditional storefronts alone, but by mixed-use formats, experiential tenants, and community-oriented environments. The State of Urban Retail Urban retail markets today reflect a complex yet improving landscape. While some legacy retail corridors continue to work through elevated vacancy or outdated layouts, many are stabilizing as landlords adopt more flexible leasing strategies and rethink how space is utilized. Several structural shifts have contributed to this reset. The growth of online shopping has reduced reliance on traditional brick-and-mortar retail for routine purchases. At the same time, urban populations, particularly younger demographics, are demonstrating a renewed preference for physical retail in specific contexts. According to information from RetailDive, nearly three-quarters of Gen Z consumers shop in-store at least once a week, and a majority view in-person shopping as an experience rather than a purely transactional activity. This shift is especially pronounced in categories such as beauty and luxury, where Gen Z shoppers show a strong preference for in-person purchasing, valuing immediacy, product interaction, and the overall shopping environment. At the same time, urban consumers are increasingly seeking experiences, dining, wellness, and social environments that cannot be replicated digitally. As a result, the role of physical retail is evolving. Rather than serving primarily as a transactional environment, urban retail is increasingly functioning as a place for engagement and community interaction. This shift is prompting landlords and developers to rethink how retail space can better align with modern consumer expectations, emphasizing experience, convenience, and seamless integration with digital behaviors. Repositioning and Adaptive Reuse Strategies Two strategies central to urban retail’s evolution have emerged: repositioning and adaptive reuse. Repositioning typically involves updating an existing retail property to better align with current demand. This may include renovating storefronts, modernizing layouts, curating new tenant mixes, or incorporating amenities that attract experiential retailers and service-oriented tenants. Adaptive reuse, by contrast, often entails a more fundamental transformation, repurposing retail space into an entirely different use or integrating it into a broader mixed-use environment. Common strategies include: Mixed-use integration: Retail spaces are increasingly being combined with residential, office, hospitality, or entertainment uses, creating built-in customer bases and activating properties throughout the day. This approach creates consistent foot traffic and extends activity beyond traditional retail hours. Experiential and service-oriented tenants: Fitness studios, specialty food concepts, medical and wellness services, and entertainment venues are helping redefine how retail environments function. The result is a shift from transactional retail to destination-based experiences that increase dwell time and repeat visits. Flexible and short-term concepts: Pop-up shops, temporary activations, and short-term leases allow landlords to test new concepts while keeping spaces active and engaging. Reduces leasing risk while enabling rapid adaptation to changing consumer preferences. Together, these approaches allow urban retail properties to evolve alongside consumer demand rather than compete directly with online alternatives. Market Leaders and Hotspots Several major urban markets are demonstrating how repositioning strategies can successfully revitalize retail districts. Cities such as New York City, Chicago, Los Angeles, and Miami have seen renewed activity in formerly underutilized retail corridors as developers introduce mixed-use concepts and experiential tenants. Successful markets often share several characteristics. Population density and strong residential growth provide a reliable customer base, while access to public transit and walkability support consistent foot traffic. Municipal support, including zoning flexibility, redevelopment incentives, and public-private partnerships, can also play an important role in accelerating revitalization efforts. Developer innovation is equally important. Projects that thoughtfully combine retail with residential, hospitality, or entertainment uses are demonstrating how urban retail can function as part of a broader ecosystem rather than as a standalone asset class. Key Considerations for Execution While the opportunity for repositioning is significant, executing these strategies in urban environments requires careful planning and alignment across multiple stakeholders. Financial feasibility remains a key consideration, particularly in markets where construction costs, entitlement timelines, and land values remain high. Developers must balance the capital required for redevelopment with realistic projections for tenant demand and long-term revenue. Regulatory processes can also shape project timelines. Zoning approvals, permitting requirements, and historic preservation considerations often require coordination with local governments and community stakeholders. Equally critical is tenant curation. Successful repositioning efforts typically focus on building a complementary tenant mix that encourages repeat visits and sustained engagement. Retailers, restaurants, wellness providers, and entertainment venues can work together to create an ecosystem that keeps properties active throughout the day and evening. Increasingly, developers are also measuring success through broader indicators such as foot traffic, community engagement, and placemaking impact, metrics that reflect retail’s evolving role in the urban environment. Navigating the Upside and the Unknowns As with any transformation, repositioning urban retail assets requires thoughtful execution. Projects that succeed are typically those that approach redevelopment with a clear understanding of local demand and long-term market dynamics. Capital investment must be carefully aligned with achievable outcomes, particularly in complex urban projects where construction and entitlement costs can be significant. Similarly, tenant strategies must reflect the needs and preferences of the surrounding community to ensure sustained engagement. The growing body of successful repositioning projects across major markets is providing valuable lessons for future developments. As developers gain experience with mixed-use strategies, experiential retail, and flexible leasing models, the industry is now better equipped to navigate potential challenges and unlock the full potential of these assets. Urban Retail’s Second Act Urban retail is entering a new phase defined by flexibility, experience, and deeper integration with surrounding uses. Traditional retail formats are giving way to more adaptive concepts. Emerging Retail Models Micro-retail enabling local entrepreneurship Experiential destinations blending retail, dining, and entertainment Mixed-use environments integrating retail with living and working These models reflect a broader shift toward spaces that prioritize engagement, convenience, and a sense of place. Technology and data analytics will also play a growing role in helping landlords understand customer behavior, optimize tenant mixes, and activate spaces more effectively. Urban retail’s transformation is still unfolding, but the direction is increasingly clear. Across many cities, properties once considered underperforming are being reimagined through creative redevelopment and strategic reuse. Rather than signaling the decline of urban retail, these changes are revealing its ability to adapt. By embracing mixed uses, experiential concepts, and community-oriented design, developers and investors are helping urban retail enter a new chapter, one that reflects how people live, shop, and gather today. For developers, investors, and city leaders alike, the opportunity lies not simply in filling vacant storefronts, but in rethinking what urban retail can become in its next act.

Rate Expectations Continue to Shape the Retail Market

Commercial real estate investors entered 2026 with cautious optimism that inflation would continue to moderate and create a path toward lower interest rates. Recent comments from the Federal Reserve, however, suggest that timeline may be less certain. While the Fed left rates unchanged at its June meeting, policymakers signaled that inflation remains a concern and that additional rate increases remain possible if price pressures persist. The announcement serves as another reminder that the commercial real estate market may need to operate in a higher-rate environment longer than many anticipated. For investors, the implications extend beyond the prospect of another rate hike. The more significant question is how prolonged uncertainty around monetary policy could influence investment decisions, transaction activity, and capital allocation moving forward. The Market Has Already Adapted, But Expectations Continue to Shift Commercial real estate has spent the last several years adjusting to a dramatically different capital markets environment. Borrowers, lenders, and investors have largely recalibrated underwriting assumptions to account for higher borrowing costs and more selective lending conditions. As a result, another rate increase may have less impact on day-to-day underwriting than it would have several years ago. Instead, the greater influence may be on investor expectations. Many market participants anticipated that lower rates would provide additional momentum for transaction activity in 2026. The Fed’s latest messaging suggests that investors may need to continue operating under the assumption that capital will remain relatively expensive for the foreseeable future. Capital Markets Remain a Key Driver of Activity Interest rates continue to play an important role in transaction volume, pricing, and liquidity across commercial real estate. Elevated borrowing costs have narrowed acquisition spreads, increased refinancing challenges, and contributed to a more selective investment environment. At the same time, market activity has not come to a standstill. Many investors continue to pursue acquisitions, particularly when property fundamentals support long-term value creation. This dynamic highlights an important distinction in today’s market: while financing conditions remain challenging, investment decisions are increasingly being driven by asset-level performance rather than broad macroeconomic forecasts. Not All Investors Face the Same Challenges The impact of a prolonged higher-rate environment will vary across the market. Owners facing upcoming loan maturities may encounter additional pressure as refinancing costs remain elevated. Meanwhile, investors with available capital and flexible investment horizons may find opportunities as pricing expectations continue to adjust. Periods of uncertainty often create divergence between market participants. While some investors choose to wait for greater clarity, others focus on identifying assets with strong fundamentals, stable cash flow, and long-term growth potential regardless of short-term interest rate movements. Fundamentals Continue to Matter Most Although the possibility of another rate hike has generated headlines, many investors remain focused on broader market fundamentals. Occupancy trends, tenant demand, rent growth, and property performance continue to influence investment outcomes across sectors. Higher interest rates create headwinds, but they do not eliminate opportunities. In many cases, they place greater emphasis on disciplined underwriting, operational execution, and strategic asset selection. As the market continues to adjust to evolving economic conditions, those fundamentals remain critical drivers of long-term value. The Federal Reserve’s latest comments reinforce a reality that commercial real estate investors have increasingly come to accept: uncertainty surrounding interest rates is likely to remain part of the investment landscape. Success in today’s market depends less on predicting the timing of future rate moves and more on identifying opportunities that can perform across a range of economic scenarios.

Daniel Gonzalez

First Vice President & Associate Director

6/22/26

Risks, Bankruptcies, & Backfills

Vacancy tells one story. The next tenant tells another. Shock-worthy news cycles have reduced the national retail landscape to a collection of volatile narratives. This retail apocalypse rhetoric now serves as a convenient catch-all for every national bankruptcy, strategic downsizing, or store closure that makes headlines. If you only skim the surface, it’s easy to conclude that the sector is in steady retreat. But, behind every going-out-of-business banner, there’s often a coming soon sign just waiting to go up. Recent CoStar analysis shows national retail asking rents increased 2.2% quarter-over-quarter to $25.95 per square foot, while availability fell to 4.8% in Q1 2026. What looks like a contraction is not necessarily a decline, but rather an architectural refinement. Closures aren’t an end state; they’re a starting line. While bankruptcies and store closures create real disruption, they open the door to a highly active backfill market that is selectively improving the quality of retail space and opening a window of investment opportunity. Retreat or Rationalization? The current wave of store closures is less ‘apocalyptic’ and more of a necessary clearing of the underbrush. Retailers are facing multi-dimensional marginal compression. Labor shortages, limited inventory, surging insurance premiums, and occupancy costs have risen 20% since 2020, according to CoStar. The rise of e-commerce sales have only amplified these pressures. As a result, chains that overexpanded during the cheap capital era between 2015 and 2021 have been forced to consolidate their physical footprint. And consumers are seeing the repercussions play out in real time. High-profile Chapter 11 filings and total liquidation often dominate the narrative. While these represent true distress, they serve a broader market function. These bankruptcies act as a catalyst, providing a window of rationalization for even the healthiest national operators to shed underperforming locations and optimize their portfolios. Strategic consolidation allows disciplined retailers to pivot away from legacy footprints and toward a flight to productivity. This isn’t just about exiting bad stores; it’s about reallocating capital into top-performing, high-traffic centers within strong demographic corridors. Ironically, the very bankruptcies causing headlines are providing the premium second-generation space these healthy brands need to expand selectively. Recent CoStar analysis reveals move-outs normalized sharply in late 2025, with store-closure announcements falling by 45% as the pipeline of previously announced exits emptied. While closure activity tapered, leasing activity climbed to pre-pandemic highs. High-quality space is now moving at a blistering pace as the median time-to-lease fell to a record-low of 7.2 months in 2025. This leasing speed is the byproduct of a definitive flight to productivity, as retailers ditch growth-at-any-cost models for a surgical focus on asset performance. Expansion-minded brands are doubling down on top units with the highest sales-per-square-foot, prioritizing grocery-anchored neighborhood centers and dominant power centers for their high foot traffic and omnichannel synergy. The implication for property owners is a stark bifurcation of quality; while weaker, tertiary locations are being exposed and shed faster than ever, a vacant box in a prime corridor is no longer a sign of distress. Instead, these vacancies represent rare, premium inventory that the market is ready to claim, subsidize, and upgrade for a more productive future. When a Tenant Goes Dark While national fundamentals remain robust, tenant transitions can still create short-term pressure at the property level. When an anchor goes dark, the effects often reach beyond the storefront. Vacancy may look temporary on paper, but the carrying costs compound quickly. Co-tenancy clauses kick in, inline tenants push for rent relief, and some use the disruption as an opportunity to leave altogether. Foot traffic can fall 15% to 30% during dark periods, as shoppers respond quickly to an incomplete tenant mix. Even when the center’s fundamentals remain intact, perception drags on, according to CoStar. The national backfill story is active, however junior anchors and big-box space can accumulate vacancy for 6 to 12 months before they are filled. Meanwhile, owners are left to absorb full carry costs with taxes up 8% and insurance up 25% from 2023, while marketing vacated space. Second-gen premium space absorbs faster, but big-box voids linger. Buildout costs are rising as well, with allowances now averaging $45 per-square-foot, up 25% since 2023, as incoming tenants demand cleaner layouts, better infrastructure, and more customized space. Deals that once moved briskly now stretch another 45 to 60 days as landlords negotiate free rent, tenant improvement packages, and operating-cost concessions just to get leases across the finish line. Still, that friction is increasingly a sign of competition, not collapse. In many cases, the very tenants pushing hardest at the negotiating table, such as fitness users, quick-service restaurants, and other high-traffic service concepts, are also the ones driving more than half of leasing activity in 2025. For well-located centers, temporary distress is often the price of landing a more productive tenant mix. Vacancy in Motion Demand is not abstract. It is showing up in full force, driven by a diverse set of tenants competing for the same limited pool of quality space. As new retail development remains at multi-decade lows, expanding brands are forced to focus exclusively on second-generation space. This shortage of available prime inventory, particularly well-located junior anchors and high-visibility inline space, has shifted leverage back to landlords in top-tier assets. As sublet activity hits a 3.6% peak, the backfill engine is shifting into high gear, allowing premium brands to displace legacy laggards in top-performing corridors. Who exactly is stepping in? The answer lies in four distinct categories of tenants that are selectively reshaping the retail landscape. Regional Operators These players are scaling up by leveraging their local agility to claim prime locations previously out of reach, often displacing national laggards. By focusing on high-growth submarkets and specific community needs, they provide landlords with a more authentic, localized tenant mix that drives consistent daily traffic. Disciplined National Retailers Value-oriented and essential retail powerhouses are aggressively claiming backfilled anchor positions. Non-Traditional & Service-Oriented Users The line between the retail and service economies continues to blur. Landlords are increasingly re-merchandising centers by replacing struggling goods-based merchants with “sticky” service users that drive consistent daily traffic. Emerging & New-to-Market Concepts The physical storefront is becoming a “phygital” bridge for Digitally Native Vertical Brands (DNVBs). Concepts like Warby Parker, Glossier, and Allbirds previously priced out of prime locations, and they are now entering physical retail to serve as experience centers for brand storytelling. This cycle of creative leveling is culminating in a profound shift in retail formats. Merchants are increasingly adopting smaller, more efficient footprints that prioritize sales productivity over sheer volume. By integrating omnichannel strategies, brick-and-mortar retail now functions as a vital fulfillment hub, making site selection for buy online, pick up in store models a functional necessity rather than a luxury. The market is choosing quality over quantity. Inventory-heavy models are shifting towards experiential, engagement-driven spaces that increase consumer dwell time. In this new landscape, value is measured by a store’s ability to drive brand loyalty and digital sales. This shift presents a generational opportunity for landlords to re-merchandise their centers. By replacing outdated, goods-based retailers with high-engagement tenants, owners can reset rents to current market peaks and curate a tenant mix that is better insulated against future digital disruption. Playing Offense in an Evolving Market With tenant turnover accelerating, risk management has become a far more active discipline. Success is no longer just about filling space; it’s about underwriting the tenant, structuring the lease, and managing exposure across the rent roll. Proactive owners are increasingly embracing shadow marketing, identifying and courting potential replacement tenants well before an existing lease expires. By maintaining a pipeline of backup operators, landlords can compress the gap between a move-out and a new opening, protecting both cash flow and co-tenancy stability. Cap rates have stabilized at a five-year high of 7.3% as of Q1 2026, signaling that the market has fully priced in the higher interest rate environment and shifted investor focus toward the credit security of backfill tenants now occupying prime space. A clear divergence of assets is emerging, creating a winner-takes-all dynamic for premium real estate. Outperforming centers are defined by strong demographic corridors, high-traffic grocery anchors, and a deep tilt toward necessity-based retail. These properties continue to command record rents and operate with near-zero vacancy. Conversely, challenged assets in stagnant trade areas or tertiary markets face a more difficult path as retailers consolidate. For these properties, incremental leasing strategies no longer be enough. Meaningful capital reinvestment or full adaptive reuse are required to remain competitive and avoid long-term obsolescence. Beyond the Headlines Store closures create short-term disruption, but increasingly serve as the reset mechanism for long-term value creation. The current backfill cycle is one of the most competitive in recent history, giving owners a rare opportunity to upgrade both the credit and composition of their tenant base. This is not a story of contraction. It is a story of selection. The headlines may focus on what’s leaving, but the market is increasingly defined by what comes next. Investors who can navigate short-term friction in exchange for stronger credit, better tenancy, and more durable long-term cash flow will be best positioned to outperform.

Charlotte, NC Multifamily Market Report Q1 2026

Charlotte Multifamily Market — At a Glance Q1 2026 Sales Volume: $2.3B Average Price Per Unit: $214,600 Average Cap Rate: 5.0% Vacancy Rate: 6.2% YOY Rent Growth: -3.2% Asking Rent: $1,516 Units Under Construction: ~18,000 Units Delivered Last 12 Months: ~13,000 Units Absorbed Last 12 Months: ~12,000 What Is Happening in the Charlotte Multifamily Market Right Now? Charlotte’s multifamily market is navigating the peak of a historic supply cycle while maintaining stronger demand fundamentals than most peer markets. Asking rents have declined 3.2% year-over-year to an average of $1,516 per month, marking the 11th consecutive quarter of annual rent decreases. Despite this, the vacancy rate holds at 6.2%, a signal that demand has largely absorbed the wave of new supply. Matthews projects Charlotte multifamily rents to return to positive growth in 2027, forecasting +1.8% annual rent change over the next 12 months as the delivery pipeline thins materially in late 2026. What Is Driving Demand in Charlotte’s Multifamily Market? Charlotte’s economy provides a durable demand foundation for multifamily. Key indicators as of Q1 2026: Population: Approximately 2.8 million metro residents; third-fastest growing metro in the U.S., adding 500,000+ residents since 2010 Employment: Approximately 1.42 million jobs; year-over-year job growth of 1.39%, outpacing the national rate by 0.05% Economic Output: Inflation-adjusted GDP expanded 4.7% in the year ending Q1 2026, well above the pre-pandemic five-year average of 3.2% Financing services anchor the local economy. Bank of America and Truist are headquartered in Charlotte, and Wells Fargo maintains its largest employment center here. Significant corporate investment announcements in early 2026 include: Siemens Energy: $421M expansion of its North Charlotte manufacturing complex Capital Group: $60m East Coast technology and operations hub adding 600 jobs AT&T: Cybersecurity operations expansion at Innovation Park HSP US (Trench Group): $60M first U.S. manufacturing plant adding 140 jobs Though notable headwinds include Lowe’s cutting 600 corporate positions (178 at its Mooresville HQ) and Family Dollar closing its Matthews distribution center, eliminating 373 jobs, North Carolina’s corporate tax rate is set to reach 0% by 2030, attracting headquarters activity and corporate relocations. What are Charlotte Apartment Rents Right Now? As of Q1 2026, the average asking rent in Charlotte is $1,516 per month. This is reflective of a -3.2% year-over-year decline in rents, the 11th consecutive quarter of annual decreases and the trough of the current five-year range. Key Rent Performance Data: More than 50% of all Charlotte apartment properties are offering concessions, the highest level on record Lease-up timelines have extended significantly, with recent deliveries averaging only 72% leased 15 months after opening High-end, Class A properties are outperforming on absorption, reflecting a clear flight-to-quality trend Matthews forecasts that rent growth is projects to turn positive in 2027, with +1.8% annual rent change expected over the next 12 months as supply and demand approach equilibrium. What is the Vacancy Rate for Charlotte Apartments? Charlotte’s multifamily vacancy rate is 6.2% as of Q1 2026, down just 0.1 percentage points year-over-year. The market absorbed approximately 12,000 units over the trailing 12 months against roughly 13,000 units delivered. This is a near-equilibrium outcome that reflects Charlotte’s exceptional demand base despite one of the largest supply cycles in the country. Annual demand of approximately 11,000 units is projects to exceed supply in 2026, supporting the gradual improvement in vacancy by year-end. How Much Multifamily is Under Construction in Charlotte? As of Q1 2026, approximately 70 properties totaling 18,000 units are under construction in Charlotte. This represents a 6.2% expansion of existing inventory. Only Miami and Nashville have larger active pipelines among U.S. markets. Construction starts have fallen sharply, with Q1 2026 recording only 958 units breaking ground. This is the lowest quarterly total since 2025. Key Pipeline Trends: Suburban submarkets now account for more than 40% of units under construction, despite representing only 25% of recent deliveries Active pipeline submarkets: North Charlotte, Southwest Charlotte, and Huntersville/Cornelius Urban submarket development costs have reached $300,000 per unit, making new projects difficult to underwrite at current rent levels How Is the Charlotte Multifamily Investment Sales Market Performing? Charlotte’s multifamily investment sales market recorded approximately $2.3 billion in transaction volume over the trailing 12 months. While still below prior cycle peaks, deal activity is showing early signs of recovery. Key Sales Metrics: Transactions: 60 properties traded in Q1 2026, down 35% YOY Cap Rate: The average cap rate is 5.00%, down 9 basis points YOY and below the South region average of 5.39% and the national average of 5.41% Average Price Per Unit: The average price per unit is $214,600 market wide, but recent institutional-grade trades range from $240,000 to $300,000 Buyer Sentiment: Equity still remains selective, favoring value-add opportunities and preferred equity structures. This has forced sales to remain limited. Charlotte Multifamily Market Outlook Charlotte enters the second half of 2026 with supply pressure peaking and demand fundamentals intact. The convergence of a declining construction pipeline, durable job and population growth, and stabilized cap rates positions the market for a gradual recovery. Forecasts: Rent growth returning positive in 2027 Vacancy improvement as annual demand modestly outpaces annual supply in 2026 Investment activity to accelerate as bid-ask spreads narrow and lenders re-engage For investors, the window between peak supply pressure and rent recovery has historically represented a compelling entry point for long-term multifamily positions.

Nick Lore

First Vice President

6/16/26

Restaurant Brands Prioritize Franchisee Support for Long-Term Growth

The restaurant industry is no stranger to change, but today’s environment is prompting many franchisors to rethink how they support their operators. As consumer preferences evolve and operating costs remain elevated, restaurant brands are taking a more proactive approach to strengthening franchise relationships and positioning their networks for long-term success. For many national chains, franchisees play a critical role in growth and brand performance. Increasingly, franchisors are recognizing that supporting existing operators can be just as important as expanding into new markets. This shift is leading brands to invest more resources into helping franchisees improve operations, enhance customer experiences, and adapt to changing market conditions. A More Collaborative Approach to Franchise Growth Recent reporting highlights how several restaurant companies are working more closely with franchisees to improve system-wide performance. These efforts range from assisting with remodel programs and operational improvements to helping operators navigate changing consumer demand. In some cases, brands are facilitating store transfers or portfolio adjustments to ensure locations remain well-positioned for long-term success. The trend reflects a broader evolution in franchising. Rather than focusing solely on unit growth, many brands are placing greater emphasis on the health and sustainability of their existing networks. Strong franchise systems depend on successful operators, and franchisors are increasingly viewing collaboration as a key driver of future growth. At the same time, consumers continue to seek value, convenience, and quality experiences. Restaurant brands that can help franchisees meet those expectations may be better positioned to maintain customer loyalty and capture future demand. By investing in operator support, brands are working to create more resilient business models that can adapt alongside shifting market dynamics. Implications for Restaurant Real Estate For commercial real estate professionals, these developments underscore the importance of strong franchise systems and engaged operators. Brands that actively support their franchisees may be better positioned to maintain occupancy, execute reinvestment strategies, and pursue future expansion opportunities. The emphasis on collaboration also highlights the growing connection between operational performance and real estate success. Well-supported franchisees are often better equipped to invest in their locations, maintain brand standards, and respond to changing customer preferences, all factors that contribute to the long-term viability of retail properties. While the restaurant sector continues to navigate economic and consumer shifts, many brands are using this period as an opportunity to strengthen franchise relationships and refine their growth strategies. The result may be a more resilient restaurant landscape, one that benefits operators, consumers, and real estate stakeholders alike.

Daniel Gonzalez

First Vice President & Associate Director

6/12/26

The Squeeze on the Corner Drugstore: A Tale of Two Battles

Front One: The War on PBMs As independent pharmacies bleed out, state lawmakers have placed an increased focus on Pharmacy Benefit Managers (PBMs), powerful middlemen that control drug pricing and reimbursements. Critics argue that conglomerates like CVS, which operate both a PBM and a pharmacy, use that dual role to crush local competitors. In response, Tennessee passed the FAIR Rx Act, a law prohibiting PBMs from owning or operating pharmacies in the state. It was a direct shot at out-of-state giants. CVS immediately sued, arguing the law violates the Constitution by constraining interstate competition. A CVS spokesperson warned the law would force it to close 136 pharmacies, 25 retail clinics, and lay off some 2,000 employees while it abandons the state. Tennessee is the second state to try this. Arkansas passed a similar law last year, only to see it blocked by federal court following legal challenges from PBMs, including CVS. The pattern is clear: states want to protect local pharmacies, but PBMs are not surrendering their turf without a fight. Front Two: The New Walgreens Math While the PBM battle rages in courtrooms, a quieter but equally consequential shift is unfolding in the world of pharmacy real estate. Walgreens, now privately held by Sycamore Partners, has quietly abandoned its previous public commitment to close 1,200 stores. That risk of abrupt closure haunted landlords, sending hundreds of locations to the market. Instead, the company is pivoting towards a performance-driven real estate strategy centered on three metrics: Labor and rent costs Sales performance Operational coverage (e.g., pharmacy hours) The new goal is not mass abandonment, it’s capital discipline. Walgreens will invest in some stores (adding staff, expanding hours), restructure occupancy costs in others, and buyout leases on dark stores. The company is also subletting, generally to Dollar stores, to mitigate rent costs while they run out the leases. CVS and Walgreens’ above-market rents from legacy investment-grade leases are unlikely to survive. However, a pragmatic landlord should recognize that a rent reduction with a credit-backed tenant is often preferable to vacancy, re-leasing costs, and a weaker replacement tenant. Rents are headed for a correction. What This Means for Net Lease Investors For investors who own a Walgreens property, the old passive model of collecting checks from an investment-grade tenant is over and active management has arrived. Key questions to ask about your location: Is Walgreens actively investing in the store (staff, hours, pharmacy)? That’s a retention signal. Debt is not replaceable at low rates and in many cases not at all. How could a sale benefit your strategy? When does the current lease expire? Shorter remaining term = sooner rent reset. Is the current rent above market for comparable retail space? If yes, expect a reduction request. Would a moderate rent cut be acceptable to avoid vacancy? Run both scenarios before negotiating. The Bottom Line Walgreens under Sycamore is not liquidating its footprint; it’s recalibrating it. And while CVS fights state-level bans on its PBM-pharmacy model, the broader pharmacy model is changing. For net lease investors, the path forward is clear: adapt to a world of shorter renewals, market-rate rent resets, and performance-based tenant retention. Those who embrace this new normal may find Walgreens a more pragmatic, solvent partner. *Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always consult your own financial and legal advisors.

Seri Bryant

Associate Vice President

6/12/26

The New Retail Leasing Playbook: Evidence Over Instinct

Leasing strategy is evolving. Where site selection once relied heavily on intuition, precedent, and relationships, today’s landscape demands a more analytical approach. The market has entered a new demand economy, where opportunities are defined less by available space and more by quantifiable consumer demand. Data is no longer a supporting tool, it is the foundation for both tenant expansion and landlord leasing strategies. In this environment, tools like void analysis, mobility data, and consumer expenditure reports are essential. They provide insights into where demand exceeds supply, how people move and shop in a trade area, and which markets have the spending power to sustain new concepts across retail, food & beverage, and hospitality. Understanding and applying these tools can transform how leasing decisions are made, ensuring both tenants and landlords align their strategies with actual market opportunity. The result is more informed site selection, stronger tenant performance, and environments that are better matched to the communities they serve. Retail Under New Demand Conditions A demand-driven market flips the traditional approach on its head. Supply alone no longer dictates decisions; instead, consumer needs and spending patterns are the starting point. Tenants no longer enter markets simply because a space is available, and landlords no longer lease units based solely on occupancy targets. Instead, both sides are increasingly evaluating trade area demand, demographic trends, and spending behavior before committing to a location. For tenants, this shift affects site selection strategy. Locations are now chosen where spending exceeds existing supply, reducing the risk of underperforming assets. For landlords, it transforms leasing strategy. Tenant mixes are curated intentionally, designed to meet actual demand, drive foot traffic, and maximize long-term asset performance. In this context, data is the enabling layer that makes these strategies precise and repeatable. The Power of Void Analysis At the heart of a demand-driven approach is void analysis. This methodology measures unmet demand by comparing actual consumer spending against existing supply. Unlike traditional demographic snapshots, which offer only a static view of potential, void analysis identifies real opportunities, highlighting underserved categories and misaligned tenant mixes. For example, a void analysis might reveal a market where spending on specialty fitness concepts is high, yet few options exist locally. Or it may show that a shopping center’s tenant mix fails to capture the cross-shopping potential of neighboring categories. More than a report, void analysis becomes a decision-making tool, guiding both where tenants expand and how landlords curate operators. Key Insight: The leasing advisor’s role has evolved from locating space to identifying underserved spending power. Demand Still Strong in 2025 • +4% U.S. retail sales growth during the 2025 holiday season • +7.8% apparel sales and +2.9% in-store spending growth • +3.7% total retail vs. +1.8% foot traffic year-over-year Source: Retail Dive Void analysis provides the starting point, but the insights grow richer when layered with additional data: Mobility Data: Understanding how consumers actually move within and between trade areas can redefine perceived boundaries. A site that seems isolated on paper may, in practice, sit along a high-traffic corridor, while a “prime” location may see less real engagement than assumed. Mobility data validates site selection and provides a more nuanced picture of potential customer flow. Consumer Expenditure Data: Income alone is not a reliable measure of opportunity. Expenditure data reveals what consumers are truly spending and in which categories. Markets with high income but low discretionary spending are filtered out, while areas with strong spending alignment emerge as high-opportunity zones. Individually, each data source is useful. Together, they create a multi-dimensional view of market demand, enabling smarter, evidence-based decisions. Mobility Insights in Action Void analysis provides a starting point, but mobility data reveals how people actually move within trade areas. Fresh format grocery stores saw double-digit year-over-year increases in foot traffic across 2025, with gains of 10.5% in Q3 and 10.9% in Q4. Source: Placer.ai Service Tenants Drive Daily Traffic • Service-oriented operators such as salons, wellness providers, tutoring centers, and pet services generate consistent, repeat visits • Appointment-based businesses increase dwell time and encourage cross-shopping • Many service tenants succeed in secondary locations, helping optimize space while maintaining strong traffic Source: ICSC How to Shape Your Leasing Strategy The applications of a demand-driven, data-informed approach differ slightly for tenants and landlords but share the same principle: align supply with real demand. For tenants, this means selecting sites where unmet demand is highest, reducing speculative risk and prioritizing expansion in areas likely to deliver performance. For landlords, it means optimizing tenant mixes. Instead of filling vacancies with whoever is available, landlords can curate operators that complement existing offerings, fill gaps, and drive overall traffic, enhancing both revenue and asset stability. From Insight to Action Consider a regional market in the Southeast. Void analysis revealed significant unmet demand in specialty food and fitness categories, suggesting that local consumers were spending in these areas but likely traveling outside the trade area to do so. Mobility insights highlighted high-traffic corridors that had previously been underestimated, while expenditure data confirmed that nearby households had strong discretionary spending within these categories. Taken together, these insights provided a clearer picture of where demand truly existed and how consumers were interacting with the surrounding landscape. Rather than relying on assumptions about where new concepts should be located, the landlord was able to focus on areas where both spending and traffic patterns supported additional supply. Armed with this information, the landlord curated a tenant mix centered around specialty food and fitness operators that aligned with the demonstrated demand. The result was stronger foot traffic, improved sales productivity, and greater long-term occupancy stability. The example highlights how combining multiple datasets can turn market insights into practical leasing decisions. Implications for the Industry The broader implications for the industry are clear. Data-driven leasing strategies are quickly becoming the standard rather than the exception. As access to mobility data, consumer spending insights, and gap analysis has expanded, both landlords and tenants are better equipped to evaluate where opportunities truly exist. This shift is gradually changing how leasing decisions are made. Instead of reacting to vacancies or expanding based on precedent, market participants are placing greater emphasis on understanding demand before committing to a location. Landlords are thinking more carefully about tenant mix and how different uses complement one another, while tenants are prioritizing markets where spending patterns suggest long-term viability. In this environment, the advantage belongs to those who can move beyond simply collecting information and focus on applying it effectively. Understanding consumer demand, spending behavior, and movement patterns is no longer just helpful, it is increasingly necessary to remain competitive. The Future of Leasing The shift from intuition-based decisions toward evidence-based strategies is likely to continue. As data becomes more accessible and analytical tools become more sophisticated, tenants and landlords will have greater visibility into how consumers shop, move, and spend within a given trade area. Demand-driven leasing provides a more durable framework because it aligns supply with actual consumer behavior. When leasing strategies are grounded in measurable demand, both tenants and landlords can reduce risk and position their properties for more consistent performance. While the tools will continue to evolve, the underlying principle remains the same: successful environments are built around understanding what consumers want, where they are spending, and how they move through a market.

Mervat Berry, CCIM

Vice President & Director

6/12/26

Beyond Hotels: How the 2026 FIFA World Cup Will Shape Hospitality and Retail Demand

When people think about the economic impact of the FIFA World Cup, they often focus on hotel occupancy. But that narrow view can miss how tournament demand ripples across the broader commercial real estate landscape, influencing everything from retail and restaurants to short-term leasing activity. In fact, World Cup demand may be driven less by the host market itself and more by the individual matches taking place there. Recent booking data underscores this point. AirDNA projected that reservations could double or even triple following the tournament draw as travelers shifted from general interest in the World Cup to planning around specific teams and matchups. The pattern has since materialized across host markets. In Miami, for example, short-term rental demand surged 244% surrounding the announced Brazil-Scotland fixture, while Kansas City recorded a 377% year-over-year increase after its group-stage matches were revealed. Together, these trends suggest that World Cup demand is driven less by host-city status alone and more by the teams and matches assigned to each market. That distinction has significant implications not only for hotels, but also for restaurants, bars, entertainment venues, and retailers positioned to capture fan spending. Demand Follows the Schedule The 2026 FIFA World Cup will be unlike any previous tournament. Expanded to 48 teams and 104 matches across North America, it will generate millions of visitor trips and billions in economic activity. Yet those benefits are unlikely to be distributed evenly. Tourism Economics forecasts hotel revenue increases ranging from 7% to 25% across host markets during the tournament period. However, those gains are expected to be concentrated around specific match dates and tournament stages rather than spread evenly throughout the event. For hospitality operators, this means that understanding the schedule may be just as important as understanding the market. A city hosting six group-stage matches may not generate more spending than a city hosting fewer but higher-profile fixtures. Matches featuring globally popular teams or later-stage knockout rounds are expected to produce stronger demand, longer stays, and higher visitor spending than many early-round contests. The group draw itself provides evidence of this phenomenon. Once fans learned where their teams would play, booking activity accelerated in several host cities, demonstrating that travel decisions are often driven by match allocation rather than destination preference. Every Hotel Booking Creates Downstream Spending While hotels often receive the most attention during major sporting events, lodging represents only one component of visitor spending. World Cup travelers spend money on food and beverage, transportation, entertainment, merchandise, convenience purchases, and local attractions. Every occupied hotel room creates demand that extends throughout the surrounding commercial ecosystem. This dynamic may prove particularly important in mixed-use environments where hospitality, dining, entertainment, and retail coexist. Visitors attending matches frequently spend far more time outside the stadium than inside it, creating opportunities for businesses located in entertainment districts, downtown corridors, and tourism-focused retail centers. For many retailers, proximity to fan activity may ultimately matter more than proximity to the stadium itself. Retail’s Opportunity May Be Underappreciated The scale of the 2026 tournament creates a unique opportunity for retail operators. With 48 national teams participating, fan bases from around the world will converge on host cities throughout North America. Demand is expected to concentrate in categories such as apparel, sporting goods, team merchandise, food and beverage, convenience retail, and experiential retail concepts. Perhaps more importantly, spending is likely to cluster around areas where fans gather before and after matches. Entertainment districts, pedestrian-oriented retail environments, and mixed-use destinations may experience meaningful traffic increases as visitors seek places to watch matches, celebrate victories, and socialize with fellow supporters. The World Cup is not simply a sporting event. It is a month-long consumer experience, and retailers positioned within those experiences stand to benefit. Not Every Market Will Win Equally Despite the excitement surrounding the tournament, operators should avoid assuming that every host city will experience the same level of success. Early booking patterns have already revealed meaningful variation between markets. Some cities have seen substantial increases in reservations tied to specific fixtures, while others have experienced more modest demand growth. This reinforces a lesson that hospitality professionals have learned from previous mega-events: demand is rarely uniform. The strongest performance is likely to occur where favorable match schedules, high-profile national teams, and concentrated fan activity intersect. Markets hosting marquee fixtures or knockout-round matches may significantly outperform those hosting less prominent games. For investors, developers, and operators, this means that event strategy should focus on understanding consumer movement patterns rather than relying solely on host-city designation. Looking Beyond the Stadium The 2026 FIFA World Cup is expected to generate billions in economic activity across North America. Yet the most valuable insight may not be the size of the opportunity, but how that opportunity is distributed. As booking data increasingly shows, consumer demand during the tournament follows specific teams, matchups, and schedules. Hotels will benefit, but so will restaurants, bars, entertainment venues, and retailers that successfully position themselves where fans choose to gather. The businesses that capture the greatest value from the World Cup may not be those closest to the stadium. They may be the ones that best understand where the crowd goes before kickoff and where it goes after the final whistle. Just as hotel demand moves by match rather than market, consumer spending across the broader hospitality and retail landscape is likely to follow the same pattern.

The Great Reset: Understanding the Next Phase of Car Wash Consolidation

For much of the past two years, the conversation around car wash M&A has centered on rising interest rates, distressed operators, and declining transaction activity. While those challenges have certainly reshaped the market, they have also obscured a larger reality: the fundamentals that attracted institutional capital to the car wash industry remain intact. The market today looks very different than it did in 2021. Valuations have reset, development activity has slowed, and buyers are underwriting opportunities more conservatively. At the same time, capital is beginning to re-enter the sector, creating a transaction environment that may be healthier and more sustainable than the one that preceded it. To understand where the market is heading, it is important to understand how it arrived here. The Expansion Cycle Between 2018 and 2020, private equity firms increasingly targeted the car wash industry as a consolidation opportunity. Recurring membership revenue, recession-resistant demand, and a highly fragmented ownership landscape created an attractive investment thesis. Early platform investments began to emerge and valuation multiples moved beyond their historical range of 6x to 7x EBITDA. That trend accelerated significantly between 2020 and 2022. Low-cost capital fueled aggressive acquisition strategies across the sector as operators raced to establish regional and national footprints. EBITDA multiples reached as high as 15x to 20x in some transactions. New development accelerated, sale-leaseback structures became common, and many markets experienced a rapid increase in supply. The result was an environment where growth often took precedence over market discipline. The Correction The market shifted quickly once interest rates began to rise. The acquisition models that supported premium valuations became increasingly difficult to justify as debt costs moved substantially higher. Transaction activity slowed and several highly leveraged platforms faced significant financial pressure. The disposition of Driven Brands’ U.S. car wash portfolio became a highly visible example of the industry’s correction phase. In many cases, operators found themselves competing in markets where development activity had outpaced demand growth, creating pressure on membership growth and profitability. While these events generated considerable attention, they reflected issues primarily associated with leverage, expansion strategy, and capital structure rather than a deterioration of the industry’s underlying fundamentals. The Fundamentals Remain Strong Consumer adoption of professional car washing continues to expand. Approximately 80% of U.S. drivers now use professional car wash services, compared to 48% in 1994. Unlimited membership programs continue to demonstrate strong retention, with roughly 90% of members indicating plans to renew their subscriptions. Industry growth remains positive as well. According to data from Rinsed, car wash sales increased 4.8% year-over-year during the fourth quarter of 2025 across more than 3,000 tracked locations. The ownership landscape also remains highly fragmented. Approximately 68% of car wash companies still operate fewer than five locations, leaving substantial runway for future consolidation activity. These metrics continue to support the long-term investment thesis that originally attracted institutional capital to the sector. Why the Next Phase Will Look Different Several structural changes are creating a fundamentally different operating environment than the one that existed during the industry’s rapid expansion period. Development Has Become More Difficult The economics of greenfield development have changed materially. Projects that previously required approximately $5 million in total investment now often require $7 million to $8 million or more. Land costs, construction inflation, permitting timelines, and equipment pricing have all contributed to higher development costs. Municipalities have also become more restrictive in markets that experienced significant development activity over the past several years. Entitlement challenges, moratoriums, and permitting restrictions have become increasingly common. The result is a more constrained supply pipeline that benefits existing operators. Acquisition Economics Are Improving As valuations have normalized, acquisitions have become increasingly competitive relative to new development. Acquiring an existing operation provides immediate cash flow, an established membership base, and proven operating performance. In contrast, new developments often require significant capital investment and extended ramp-up periods before generating meaningful returns. This shift is one of the primary reasons transaction activity has begun to improve despite slower development volumes. Capital Still Needs Deployment Private equity activity has slowed from peak levels, but investor interest in the sector has not disappeared. According to Bain & Company’s 2026 Global Private Equity Report, firms currently hold approximately $1.3 trillion in undeployed capital. At the same time, distributions to investors have remained below historical averages for an extended period, increasing pressure to identify attractive investment opportunities. The car wash industry continues to offer many of the characteristics institutional investors seek, including recurring revenue, strong consumer demand, fragmentation, and opportunities for scale. The capital remains available. What has changed is the level of discipline applied to deployment decisions. Looking Ahead The current market environment is best understood as a reset rather than a retreat. Valuations have adjusted to more sustainable levels. Development activity has slowed. Competition for new sites has become more rational. At the same time, industry fundamentals remain strong and investor interest continues to build. For operators considering growth, recapitalization, or a future exit, these conditions may create opportunities that did not exist during the peak of the market cycle. The next phase of consolidation is beginning to take shape. Unlike the previous cycle, it is likely to be driven less by inexpensive capital and more by operational performance, market positioning, and asset quality.

Simon Assaf

Senior Vice President & Director

6/10/26

The Wellness Takeover

Health-adjacent tenants are giving retail a new edge, and looking good while doing it! The so-called retail apocalypse has given way to a clinical makeover, injecting fresh vitality into the retail leasing landscape. While commodity-driven retail giants have shed millions of square feet, CoStar reports a sector leaner and more resilient than ever, with national vacancy rates compressed to a razor-thin 4.3% as of Q1 2026. The ascendance of medtail isn’t just a change in signage, it’s a pivot from pushing product to prioritizing people. Today’s powerhouse tenants aren’t selling inventory; they’re selling appointments, routines, and optimized lifestyles. This shift mirrors a decisive move in consumer demand away from mere product accumulation towards preventive health, convenience, and lifestyle integration. By modernizing the brick-and-mortar experience into high-touch health destinations, landlords are capturing a level of patient-client inertia that static rows of inventory simply cannot generate. Local centers are becoming an integral part of high-frequency rituals, creating dynamic community hubs people visit to invest in their longevity. From pickleball courts to IV drip bars, these wellness anchors are ‘internet-proof’ in execution, yet internet-fueled in demand. While a Botox injection or a Pilates class cannot be downloaded, they are increasingly discovered, vetted, and sold through a digital lens. This creates a unique paradox. The modern strip center has become the physical stage for a social-media-driven lifestyle, where ‘Instagrammable’ clinical interiors and influencer-backed branding are now among the primary engines of foot traffic. The result? A retail landscape definitively built around how consumers live, not just how they shop. Stripping Down Retail While the 2020 pandemic initially froze physical commerce, it unequivocally became the catalyst for the “retailization” of healthcare, exposing the vulnerability of product-heavy storefronts while pushing personal health to the center of consumer life. CoStar reports that, for the first time on record, service-oriented tenants led by med spas, fitness studios, and specialized clinics have surpassed goods-based retailers in total leasing activity, accounting for more than 50% of new retail demand in 2025, up from sub-40% levels before the pandemic. What began as a convenience play resulted in a structural shift. The old big-box formula is being rewritten in real time, not by more merchandise, but by movement, maintenance, and repeat use. Fitness and wellness openings now drive nearly 30% of all service-based leases, while the medical spa industry has seen an estimated 70% increase in new business starts in comparison to pre-pandemic levels, according to CoStar. Health-related tenants now occupy roughly 20% of traditional retail square footage, effectively doubling their presence over the last decade. While traditional commodity retail continues to fight for every inch of foot traffic, the wellness sector has moved into a league of its own. A Ritualistic Reset Behind this spatial reset is a consumer who spends heavily and views wellness as a necessary luxury rather than a one-off indulgence. According to McKinsey & Company’s The Future of Wellness Trends 2025 Survey, while Gen Z and Millennials make up just 36% of the adult population, they drive more than 41% of the nearly $500 billion spent annually on health and self-optimization. More than 80% of U.S. consumers now rank wellness as a top priority, creating massive, cross-generational demand for wellness-driven social spaces. This isn’t just a generational bubble; it’s a total market takeover. The fundamental rewrite of the American lifestyle blueprint has pushed the health and wellness market towards a staggering $6.82 trillion valuation in 2025, with projections set to reach $10.36 trillion by 2030, according to Research and Markets’ 2026 Health and Wellness Market Report. Capital is moving, and so is culture. The market is witnessing the death of chore-based shopping trips and the birth of high-performance rituals. Post-COVID, consumers have prioritized wellness routines over one-off shopping trips. Is Daylife the New Nightlife? In major Sunbelt metros and coastal hubs, wellness has become the primary thread of the social fabric. The American third space is moving away from alcohol-centric nightlife, as recent Gallup data shows U.S. alcohol consumption has hit a 90-year low. Currently, only 54% of adults report drinking, down 13% since 2022. Driven by high costs and a categorical move toward health-consciousness, Gen Z is trading the bar stool for the cold plunge. As Gen Z ditches the cocktail as their go-to social kryptonite, medtail is stepping up to fill the gap. The sweat-and-social economy is providing the community connection that bars once offered, as Custom Market Insights reports the U.S. health and fitness club market was valued at $45.8B in 2025 and is expected to grow to $71.5B by 2035. More importantly, frequency is holding, and the appetite for this lifestyle is only sharpening. Nearly half of fitness chain customers, who visit four or more times a week, now treat gyms like self-care commitments, not drop-ins, with luxury fitness chain Life Time leading at 50% peaks. This drives sustained traffic that landlords underwrite with confidence. These are not one-time visits or seasonal spikes. They reflect consistent, repeat engagement, reinforcing the idea that wellness is no longer occasional but built into routine. But this isn’t just about fitness; it’s about shared rituals and members-only wellness clubs that serve as destination anchors. When a center lands a social-forward wellness tenant, it doesn’t just gain a lease; it gains a brand identity that defines the entire asset. That demand is no longer limited to coastal gateways. Luxury fitness brands are increasingly targeting middle-markets, where residents expect city-tier amenities, programming, and design in their local clubs. The Age of Upkeep Fitness isn’t the only catalyst; it’s an overarching shift towards aesthetic-forward wellness spaces where injectables, IV therapy, and recovery tech like red-light and infrared panels have become part of the monthly ritual. High-end med spas are increasingly positioning themselves as members-only wellness labs, where clients are not simply booking treatments but committing to quarterly correction plans, monthly IV drips, and weekly red-light sessions designed to optimize energy, sleep, and recovery. And that demand is no longer confined to urban dermatology hubs. Luxury med spa brands are expanding into middle markets, where consumers increasingly expect non-invasive aesthetics technology, clinical-grade results, and boutique-spa ambiance in their local clinics. This medical-lifestyle hybrid is no longer exclusive to the one percent. As consumers shift from buying products to buying outcomes, shopping centers are pivoting from a place to buy to a place to become. The Rent Roll Glow-Up The ideal tenant profile is getting a facelift. Landlords are no longer just collecting rent; they’re curating longevity hubs built on high-margin, physical-start services that cannot be replicated by a browser tab. Wellness and healthcare tenants are fundamentally changing the underlying rhythm of a center, replacing sporadic shopping trips with routine, appointment-based visitation that is more consistent, more habitual, and more durable by design. They offer an experience physically tethered to the real estate, but sharpened by digital convenience. The traits that once made a retailer desirable, such as massive inventories and seasonal collections, now include a health halo anchored in contractual consistency. By prioritizing services that require physical presence and repeat visits, landlords are trading the volatility of discretionary shopping for the stability of routine-based spending. The traffic story changes with it. It shifts from something landlords hope for to something that shows up on a schedule. A Botox appointment is booked. A Pilates class is reserved. An IV drip is added to the weekly routine. These are not casual visits. They are recurring demands, generally reinforced by memberships, deposits, and cancellation policies that increase follow-through and, in turn, make NOI more predictable. That durability is being amplified by a landlord-friendly supply imbalance. CoStar reports national retail construction remains at a multi-cycle low of about 52 million square feet, while leasing activity is dominated by smaller spaces, with nearly 90% of leases signed in spaces under 5,000 square feet. In that environment, high-quality space is moving fast, with a median time-to-lease of just 7.2 months. And the payoff does not stop at the front desk. According to ICSC, 63% of visitors to medical and wellness facilities cross-shop with neighboring tenants on the same trip. This creates a powerful synergy, turning a single tenant into a traffic driver for the rest of the center. Because wellness traffic often peaks during mid-morning or early afternoon, these tenants effectively fill the slow hours, sending steady, high-intent foot traffic toward nearby cafes, boutiques, and service providers. There is a defensive quality to that demand, too. McKinsey & Company found consumers are more likely to cut spending on clothing, entertainment, and home decor first in a downturn, while wellness outpaces apparel and home goods in budget resilience. Physical experiences like spas and studios hold significantly stronger than digital supplements or apps, as consumers treat fitness and recovery as vital as groceries. While this self-care buffer does not make wellness recession-proof, it provides a level of stability that categories built on impulse, novelty, or one-time transactions simply cannot match. For landlords, that matters. It means demand will hold up better when the broader market starts to wobble. Algorithm Approved In a retail environment haunted by e-commerce erosion, health and wellness tenants offer a new edge, operating under their own set of rules. The traditional retail playbook was reshaped by the demands of a digital-first world, and COVID-19 only accelerated that evolution. But medtail? Born into a digitally native marketplace, it has effectively broken the fourth wall. Curated experiences are designed as much for the camera as they are for the client. This dynamic is powerful and has become central to the economic model. As Gen Z consumers are the primary drivers of health and wellness, they dually shape how these services are marketed and monetized. Sprout Social’s 2025 Pulse Survey found that over 60% of Gen Z discover and vet new brands largely through social content and influencer recommendations, turning the feed into a de facto directory for wellness experiences. In a category built on visible outcomes, better recovery and improved energy, social media functions as both proof and promotion. Before a client even steps into a space, they have already seen the results, the interiors, and the brand identity through a curated digital lens. Trust is no longer built solely on proximity. It is built through exposure. That has fundamentally changed the marketing playbook. Conventional advertising is evolving to influencer-driven discovery, creator partnerships, and location-based visibility, turning a single treatment room into a high-performing acquisition tool. A cold plunge suite, a red-light room, or a sleek injectables bar is no longer just a backdrop for service delivery. It is part of the sales funnel. In a sense, “Instagrammable” interiors are not aesthetic fluff. They are strategic infrastructure. Well-lit treatment rooms, branded mirrors, custom signage, and highly curated waiting areas are designed to travel beyond the four walls of a space, extending a location’s reach well beyond its immediate trade area. The same is true for brand collaborations and influencer content. When a creator tags a med spa, recovery studio, or wellness club, the location gains more than visibility. It gains borrowed trust, cultural relevance, and a direct line to a consumer already primed to convert. Foot traffic increasingly follows the feed. The result is a self-reinforcing loop. Content drives awareness. Awareness drives bookings. Bookings generate more content. And that content feeds directly back into demand. In today’s wellness economy, visibility is not just a byproduct of success. It is part of the product. Investing in Rhythm This fundamental reorganization of the retail hierarchy forces the surrounding ecosystem to evolve, prioritizing high-frequency lifestyle integration over simple commodity accumulation. By shifting the focus toward high-frequency lifestyle needs, landlords are creating a ripple effect. Placer.ai reports that wellness anchors typically sustain foot traffic more than 20% above traditional retail averages. The payoff is immediate. More visitors. Longer stays. Stronger spillover. It changes the gravity of every surrounding lease, turning a collection of independent shops into a synchronized lifestyle hub. This evolution also creates new opportunities for centers willing to rethink co-tenancy, parking ratios, and buildout requirements. Traditional retail centers were often designed around apparel-centric tenant mixes, with parking ratios and circulation patterns optimized for weekend shoppers carrying bags. Wellness and experience-focused tenants, by contrast, tend to draw mid-week, appointment-based visitation, which shifts peak traffic patterns but can also support higher, more consistent foot traffic across the week. As a result, many owners are updating parking allocation and valet or drop-off capabilities to better serve appointment-driven, service-oriented tenants. The Long-Term Wellness Bet If the early appeal of wellness tenancy is foot traffic, the longer-term case is lease durability, which becomes clearest in the buildout itself. Many wellness, fitness, and healthcare users come with serious upfront investment, from specialized plumbing and treatment rooms to medical-grade systems and customized interiors. These are high-barrier concepts on both ends. They are expensive to open and even harder to move. Once a location is established, relocation becomes costly, disruptive, and often impractical. In effect, landlords are not just securing a tenant. They are locking in tenant capital and client relationships built for long-term valuation. That staying power only grows once the customer relationship is in place. A traditional retailer may need to win the shopper back with every visit. A med spa, clinic, or boutique fitness operator builds around habit, continuity, and trust. Once that rhythm is established, moving is no longer just a real estate decision. It risks breaking routine, sacrificing convenience, and disrupting a client base built carefully over time. From an investment standpoint, that can translate into stronger renewal odds, lower rollover risk, and a cash flow profile that is easier to underwrite than traditional discretionary retail. It also helps explain why end caps and outparcels are drawing more interest from these users. Accessibility, signage, and ease of arrival are not just perks. They are part of the operating model. Still, not every wellness concept deserves the same underwriting. Unit growth has to stay in step with local demand, especially in categories that depend on repeat use. More medicalized concepts bring regulatory and reimbursement considerations that traditional retail rarely faces. And centers that lean too heavily on a single wellness niche can create concentration risk if that segment cools or becomes oversupplied. The opportunity is real, but it is not automatic. The strongest investments will come from owners and operators who can distinguish broad wellness demand and durable unit economics, then build the lease structure, layout, and tenant mix to protect both. From Checkout to Check-In: The Future of Wellness Retail Consumers are prioritizing health, longevity, and appearance. Retail is simply following suit. The strip center is no longer just a place to pick things up. It is becoming a place to keep things up. Wellness integration is not a passing theme. It is a signal of where expectations are heading and which assets are flexible enough to meet them. The next generation of retail will not be defined by what it sells, but by how well it fits into the way people live. For landlords and developers, this isn’t just a trend in consumer behavior; it’s a redefinition of the retail asset itself. The broader takeaway is that tenant mix is no longer just about retail vs. non-retail, but about the type of retail and the role it plays within the center. As wellness-centric spaces are integrated into everyday life, the most competitive centers will be those that deliberately curate a tenant mix capable of fulfilling both functional needs and emotional wants. These experience-driven formats offer convenience, leisure, and wellness in a single, cohesive environment. Far from signaling the decline of traditional retail, this shift underscores the opportunity to evolve centers into higher-value, experience-anchored destinations that are better aligned with how consumers live, work, and recover today.

Michael Pakravan

Senior Vice President & National Director

6/10/26

The Hotel Rate Sheet

Current Rates for Hospitality If you’re exploring debt financing for a hotel, whether it’s an acquisition, refinance, repositioning, or ground-up development, knowing where rates stand across every major capital source is half the battle. This Hotel Rate Sheet cuts through the noise by displaying indicative terms across seven hospitality lending programs in one place, giving hotel owners, investors, and developers a clear side-by-side view of current terms. It includes LTV limits, DSCR requirements, loan terms, interest rate ranges, prepayment structures, and recourse requirements for deals across all 50 states, from limited-service flags to luxury resorts. Terms Bank / CU Life Co. CMBS Bridge Mezz / Pref** USDA C-PACE Max LTV / LTC 70% 65% 68% 80% 85% 80% 35% Min DSCR 1.25x 1.50x 1.35x <1.00x <1.00x 1.25x N/A Loan Term 3–10 Yrs 3, 5, 7, 10 Yrs 5, 10 Yrs 3+1+1 Yrs Coterminous w/ Sr. 30 Yrs 25 Yrs Amortization 20–25 Yrs 25–30 Yrs 30 Yrs 30 Yrs None Self Amort. Self Amort. Interest-Only 1–2 Yrs Partial-Term Full-Term 3 Yrs Full Term 3 Yrs 3 Yrs Index Prime / UST 3, 5, 7, 10YR UST 5, 10YR UST SOFR Fixed Rate Prime 10YR UST Interest Rate Range 5.75–7.75% 5.81–6.85% 5.76–7.11% 6.65–11.15% 12.00–18.00% 8.25–8.75% 7.19–7.49% Prepayment Penalty Negotiable Declining / YM Defeasance Negotiable Negotiable Declining Declining Recourse Negotiable Non / Partial Non-Recourse Non-Recourse Non-Recourse Non if <20% Own. Non-Recourse Ground Up Construction Yes Yes No Yes Yes Yes Yes Origination Fee 0.25–1.00% None None 1.00–2.00% 1.00% 2.80% 1.00% Exit Fee None None None Negotiable 1.00% None None ** Mezzanine / Preferred Equity terms are indicative and subject to senior capital structure, sponsorship, and business plan. Disclaimer: The information contained in this rate sheet is for informational purposes only and represents general market indications as of the date shown. Rates, spreads, and terms are indicative, vary by transaction, and are subject to change without notice based on market conditions, sponsorship, property-level performance, and lender underwriting. This material does not constitute an offer, commitment, or solicitation to lend. All loans are subject to credit approval and customary closing conditions.

Luke Thompson

Vice President & Director

6/10/26

Q&A Milton Braasch II | Phoenix Market Leader

The Power of Staying the Course Q: It took you exactly one year from your first day to closing your first deal and ringing the bell. Looking back, what was the most important lesson you learned during that first year that you now teach to new agents? A: Trust the process and keep going. Your mind will play tricks on you; it will convince you that giving up is the rational choice when things get hard. Learning to recognize that voice and not listen to it is half the battle. The agents who make it aren’t always the ones who had the easiest start; they’re the ones who stayed the course when every instinct told them not to. Q: You earned both the Pacesetter Award (2022) and Rookie of the Year (2023). What were the specific daily non-negotiables in your routine that you believe separated you from the pack that you now look for in other agents? A: Being intentional about the commitments I set for myself and actually hitting them is what I believe separated me and what I see separating agents early on in their careers. Everyone sets goals, early mornings, call targets, and weekly numbers, but very few people consistently follow through. It sounds great to say you are going to be in at 5:30 a.m. or make 500 calls every week. But when the rubber meets the road, most people fall short, and it is rarely because of outside circumstances. The truth is, it got hard, and they chose comfort over growth. That’s the real separator. The agents who stand out early aren’t always doing something different; they’re just doing what they said they would. Q: You’re known for a hands-on, people-first approach. What is the most common mental block you see in early-career agents, and how do you help them coach themselves through it? A: Almost every agent battles the fear of the “what if” early on in their career. It’s the hesitation before the next call because you don’t know if you’ll get hung up on, or the anxiety before a meeting because the other person might not show. That uncertainty can become paralyzing. The shift I try to encourage is flipping that same “what if” into optimism. What if they do pick up? What if this is the meeting that changes everything? Same question, completely different energy, and it changes your approach overnight. Q: When you transitioned into leadership, how did you translate the success of your brokerage career into scaling a blueprint for agents stepping into their careers? A: Honestly, I didn’t have to reinvent the wheel. At Matthews™, we already offer a proven, pressure-tested path to success in brokerage through our training and mentorship programs. Pair that with a relentless work ethic, and it is simple to follow. I bought into the blueprint, lived it, saw the benefits, and now I outline that same path for new brokers. Q: What does a strong brokerage culture look like in the Phoenix office, day to day? A: Culture thrives when everyone is here for the same reason. We all want to build successful, long-lasting careers, but what makes Phoenix so special is the genuine friendships our agents have for one another. That combination is lethal in this industry and matters more than people think. When you’re grinding through a hard stretch, the camaraderie makes it easier and more fun to push through because the people around you can pick you up, and you do the same for them. When you pair that shared commitment to success with a tight-knit group of people who actually care about each other, it creates a competitive energy that’s hard to manufacture. We didn’t have to force it; it just became who we are. Q: As you look to expand the firm’s footprint in the Southwest, what is the biggest opportunity you see in the Phoenix market over the next 12-24 months? A: A lot of brokers in Phoenix have taken their foot off the gas over the past couple of years, and that’s an opening we intend to take full advantage of. When the market slows, many competitors pull back, wait for conditions to improve, or stop creating momentum altogether. We’re the agents who keep our foot down and move the market. The result? In the next year or two, we’re positioned to take significant market share from the agents who have kindly created that opening for us. Q: Brokerage is rarely a straight line. What advice do you give agents when they start to doubt themselves during a slow period? A: It’s simple, yet effective. Control what you can control. Set hard but achievable weekly commitments and show up to them every week, without exception. We don’t control when someone decides to sell a building, but we control how present and relevant we are when that moment comes. Q: How do you define an agent’s success beyond just closing deals? A: How seriously an agent takes their business is a big tell of success. Closings are an outcome, you can’t always control when they happen. But you can control the attention to detail, the time committed, the early mornings, the late nights, the call goals hit, and the meeting goals hit. An agent who performs those activities at a high level consistently, the closings will come. Q: How do you encourage agents in your office to leverage technology and data to sharpen their advisory approach? A: Matthews™ is well ahead of the curve on technology. Both leadership and agents recognize the separation that will arise between companies and agents leveraging tech and those that aren’t. The market has shown us that it is not really an option; it’s a requirement to adapt to the times. The agents who treat it that way will have a significant advantage over those who are still deciding whether to take it seriously. Q: Looking ahead, what opportunities do you see for investors and brokers in the Phoenix market? A: Phoenix is the fifth-largest city in the United States, and people are still flocking to the Valley of the Sun. Population growth is the single most important long-term stat we track; it’s the domino that stimulates growth across the entire economy, especially in commercial real estate. All of these people need somewhere to eat, sleep, shop, get medical care, and build businesses. That demand doesn’t slow down. We are very bullish on the Phoenix commercial real estate market for years to come, and frankly, it’s not surprising given the fundamentals.

Milton Braasch II

Market Leader

6/9/26

Why Medical Real Estate Outpaces Other CRE in Rental Growth

Commercial real estate has spent the last several years working through a lot of change. Office demand has been reset by hybrid work, retail continues to adjust to consumer behavior and e-commerce, and even industrial, one of the strongest performers of the last cycle, has become more sensitive to supply chain disruptions, and broader economic swings. Medical real estate has not been immune to those same pressures, but it has behaved differently. Rent growth in the sector has been more durable because the demand drivers are not purely cyclical. They are tied to broad changes to healthcare utilization, patient access, demographics, tenant investment in the space and the high cost of replacing well-located medical facilities. A Different Growth Engine In most asset classes, rent growth is heavily tied to timing: where the market is in the cycle, how much vacancy exists, how much new supply is coming, and how much leverage tenants have when leases roll. When fundamentals soften, rent growth slows, and in weaker environments it can reverse entirely. Medical real estate still lives within those same market forces, but it has a different foundation. Long-term leases, expensive tenant improvements, specialized infrastructure and a provider’s dependence on location all change the way rent behaves. The result is a sector where rent growth is often supported by both the lease structure and the operational realities of healthcare delivery, rather than just near-term market momentum. Demographics Continue to Push Demand The demand side of the equation is straightforward: the country is getting older, and older populations use more healthcare. The U.S. Census Bureau reported that the population age 65 and older reached 61.2 million in 2024 and grew 3.1% in one year. Florida is one of the clearest examples of this trend, with population growth continuing to outpace the national average and a much higher share of residents over 65 than the broader U.S. That matters for medical real estate because care has to be delivered close to where people live. In high-growth Sun Belt markets, the combination of population migration, aging demographics and physician shortages increases competition for well-located outpatient space. HRSA’s 2025 workforce outlook projects a national shortage of more than 141,000 full-time-equivalent physicians by 2038, which only reinforces the value of locations that already have patient access, referral patterns and provider infrastructure in place. Why Medical Tenants Behave Differently This stability starts with the tenant. Healthcare providers are not simply leasing space; they are building their business into the real estate. The space becomes part of the operation, not just an address on a letterhead. Moving a medical practice is expensive, disruptive and risky. Patient relationships are geographically anchored, referral patterns are built over time, and many medical spaces require specialized plumbing, imaging capacity, lead-lined walls, surgical infrastructure, backup power, upgraded HVAC, life-safety systems and highly specific layouts. Regulatory requirements, licensing considerations and equipment installation make relocation even harder. For imaging, surgery, dialysis, oncology, dental, urgent care and specialty practices, a move can affect patient volume and revenue continuity. Even when a tenant technically has other options, location consistency usually carries real value. That is why rent is often only one part of the decision. Avoiding downtime, protecting the patient base and preserving referral flow can matter just as much, if not more. Rent Growth Is Built Into the System Medical lease structures also support the sector. Many medical leases include fixed annual increases in the 2% to 3% range, CPI-based adjustments or longer initial terms that can run 10 to 15 years depending on the tenant and use. That creates income growth that is not fully dependent on a landlord winning a market rent negotiation every few years. In other words, rent growth is often built into the lease from day one. That is one of the biggest differences between medical real estate and more discretionary asset classes. The growth profile is not just a bet on the next leasing cycle; it is frequently contractual, predictable and supported by the tenant’s need to stay put. Inflation and Operating Expenses Have Raised the Floor The last few years also reset the cost side of real estate ownership. Insurance, taxes, maintenance, utilities, labor and materials all moved higher, and those increases have been particularly visible in growth states like Florida. The American Hospital Association reported that hospital labor costs increased by more than $42.5 billion from 2021 to 2023, reaching $839 billion, while total hospital expenses continued to outpace general inflation in 2024. Landlords cannot ignore that backdrop. Whether costs are passed through directly under net leases or reflected in higher gross rents at renewal, the operating environment has pushed the market toward higher rent levels. For tenants, this is not just a real estate issue; it is part of a broader healthcare cost environment where labor, supplies, equipment and reimbursement pressure are all moving at once. Replacement Costs Have Changed the Conversation Another reason rents have moved higher is simple: replacement cost has changed. In many markets, the rent needed to justify a new medical building or a heavy medical buildout is materially above where older leases were signed. A tenant paying a legacy rent in the low $20s per square foot may be facing a market where comparable modern space requires rent in the $30s or $40s per square foot, especially once tenant improvements, financing costs and construction risk are included. This is not just a landlord talking point. National construction cost indices show the reset. ENR’s Construction Cost Index moved materially higher from 2020 through 2024, and Turner’s Building Cost Index continued to show rising building costs through 2024 and into 2025. Medical buildouts are even more sensitive because the cost is not limited to walls, floors and ceilings. Healthcare users often require infrastructure that traditional office or retail tenants do not. Limited New Supply Keeps Pressure on Existing Space New medical supply is also difficult to deliver. Developers are dealing with higher construction costs, higher interest rates, more expensive tenant improvement packages, zoning limitations, parking requirements and longer entitlement timelines. Those hurdles have made many projects harder to pencil, especially without strong pre-leasing or a credit tenant in place. The result is a slower supply response at the exact time demand for outpatient care continues to grow. Well-located existing buildings, especially those with usable medical infrastructure already in place, become more valuable because they are faster and cheaper for tenants to occupy than starting from scratch. That supply constraint gives owners more support when rents reset. Construction Costs Hit Medical Harder Than Traditional Office Healthcare buildouts are expensive because the space has to perform. Exam rooms, surgical suites, imaging, lab areas, sterilization rooms, specialized flooring, plumbing, power, backup systems and mechanical requirements all add cost. For certain uses, the tenant improvement package can be the difference between a deal making sense or not making sense at all. That matters for rents because landlords and tenants are both underwriting the same reality: the space costs more to build, improve and replace. If construction and TI costs are significantly higher than they were five years ago, rents have to move higher as well. Otherwise, new development slows, second-generation medical space becomes more competitive, and existing landlords gain more leverage at renewal. The Shift to Outpatient Care Is Reinforcing Demand Healthcare delivery has also moved closer to the patient. More procedures and services are being pushed out of traditional hospitals and into outpatient settings, including medical office buildings, ambulatory surgery centers, imaging centers, urgent care clinics and specialty practices. AHA’s 2025 cost report, citing Moody’s data, noted that outpatient services increased from 52% of hospital revenue in 2020 to 57% in 2024. CMS also reported that national healthcare spending reached $5.3 trillion in 2024, growing 7.2% year over year, with demand for healthcare services remaining a key driver. That does not mean every operator is thriving, but it does support the larger point: healthcare utilization is growing, and much of that growth needs outpatient real estate. How Medical Compares Across CRE The contrast with other sectors is becoming clearer. Office is still working through tenant downsizing, hybrid work and vacancy. Retail performance is stronger than many expected, but tenant demand is still tied to consumer spending and location quality. Industrial remains an important asset class, but it is more exposed to supply pipelines, logistics trends and macroeconomic cycles. Medical sits in a different lane. It combines essential-service demand with sticky tenants, expensive buildouts and long-term lease structures. That does not make it risk-free, but it does make the income profile less dependent on short-term sentiment than many other parts of commercial real estate. A Necessary Reality Check The sector still has real pressure points. Healthcare operators are dealing with reimbursement constraints, staffing shortages, wage inflation, higher supply costs and tighter margins across many specialties. Those issues can influence expansion plans, tenant credit and renewal conversations. That is why not every medical deal deserves the same treatment. Tenant quality, specialty type, lease structure, rent level, reimbursement exposure, market position and replacement cost all matter. Medical real estate may be more durable than many asset classes, but underwriting still has to be specific. Why the Sector Still Outperforms Even with those challenges, the broader setup remains favorable. Demand is being supported by aging demographics, population growth in key Sun Belt markets, higher healthcare utilization and the ongoing shift to outpatient delivery. At the same time, new supply is constrained by construction costs, zoning, capital markets and the specialized nature of healthcare space. That imbalance – growing demand on one side and limited supply on the other – is the reason medical rents have continued to rise. In many cases, the rent growth is not being driven by one factor. It is the combination of demographic demand, higher operating costs, higher replacement costs, limited new construction, expensive buildouts and healthcare’s continued move into outpatient settings. Investor Implications: Predictability as a Competitive Advantage For investors, the real value of medical real estate is not just that rents have grown. It is that the growth is generally more predictable and better protected than in many other asset classes. Lease escalations, tenant stickiness, costly relocation and the essential nature of healthcare services all support the income stream. In a market where capital is more selective and investors are placing a premium on certainty, that predictability matters. Medical real estate offers a cleaner story: durable demand, higher barriers to entry, long-term occupancy and income growth that is often already written into the lease. At the same time, owners of existing pre-pandemic medical properties are in a particularly strong position. Many of these assets were developed at significantly lower construction costs and lower basis levels than what would be required today, allowing landlords to remain competitive with newer inventory while still capturing meaningful rent growth. In many cases, tenants can renew at rental rates below the cost of relocating into newly delivered space, creating a strong incentive to stay in place and reinforcing long-term occupancy stability. The Core Insight In most real estate, rent growth is primarily a market story. It rises and falls with supply, demand, economic cycles and tenant leverage. In medical real estate, rent growth is also an operational story. It is shaped by how healthcare is delivered, how difficult it is for providers to move, how expensive space is to build, and how much demand exists for care in growing and aging markets. That is the key distinction. Medical real estate does not outperform simply because it is defensive. It outperforms because the tenant, the lease, the buildout and the demand drivers are all working together in a way that most other CRE sectors cannot replicate.

Jake Allen

Associate Vice President

6/9/26

Q4 2025 Multifamily REIT Earnings Report

Macroeconomic & Market Backdrop The U.S. multifamily housing market entered 2026 in a transitional phase following one of the largest supply waves in decades. Elevated apartment deliveries across Sunbelt markets continued to pressure rent growth and same-store NOI for operators concentrated in high-growth regions, while coastal markets with limited new development demonstrated significantly stronger fundamentals. Despite near-term supply pressures, management commentary across the sector increasingly pointed toward a favorable inflection beginning in late 2026 as construction starts continue to decline and absorption trends stabilize. Consumer demand for rental housing remained fundamentally resilient throughout Q4 2025, supported by elevated mortgage rates, limited single-family affordability, stable employment trends, and continued household formation. Occupancy across the sector remained healthy in the mid-95% range despite increased concessions and moderated new lease growth in oversupplied markets. The divergence between coastal and Sunbelt markets became increasingly pronounced during the quarter. Coastal operators with exposure to New York City, the San Francisco Bay Area, Seattle, and Southern California benefited from structurally limited development pipelines, improving office utilization trends, and stronger wage growth tied to technology and life sciences employment. Conversely, Sunbelt-focused operators continued to navigate elevated new deliveries across Texas, Arizona, Florida, and the Southeast. Importantly, capital markets conditions improved modestly entering 2026. Most multifamily REITs maintained investment-grade balance sheets, well-laddered debt maturities, and significant liquidity positions, enabling active capital recycling, development funding, and opportunistic share repurchases. National Multifamily Fundamentals Apartment fundamentals remained relatively stable entering 2026 despite the temporary impact of elevated new supply deliveries. Physical occupancy across the public multifamily REIT universe generally remained between 95% and 96%, reflecting healthy underlying renter demand and strong resident retention. Rent growth trends moderated meaningfully compared to the post-pandemic period. Coastal markets continued to outperform due to limited new supply and stronger employment fundamentals, while Sunbelt markets experienced softer blended lease rates as developers delivered a record volume of new units. Management teams across the sector consistently emphasized that the construction cycle is now decelerating. Elevated financing costs, tighter lending standards, and declining development starts are expected to materially reduce new deliveries over the next several years. As a result, many operators anticipate improving pricing power beginning in late 2026 and extending into 2027. Capital allocation remained highly active throughout the quarter. Multiple REITs executed meaningful share repurchase programs, asset sales, and joint venture transactions designed to recycle capital into higher-growth opportunities while protecting balance sheet flexibility. The multifamily sector also continued to benefit from long-term structural demand drivers, including affordability challenges in the for-sale housing market, demographic household formation trends, and increased renter mobility across major urban and suburban markets. Multifamily REIT Performance Within the multifamily REIT sector, fourth quarter 2025 results reinforced the growing operational divergence between coastal markets with limited new supply and oversupplied Sunbelt regions. Equity Residential delivered among the strongest operating results in the group, supported by robust same-store revenue growth in coastal gateway markets. The company also demonstrated disciplined capital allocation through approximately $300 million of share repurchases funded by disposition activity. Essex Property Trust similarly benefited from its concentrated West Coast exposure, with management emphasizing that California markets remain structurally undersupplied relative to national averages . Same-store revenue growth and occupancy trends remained among the strongest in the sector. AvalonBay Communities produced balanced performance across both coastal and expansion markets while continuing to execute one of the largest and most active development pipelines in the apartment REIT universe. The company also repurchased nearly $500 million of common stock during 2025. Sunbelt-focused operators Mid-America Apartment Communities and Camden Property Trust continued to experience near-term pressure from elevated new supply deliveries across Texas, Arizona, and the Southeast. However, both companies noted improving demand trends and increasing confidence that the supply cycle is approaching an inflection point. UDR maintained relatively stable operating performance while continuing to actively recycle capital and expand joint venture partnerships. Management highlighted the importance of operational agility and data-driven pricing strategies amid a choppy leasing environment. Across the sector, balance sheets remained conservatively positioned, with most operators maintaining leverage within investment-grade parameters and limited near-term refinancing risk. Risks, Outlook & Synthesis While the multifamily operating environment remains fundamentally healthy, several risks warrant continued monitoring entering 2026. The primary near-term challenge remains elevated apartment supply in Sunbelt markets. Although deliveries appear to be peaking, rent growth and same-store NOI may remain pressured until absorption fully normalizes. Macroeconomic risks also remain relevant. A slowing labor market, deterioration in consumer confidence, or prolonged interest rate volatility could negatively impact renter demand, household formation, and capital market activity. Expense growth remains another area of focus, particularly property insurance, labor, utilities, and real estate taxes. Operators with stronger scale and operational efficiencies are expected to outperform in this environment. Despite these risks, the broader outlook for the multifamily REIT sector remains constructive. Construction starts continue to decline materially, financing conditions for new development remain restrictive, and long-term housing affordability challenges continue to support renter demand. Coastal REITs appear best positioned entering 2026 due to limited supply pipelines and improving urban fundamentals, while Sunbelt operators may experience a more pronounced earnings recovery as deliveries moderate over the next several quarters. Overall, the sector enters 2026 with strong balance sheets, durable occupancy, active capital allocation programs, and increasing visibility toward an improving supply-demand backdrop.

Influencers in Healthcare Real Estate

Q&A with Executive Vice Presidents & Senior Directors Rahul Chhajed, Michael Moreno on navigating the 2026 market and building a national platform for the next era of care. Healthcare has remained one of the more resilient sectors across commercial real estate, despite working through a challenging capital environment. Today, buyers remain focused on well-located, durable assets. As capital markets begin to stabilize, the environment becomes increasingly constructive for transaction activity. According to a recent CoStar Group analysis, year-over-year sales volume has increased by 13.7% for healthcare assets, underscoring continued investor confidence in the sector even as the market recalibrates. What are the key forces shaping healthcare real estate in 2026? First and foremost, it’s the continued migration from inpatient to outpatient care, along with a supply environment that remains relatively constrained. The shift toward outpatient delivery is not new, but it continues to have a profound influence on how healthcare providers think about location strategy, patient access, and facility planning. Now more than ever, providers are focused on delivering care closer to the consumer in settings that are convenient, efficient, and better aligned with how patients want to engage with the healthcare system. At the same time, development activity has slowed meaningfully, and that has created a dynamic where demand is still healthy, despite limited new supply. In that kind of environment, you tend to see strong absorption and continued rent growth, especially for well-located, high-quality assets. While 2026 is still largely defined by restricted supply, this period is laying the groundwork for a new wave of construction activity in 2027 and 2028, as developers and investors respond to the imbalance between demand and available space. How is the shift toward outpatient care reshaping demand for healthcare space? Rather than representing a dramatic reshaping of demand, it’s simply a continuation of a structural shift that has been unfolding for years. The healthcare system has been moving steadily toward outpatient delivery for some time, and that trend continues to drive demand toward facilities that are more accessible, more consumer-oriented, and better integrated into the communities they serve. Providers want to be closer to their patient base, and real estate has to support that objective. What is becoming more pronounced, however, is the quality expectation that comes with that shift. There is now a much higher standard for what healthcare space needs to deliver. Patients increasingly expect a healthcare environment that feels modern, convenient, and intentionally designed. However, these expectations raise challenges for both new development and the repositioning of older assets. In some cases, obsolete or underutilized properties can be adapted for outpatient healthcare use, which creates opportunity. But construction and build-out costs remain elevated, so when a new product does come to market, it often commands premium rents. Over time, that dynamic will continue to widen the gap between high-quality healthcare space and older, less competitive products. Which healthcare specialties are showing the strongest demand fundamentals? Several specialties continue to stand out, particularly orthopedics, cardiology, and oncology. These are areas where demand remains durable and where the underlying patient need is significant and consistent. In many cases, these specialties also benefit from long-term demographic tailwinds, advances in treatment, and a greater emphasis on specialized outpatient delivery models. From a real estate perspective, those specialties are attractive because they often require thoughtfully designed space and support long-term tenancy. They are not purely interchangeable uses. The operational requirements, patient volumes, and investment in equipment can make these practices particularly sticky within a given location, which in turn supports strong demand fundamentals for the real estate that serves them. What role is technology playing in the evolution of care delivery and facility design? Technology is playing an increasingly important role across the entire commercial real estate industry, especially in healthcare, and AI is only accelerating that trend. One of the biggest impacts is the compression of time. Processes that historically required more manual effort, whether in planning, underwriting, design, research, or market analysis, can now be completed more efficiently and with better information. These tools allow agents to make decisions faster and with greater confidence. Over time, that kind of efficiency should carry through into care delivery itself. When providers, architects, operators, and investors are able to process information more quickly and execute with greater precision, the result is better and more responsive healthcare environments. Technology is not replacing the need for sound judgment, but it is absolutely increasing the speed and sophistication with which decisions can be made. As a result, these advancements will continue to shape both facility design and operational execution going forward. How are demographic trends supporting long-term healthcare demand? The most important demographic driver is the aging population. As a larger share of the population moves into the 65-and-older age bracket, demand for healthcare services will continue to expand, and that naturally supports long-term demand for healthcare real estate as well. This is one of the clearest and most durable tailwinds in the sector. What makes that especially meaningful is that aging does not just increase demand in a general sense. It also supports sustained need across a range of specialties, treatment settings, and care models. As utilization rises, providers need more space, better-located facilities, and real estate strategies to meet patient demand efficiently. That demographic foundation is one of the reasons healthcare real estate continues to be viewed as such a resilient asset class over the long term. How is consolidation influencing healthcare real estate strategy? Consolidation continues to shape strategy in a significant way. Larger health systems are still acquiring or partnering with independent practices, and private equity remains an active force in the space. As capital becomes increasingly accessible at more favorable rates, that activity will accelerate further. Consolidation tends to drive more sophisticated real estate decision-making because scale creates both opportunity and complexity. As organizations grow, their real estate strategies often become more deliberate. They’re thinking not only about footprint and expansion, but also about operational alignment, access to patients, and how to integrate different service lines across markets. We are also seeing continued partnership structures, including joint ventures involving health systems, rehabilitation operators, and behavioral health providers. All of that reinforces the idea that healthcare real estate is no longer just about site selection; it is increasingly tied to larger strategic and capital allocation decisions within the industry. How are patient preferences changing the location and design of care settings? Patient preferences have a greater influence on healthcare real estate today than they have in the past. Patients want care delivered in locations that are easy to reach, close to where they live, and designed in a way that feels modern and welcoming rather than institutional or outdated. That expectation is shaping both where providers choose to locate and how they think about the physical environment itself. Design increasingly matters not just from a branding perspective but also from a care delivery perspective. A modern, thoughtfully designed setting can improve comfort, support efficiency, and better reflect the level of care being delivered. In that sense, patient preference is pushing the market toward more consumer-oriented healthcare formats. Which healthcare real estate specialties look best positioned for long-term resilience? Ambulatory surgery centers stand out as one of the most resilient specialties. The reason is that they are highly specialized, operationally essential, and supported by long-term trends in how care is delivered. The more specialized the facility, the more defensible it tends to be from a real estate standpoint. These are not generic spaces that can be easily replicated or casually replaced. ASCs require significant infrastructure, whether that’s advanced HVAC systems, filtration, sanitation controls, or other technical elements that support procedural care. Even as technology evolves, including the growth of robotic surgery, that doesn’t reduce the need for dedicated space. If anything, it can reinforce the importance of purpose-built environments that can accommodate increasingly sophisticated care delivery. That’s one of the main reasons why ASCs are particularly well-positioned for long-term resilience. As the sector has matured, how has the standard for success evolved compared to ten years ago, and how have you adapted your approach to stay ahead in this new era for healthcare real estate? In many ways, the fundamentals of success have not changed as much as people assume. This is still a relationship-driven business that rewards consistency, market knowledge, and a deep understanding of both transactions and capital markets. For us, staying ahead has always meant remaining active in the market, constantly connecting with clients, understanding the financing environment, and continuing to learn. What may have changed is the level of sophistication required to compete at a high level. Markets move faster, information is more abundant, and clients expect sharper insights and stronger execution. But even in that environment, success comes back to being in the mix every day, staying close to the market, and continuing to build knowledge over time. Over the past decade at Matthews™ the healthcare division has scaled into a national platform. What has that evolution required as leaders, and what’s been key to its success? Building a platform at scale requires patience, conviction, and a real commitment to doing business the right way. Growth is never perfectly linear, especially in a business as demanding as commercial real estate. Over time, many people may enter a platform, but not everyone is built for the pace, pressure, and persistence the industry requires. That’s why leadership is not just about setting standards; it’s also about providing the support, coaching, and structure that allows brokers to reach their full potential. One of the most important things a leader can do is create an environment where people can grow, both technically and personally. You cannot manufacture success for someone, but you can help them recognize what they are capable of and give them the tools to pursue it. At the same time, building a successful healthcare platform also requires a clear point of view on the market. You have to know where opportunity exists, where competition is limited, and where your advisory can truly create value. For us, a major part of that value proposition has been helping healthcare providers understand that real estate is not just a background consideration. It can be a strategic and financial lever in its own right. Many physicians and operators spend years building successful practices without fully appreciating the value embedded in their real estate decisions. Helping clients recognize and unlock that value has been a key part of building the platform and differentiating the advisory we provide. The people who remain active, engaged, and informed are the ones best positioned to stay ahead. How has your ability to interpret the healthcare real estate market through both an operator’s lens and an investor’s lens shaped the way you identify opportunity, assess risk, and structure transactions that create value for both sides? At the core of that perspective is empathy. When you understand the motivations, pressures, and priorities of all the parties involved in a transaction, you are in a much better position to create solutions that work. That means understanding not just the buyer and seller, but also the lender, the attorneys, the agents, and the broader context in which the deal is happening. The ability to see a transaction through multiple lenses helps you identify where risk actually sits, where expectations may be misaligned, and where the real opportunity lies. It also allows you to structure deals in a way that creates confidence on both sides. In healthcare real estate, especially, where transactions can be nuanced and operational considerations matter, that broader perspective becomes a real advantage. Ultimately, the best outcomes tend to come from being able to put yourself in multiple pairs of shoes and navigate the process with that awareness. As healthcare real estate continues to evolve, what do you think the next phase of the market will demand in terms of expertise, execution, and opportunity? The next phase will continue to reward strong fundamentals, but it will also place a greater emphasis on adaptability and the ability to leverage technology effectively. Market knowledge, transaction experience, and sound judgment will remain essential. Those things don’t go out of style; but the professionals and platforms that can combine those fundamentals with faster, smarter execution will be the ones best positioned for the future. In particular, there will be increasing value in embracing tools like AI and other technologies that improve efficiency, sharpen analysis, and accelerate decision-making. The opportunity is not simply in using new tools for the sake of it, but in integrating them in a way that enhances execution and helps deliver better outcomes for clients. That combination of traditional expertise and modern capability is where the market is headed.

Rahul Chhajed

Executive Vice President & Senior Director

6/8/26

What 7 Brew’s Expansion Signals for Restaurant Real Estate

When a restaurant concept opens hundreds of locations in a single year, it’s worth paying attention. Not simply because of the growth itself, but because of what that growth reveals about consumer behavior, site selection, and where capital is flowing. That’s why 7 Brew has become one of the most closely watched brands in the quick-service space. The drive-thru beverage chain added 281 net new locations in 2025 and entered 2026 with more than 600 stores nationwide, a remarkable rise for a company that operated just 14 locations four years ago. While the headline numbers are impressive, the real story is what they say about the evolving relationship between convenience, real estate, and restaurant performance. For developers, investors, and franchise operators, 7 Brew’s success is another indication that the market continues to reward concepts built around speed, accessibility, and operational efficiency. The Value of Smaller Footprints For years, restaurant development was driven by larger prototypes designed around dining rooms and extended customer visits. Today, some of the industry’s fastest-growing brands are proving that a smaller footprint can often generate stronger returns. 7 Brew’s model is designed almost entirely around the drive-thru experience. The concept prioritizes throughput over square footage, allowing operators to maximize sales while minimizing occupancy costs. In a real estate environment where construction costs remain elevated and desirable sites are increasingly competitive, that equation is attracting attention. The success of concepts like 7 Brew reflects a broader shift in how restaurants evaluate growth opportunities. Rather than focusing solely on large retail corridors or traditional restaurant pads, brands are increasingly targeting locations that offer strong traffic patterns, efficient ingress and egress, and the ability to serve customers quickly. As a result, smaller parcels that may have once been overlooked are becoming highly desirable assets. Site Selection Has Become a Competitive Advantage As more drive-thru-focused concepts enter expansion mode, site selection is becoming one of the most important differentiators in restaurant growth. The competition for well-positioned drive-thru real estate continues to intensify, particularly in high-growth suburban markets. Sites with strong visibility, convenient access points, and favorable traffic counts are commanding increased attention from expanding franchise systems and development groups. This trend extends beyond beverage concepts. Coffee, quick-service restaurants, dessert brands, and other convenience-oriented operators are all pursuing similar real estate strategies, creating additional pressure on an already limited supply of quality drive-thru locations. For landlords and developers, this demand is creating new opportunities to reposition existing assets, redevelop underutilized properties, and attract tenants seeking efficient formats with proven consumer appeal. Strong Operations Continue to Drive Expansion Growth at the scale 7 Brew is experiencing rarely happens without strong store-level economics. Brands that expand rapidly and sustain that momentum typically combine a compelling consumer offering with operational consistency and a development model that can be replicated across multiple markets. Investors and franchise groups increasingly look beyond unit counts and focus on concepts capable of delivering predictable performance while adapting to local market conditions. That discipline is particularly important in today’s environment, where development decisions are being scrutinized more carefully than they were during periods of lower interest rates and lower construction costs. The brands attracting the most attention are often those that can demonstrate not only customer demand, but also a clear path to long-term profitability at the unit level. Looking Beyond the Beverage Category While 7 Brew’s growth story is unique, the underlying trend is much larger than any single brand. Consumers continue to place a premium on convenience. They want speed, customization, and ease of access. Restaurant concepts that can deliver those attributes consistently are gaining market share, attracting franchise investment, and driving new development activity. For commercial real estate professionals, that shift presents both opportunities and challenges. Demand for prime drive-thru locations remains strong, available inventory remains limited, and competition for the best sites is likely to intensify as emerging concepts continue to scale. The rapid rise of 7 Brew serves as a reminder that successful restaurant real estate strategies are increasingly centered on efficiency. Whether evaluating development opportunities, identifying investment targets, or advising expanding brands, understanding where consumer preferences are headed will remain critical. If recent growth trends are any indication, convenience-driven concepts will continue to shape the next phase of restaurant real estate development.

Daniel Gonzalez

First Vice President & Associate Director

6/7/26

Jacksonville, FL Retail Market Report Q1 2026

Jacksonville retail fundamentals were stable in Q1 2026, with vacancy at 4.9%. Net absorption totaled 91.8K SF, showing that tenant demand remained positive during the quarter. Asking rents averaged $26.12 per square foot, supported by 2.0% rent growth. Rent gains were moderate, reflecting healthy occupancy levels but also a more cautious leasing environment. Demand remained strongest for well-located centers serving growing residential areas and daily-needs consumers. Grocery-anchored, neighborhood, and service-oriented retail continued to outperform more discretionary formats. New deliveries of 200K SF were absorbed without significant disruption to overall vacancy. The market’s low vacancy rate suggests limited available quality space in preferred locations, which should continue to support rent stability. However, rent growth may remain measured as tenants evaluate costs and expansion plans carefully. Key Findings Vacancy stayed contained, indicating that tenant demand continued to keep pace with new deliveries. Investment remained active, with pricing and cap rates reflecting a more selective capital markets environment. Jacksonville retail fundamentals remained steady in Q1 2026, supported by positive absorption and moderate rent growth. Jacksonville Retail Supply & Demand Dynamics Source: CoStar Group, Inc. Jacksonville Demographics Source: CoStar Group, Inc. Unemployment Rate: 4.5% Current Population: 1,782,524 Households: 857,134 Median Household Income: $85,434 Jacksonville’s retail market continued to benefit from steady economic and demographic growth in Q1 2026. The metro’s diverse employment base, anchored by logistics, healthcare, financial services, military, and tourism-related industries, supported consistent consumer demand. Population growth remained an important driver, as in-migration and household formation expanded the local customer base. Continued residential development across suburban areas also helped support neighborhood and convenience-oriented retail demand. Employment conditions remained broadly supportive, though higher operating costs and interest rates continued to influence business expansion decisions. Retailers remained focused on locations with strong traffic patterns, population growth, and access to higher-income households. Population, Labor Force, & Income Growth Source: CoStar Group, Inc. Major Financial Institutional in Jacksonville Source: CoStar Group, Inc. Bank of America Wells Fargo BBVA Truist Jacksonville Retail Construction Development remained active yet manageable in Q1 2026. The market had 572K SF under construction, indicating continued developer confidence in select submarkets. New deliveries totaled 200K SF during the quarter. Development activity was likely concentrated in high-growth suburban corridors where residential expansion has created demand for additional retail services. Much of the current pipeline is expected to favor necessity-based, restaurant, service, and small-shop formats rather than large speculative centers. The scale of construction remains meaningful but not excessive relative to the market’s current vacancy position. With vacancy below 5%, new supply should help meet demand in constrained trade areas. Overall, the construction pipeline appears balanced, though its impact will depend on location quality and tenant preleasing. SF Construction Starts Source: CoStar Group, Inc. SF Under Construction Source: CoStar Group, Inc. Jacksonville Retail Sales Retail investment activity in Jacksonville totaled $187 million in Q1 2026. The average price was $239,000 per square foot, while the market cap rate stood at 7.2%. Sales activity indicates that investor interest remained present, particularly for stabilized assets with durable income streams. Buyers continued to favor centers with strong occupancy, credit tenancy, and exposure to growing residential areas. The elevated cap rate reflects broader capital market conditions, including higher borrowing costs and more disciplined underwriting. Pricing remained sensitive to asset quality, lease rollover risk, and tenant credit. Grocery-anchored and necessity-based centers likely attracted the most consistent demand. Investors remained selective, but Jacksonville’s population growth and stable retail fundamentals helped support liquidity. Overall, the sales market was active but cautious, with capital focused on assets offering reliable cash flow and long-term demand drivers. Sales Volume Source: CoStar Group, Inc. By the Numbers Q1 2026 | Source: CoStar Group, Inc. Sales Volume: $187M Price Per SF: $239 Cap Rate: 7.2% Vacancy Rate: 4.9% Rent Growth: 2.0% Asking Rent Per SF: $26.12 SF Under Construction: 572K SF Delivered: 200K SF Absorbed: 91.8K

Jessica Humphreys

Associate

6/5/26

From Peak to Discipline: What Has Changed in Multifamily Investing

The multifamily market over the past few years has not broken, but it has clearly reset. At its peak in 2021 and early 2022, the sector was defined by abundant liquidity, aggressive pricing, and a broad expansion of the buyer pool. Capital was widely available, debt was cheap and flexible, and underwriting often leaned on continued rent growth and cap rate compression to justify pricing. Competition for assets was intense, and transactions frequently moved forward on compressed timelines as investors raced to deploy capital in a market that appeared to be accelerating. That environment has meaningfully shifted. Higher interest rates, rising operating costs, and tighter capital markets have forced a recalibration across nearly every part of the investment process. The pace of transactions has slowed, financing structures have become more conservative, and investors are spending more time evaluating operational and financial risks before committing to acquisitions. Today’s market is more measured, more selective, and increasingly driven by execution rather than momentum. A Buyer Pool Defined by Experience At the height of the market, access to capital and deal flow expanded rapidly. A new wave of syndicators and first-time operators entered the space, many drawn by the visibility of outsized returns and the perception that multifamily was a one-directional trade. In many cases, those groups were willing to take on higher leverage, shorter-term debt, and more aggressive assumptions in order to win deals. Execution risk was often underestimated, and underwriting frequently left little margin for shifts in interest rates, operating costs, or leasing performance. As liquidity has tightened and capital has become more selective, the buyer pool has shifted back toward more experienced operators and well-capitalized investors. Institutional buyers, established regional operators, and experienced groups are again dominating transaction activity. Meanwhile, many newer entrants have stepped to the sidelines or are working through assets acquired under more optimistic assumptions. At the same time, investors who allocated capital during the peak are now placing greater emphasis on track record, discipline, and operational capability when selecting partners. The focus has shifted away from rapid growth and toward consistency and execution across market cycles. The result is a more competitive environment, but one where bids are grounded in fundamentals. Source : Altus Group Operations Have Moved to the Forefront If the previous cycle was driven primarily by revenue growth, the current one is defined by cost control and operational efficiency. Operating an apartment asset today is materially more complex than it was just a few years ago. Property taxes and insurance costs have risen sharply in many markets, particularly in high-growth Sunbelt regions where reassessments and natural disaster risk have pushed expenses higher. Payroll costs have increased as operators compete for skilled maintenance and leasing staff, while construction-related inflation has raised the cost of unit turns, repairs, and capital improvements. At the same time, rent growth has slowed significantly from the historic levels seen during the pandemic-era housing shortage. In some markets, new supply has created short-term pressure on occupancy and pricing power, requiring operators to compete more actively through concessions, marketing, and resident retention strategies. Delinquency has also become a more meaningful variable in certain tenant segments as household budgets adjust to higher living costs. These pressures have compressed margins and exposed operational inefficiencies that may have gone unnoticed in a rising market. In response, owners and operators are placing greater focus on expense management, process improvement, and scalability. Portfolio-level purchasing, centralized leasing models, and more data-driven asset management are becoming increasingly common. Technology is playing a larger role as well, with many groups exploring ways to integrate automation and artificial intelligence into leasing, maintenance scheduling, and back-to-office operations. Performance today is less about how quickly rents can be pushed and more about how effectively an asset can be run. Financing Has Shifted from Aggressive to Defensive Debt strategies during the market’s peak were largely built around speed and flexibility. Bridge loans and floating-rate structures were widely used, often paired with value-add business plans that relied on near-term rent growth to drive refinancing or sales. In a low-rate environment with strong demand for housing, that approach allowed investors to amplify returns while maintaining relatively short hold periods. Many of those loans are now approaching maturity in a very different capital markets environment. Higher borrowing costs and lower asset valuations have created refinancing gaps for some properties, requiring additional equity contributions, loan modifications, or extensions. In certain cases, assets acquired with aggressive leverage have become difficult to refinance altogether without substantial restructuring. That experience has driven a clear shift in how investors approach financing today. There is a renewed preference for longer-term, fixed-rate debt, often sourced through agency lenders or other stabilized financing channels. Investors are prioritizing lower leverage, stronger debt service coverage, and structures that provide flexibility across changing market conditions. Debt is no longer viewed simply as a tool to enhance returns. It is increasingly treated as a central component of risk management. Underwriting Is Grounded in Reality Perhaps the most meaningful change is in how deals are evaluated. Underwriting often relied heavily on forward-looking assumptions to justify pricing. Rent growth projections were frequently aggressive, expense growth was understated, and exit assumptions often depended on continued cap rate compression. In today’s market, that approach no longer holds. Underwriting has shifted towards in-place performance and downside protection. Rent growth assumptions are more modest and frequently aligned with long-term historical averages rather than short-term spikes. Expense projections are more conservative and reflect the persistent inflationary pressures affecting property taxes, insurance, and labor. Exit cap rates are typically modeled wider than entry, and sensitivity analyses have become a more prominent part of the investment process. Just as important, there has been a shift in how investors think about value. Where cap rates once served as the primary lens for evaluating acquisitions, basis has taken on equal importance. Investors are increasingly focused on replacement cost, comparable sales history, and the long-term durability of an asset’s location and tenant demand. Rather than simply asking what yield a property offers today, buyers are asking whether the entry price provides sufficient protection across a range of economic outcomes. Where Investors Are Focusing in 2026 While underwriting standards have tightened, capital has not disappeared. Instead, it has become more targeted. Investors are increasingly concentrating on markets with durable population growth, diversified employment bases, and long-term housing demand. Several metropolitan areas stand out as focal points for multifamily investment in 2026: • New York, NY • San Francisco, CA • San Jose, CA • Boston, MA • Chicago, IL • Atlanta, GA • Washington, D.C. • Northern New Jersey • San Diego, CA • Orange County, CA Source: Matthews™ Research These markets share many of the characteristics investors now prioritize: population growth, constrained housing supply, and employment drivers capable of supporting long-term renter demand. An Ever-Evolving Cycle The current multifamily environment is marked by greater discipline, yet it is far from static. Real estate markets inherently move in cycles, with investor behavior closely following shifts in liquidity and capital availability. As interest rates stabilize and transaction activity gradually increases, risk tolerance is likely to expand, drawing new participants into the market. The caution and selectivity that define today’s conditions will eventually give way to renewed competition for assets, a dynamic that has repeated across past cycles and reflects the enduring rhythms of real estate investing. This ongoing reset does not eliminate future volatility. Instead, it provides a clearer framework for evaluating and managing risk when market conditions are less forgiving, allowing investors to make informed decisions that balance opportunity with prudence. The multifamily sector today is defined less by rapid appreciation and more by execution and operational precision. The buyer pool is more experienced, financing is structured with stability in mind, and underwriting reflects a broader range of potential outcomes. Those best positioned in this environment are not counting on a return to peak conditions. Rather, they are the investors who can operate effectively within current constraints while remaining agile enough to respond as the cycle inevitably shifts again.

Austin Graham

First Vice President & Associate Director

6/2/26