← The TreppWire Podcast: A Commercial Real Estate Show
The TreppWire Podcast: A Commercial Real Estate Show
381. Quiet Week, Loud Signals: Data Center Hyperdrive, Industrial Rankings, Office & Retail Trading Alerts
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Foreign.
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Welcome to the Tripwire Podcast, the show where commercial real estate meets data and insights. This is our Week in Review for the week ending February 20, 2026. I'm Haley Keen with Trep, a data modeling and analytics firm for the CMBS commercial real estate and CLO markets. I'm with Lonnie Hendry, Chief Product Officer, and Steven Bushbaum, Head of Applied Research and analytics. This week, markets processed softer than expected inflation data, with CPI coming in below forecasts and core inflation hitting its lowest level since 2021 offering some relief on the price front. Investors are also parsing the latest Fed minutes and looking ahead to revised gdp, PCE inflation, trade data and pending home sales in a shortened holiday week. On the surface, it's a lighter macro calendar. Underneath, though, important signals are still forming, from labor share trends to housing activity and capital flows. In this episode, we'll dig into several CRE themes shaping the market right now, including capital markets, repositioning, affordable housing, supply trends, new information for the multifamily market and data centers and shifting ownership structures. We'll also share multiple TREP trading alerts across office and retail, highlight notable deals and property level data, and add a special digging through the data segment focused on industrial performance rankings and credit trends. Steven, On a quieter week like this, what signals are you watching most closely and what should our listeners be paying attention to beneath the headlines?
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Well Hayley, you're right. On paper, this definitely looks like a quieter week. It's thin on data releases, but these kind of weeks are where the market can actually tell you more because the noise level is lower, there's less distractions, less distortions, and so what matters most is going to bubble to the surface more clearly. So the first signal I'm watching is how rates react to the softer inflation print. It's one thing for CPI to come in cooler, but it's another thing for the bond market to actually believe it and trade on it. So I'm paying close attention to whether treasury yields actually stay lower. And just as importantly, what happens to credit spreads in Siri. The real story isn't just where the 10 year is headed or these days. It feels like we're also watching the five year equally as close because duration has pulled in a lot across both Siri and Resi space. So it's not just the 10 year or 5 year rate, but it's the all in cost of capital and that's really what matters most. Second, I'm watching the Fed narrative that's coming out of the minutes and the data Stack this week including GDP revisions, PCE and the housing numbers. Even in a shortened week, those releases can reinforce a key question. Are we drifting towards a softer landing or just bouncing around? And for CRE that shows up through liquidity lender posture such as what gets refinanced, what gets extended and what gets priced to move. Third beneath the headlines, I'm tracking capital flows and transaction behavior. If buyers are stepping back in, you'll see it first in the places where the bid ask spread is narrowing, like in certain pockets of industrial, well located retail and parts of multifamily while other sectors are still working through repricing and ownership transactions. So for listeners this week, don't just watch the economic releases, watch the market's response to them. Look at yields, spreads and deal terms. That's where you'll see whether confidence is really returning or if we're still in this wait and see mode. And that sets up a lot of what we're going to talk about today across capital markets affordability and sector level trading alerts.
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Yeah, short week, I think there's still plenty of news for us to cover, Stephen, and you give us a really nice overview of some of the things that are top of mind. I think the all in cost of capital question is what we've been harping on for the last couple of months. And I think we're going to start seeing play itself out here now that we're maybe getting a little better indication of where the 10 year is going to be and where inflation actually is in 2026. And so, you know, I'm optimistic that that's a favorable tailwind for CRE as we kind of enter into this new cycle. And I think on the transaction side, you know, at any hint of, you know, kind of a more borrower friendly marketplace or more competitive lending environment where you're seeing spreads compress and you're seeing lenders aggressively fight for deals, you're going to see that transaction velocity you talked about pick up pretty significantly. And I think, you know, as we go through the segments today, we'll highlight some of the industrial transactions and just the industrial sector as a whole. There's definitely some green shoots in industrial even despite some of the broader headline narrative that they've kind of reached the peak or that that sector is starting to cool off. I think there's still some real positive momentum for industrial market specific obviously which will be interesting just to kind of work its way through. I will say though, as we kind of get into some of the headlines this week, you Know, the soft landing narrative. I mean, we must be on a jet that has an infinite supply of fuel because we've been talking soft landing since I didn't have gray in my beard. And for those that have seen me recently, I have plenty of gray in my beard at this point. So, you know, soft landing at this point, if that thing hasn't landed, I don't know, I'm either super excited to be on a plane that never has to land or I'm wondering if this thing will ever land. Right. So, you know, you hit on a couple of things. Consumer prices rose 2.4% annually in January, which was less than expected. Cost of goods and services, you know, rose at a slower annual rate than expected, which, you know, I think, you know, as you mentioned, Stephen provided some hope that maybe this nagging inflation problem is finally starting to ease. So if you exclude food and energy, core CP was up 2.5, which is the lowest level since April of 21. And if you look at the economists that were surveyed by Dow Jones, they've been looking for an annual rate of 2.5 for both readings. So I think this is actually positive news. When you look at what this latest print was. We'll see, as you mentioned, if the market reacts similarly.
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Yeah, you know, it's funny, like the treasury yield response to this was decline.
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Right.
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Treasury's rallied really nicely. It's actually fun to go back and look at the price chart to see exactly how this movement played out last week. Like all in, from peak to trough, high to low. Last week I think we dropped right, about 14 basis points. We've given some of that back. But it was just funny when that release came out, I was listening to some of the narrative and it's like, oh well, traders are now pricing in maybe a greater chance of a Fed rate cut near term. Like really? Because last time I checked, Fed target is still 2% and we're nowhere close to that. So really what I think matters more right now, it's going to be the labor side of the equation. I mean, you look at what's gone on around the globe and there's been plenty of central banks that have cut rates with inflation hovering in the mid twos to maybe 3%. And really it's the labor weakness that matters more, I think in the balance right now. So in other words, yeah, we could get a Fed rate cut, but I don't see it coming from inflation prints unless all of a sudden they fall off a cliff, which is not going to happen. It's going to be coming from labor weakness. And that's just something that we're going to have a really tough time reading through because you get these kind of hyperbolic headlines saying, oh, we're all going to lose our jobs and AI is going to take our place. But then when you scratch beneath the surface, the reality is that's not happening anytime soon. Like in the long run, we're probably underestimating the seismic shift that's going to happen, but in the near term, we're definitely overestimating.
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Steven, I wanted to come back to something you mentioned on that last piece of the 2% inflation target and how we're not even really close to that. Is this one of those things that you think over time going to see an evolution where two and a half becomes two, three becomes two, like the markets just generally accept? Or the Fed comes out and says like target rate is no longer 2%. Obviously you have the labor stuff that you highlighted, but it feels like the hard line around 2% inflation seems to be waning at some level.
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You know, it, it wouldn't surprise me if eventually that happens. I, I don't know though. The Fed's a fickle beast. I feel like if I'm going to err on calling this one way or the other, I'm going to guess they stay anchored at 2% rather than make a change for a range bound or even elevated just for fear of inflation creep. But if they were to move, I feel like there's plenty of support to say production capacity and productivity for the economy as a whole has improved such that we feel like we can maintain a slightly higher pace of inflation without running the economy hot than what was historically possible. Now that's a feasible defensible route to take. But I don't know. I think the Fed's pretty entrenched with their 2% target.
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Yeah. And I actually think it's good. I think they should stay anchored to two. The Fed minutes have come out. Basically they're just little appetite for, for any type of rape moves that looks like I think to your point earlier, they're, they're going to be some more pause. I think just given where we're at in the cycle. So, you know, we'll be, we'll keep this top of mind and be something that we continue to talk about. We do have some other noteworthy, you know, part of having a weekly show is sometimes the data delivery doesn't coincide perfectly when we record. But this week you have national association of Realtors releasing its January data on pending home sales, which gives us a really great indicator of housing activity. And then you have the Bureau of Economic Analysis that's going to release its Revised estimate of GDP for the fourth quarter, 2025, and the Department of Commerce, which is going to release December's Personal Consumption Expenditure Price Index, which is the Fed's preferred inflation measure, as you mentioned. Every time, Stephen, you know, that report measures changes in the price of goods and services. So some of these things we'll probably circle back to at some level next week since the releasing of that data doesn't coincide with our recording. But, you know, a couple of other headlines that did make their way to us this week is, you know, Paramount's renewed Warner Brothers bid. You know, we've covered this fairly extensively over the last couple of months, and it seems like the production giant still prefers Netflix buyout offer over Paramount. And so, you know, is this like, is this intentional suspense and drama?
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I feel like it might be. I mean, you can't give up too quickly, quietly, easily on a deal like this, right? Like, if this is your industry, this is what you do. I feel like you have to put up this kind of a fight just, just to save face.
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I just want to know who's going to host the, the made for TV movie of this when it all plays itself out.
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Oh, I'm sure there's been lots of sleepless nights and long hours and, you know, heaven knows what kind of war room chatter that's been going on over this. You gotta wonder like, how much more effort you really want to put into it, though, when Warner Brothers has said, well, we'll engage in discussions with Paramount. I don't know the way it's phrased.
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You know, what's interesting to me is at some level, don't you have to put the shareholders first? I mean, like, if there's such a huge delta between the two offers, I mean, I think the longer this plays out, it's got to be in Paramount's favor because they have a clearly higher offer than what Netflix is making. I mean, it's like pretty significant, right?
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It is. So we'll see how this plays out. I mean, I think it's quite clear for right now, this thing is not even close to being put to bed.
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Did you see the Kennedy Wilson announcement? So they agreed to go private in a $1.5 billion deal from the CEO led consortium.
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Yeah, that's a solid deal. It's anticipated to close in the second quarter of 2026. The consortium said that the private ownership would reduce the cost and administrative burden of being publicly listed, allowing management to focus on its strategy. I like that. You know, just clear cut. Look, this business is going to run smoother and easier if we just delist. Right. If we go private, this will be better for everyone.
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I think you're going to see a lot more companies take this route. And then we've, we've talked at some level about some companies just never going public because they don't want all of the extra pressure. And as long as the, they can raise capital and you know, credits available through private mechanisms, then I think this is a superior path for a lot of firms.
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If you're in that stable value phase, this makes a lot of sense. But obviously if you're still trying to grow and expand and need that additional capital markets flexibility, yeah, perhaps staying in the public arena makes sense. But I like this move.
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And let's dig a little more into the housing, affordable housing and multifamily markets. We saw some trade organizations this week release new data, one of which is about affordable housing. And this comes from the National Low Income Housing Coalition. And they reported that There's a shortage of 7 million affordable homes for 10.8 million low income families. So let's talk about the findings in this latest report and then a little bit about what we know about the affordable housing and low income housing market.
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I mean that's a substantial housing gap. 3.8 million million unit deficit for low income families. One of the findings, the report said that since 2012, the number of rental units priced below $1,000 per month has dropped by 24%. That's absolutely wild. So these statistics and others provide compelling evidence of the problem that I think we're all at least aware of at some level. However, a recent Rent CAFE report offers some additional data. Since 2020, nearly 310,000 affordable rental have come online with close to one third of those deliveries coming in 2024. The study's results weren't exactly unexpected given a supportive policy environment over that time. So to quote the report's author here, he says that what stands out is the magnitude of the growth. A 73% increase in affordable housing construction between 2020 and 2024 is indeed unprecedented, particularly in high cost markets like Seattle and New York City, where building affordable housing has long posed significant challenges. He added that the report focuses exclusively on affordable buildings. It doesn't include units developed through inclusionary zoning or mixed income projects, which contributes more to the supply. So one reason for the uptick in affordable housing builds is due to The American Rescue Plan, which has helped move things forward by directing billions of dollars into housing through state and local fiscal recovery funds. Additionally, at the state and local level, governments have reinforced these efforts with their own incentives, including state housing tax credits, zoning reforms and streamlined approval process. Also back in 2018, the Low Income housing tax credits income averaging provision allowed rental housing developments to be made available to a wider range of incomes even as they qualified for tax credits. They explained that the process has helped strengthen project economics. So Lonnie, I think we just had some new releases in our project that target this exact incentive program. Is that, is that right?
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Yeah. So we actually in our trip CRE product have flagged all of the low income housing tax credit properties in our data set. So now they're easily searchable, you can find them. And we know this is a pretty long standing solid part of the affordable housing ecosystem. And you know, with, with some of the increased new construction projects that have been discussed in this article, it's now super easy for you as a user to information about those properties in our products and platform. And so we'll continue to, you know, evolve the products as the market evolves and try to keep track. I mean affordable housing has been a hot button topic for some time and we're trying to bring real time insights and perspective across those those topics to our users. And so you know, I think what's interesting here, I know we don't want to belabor this and we can move on to the next segment here, Stephen, but while 73% increase in affordable housing construction is maybe unprecedented, if you dig a little deeper and actually see what those construction costs were for those units on a per unit basis in almost every single instance, these were either statutorily or building code required affordable housing from a development perspective. And they're being delivered at 2 or 3x what typical private developer construction costs would be. And so it's exciting to see maybe a little bit more supply hitting the market. But if you remove some of the burden and just allowed the free market to deliver these, I think you could deliver some multiple of the units at a fraction of the cost.
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So if any of our listeners out there are interested in this data or are looking to do a deeper dive into the sector, TRUP has a lot of additional data that isn't always immediately obvious. And just to toss the idea out there, TRUP does offer advisory services and BESPOK research. So if this is a topic that you're interested in, we'd love to talk to you. Please feel free to Reach out. And we're more than happy to engage. We have some, I think, very rich, very interesting data that can dive deeper into this particular niche of the multifamily market. So if you want to reach out to us@podcastrupp.com, we would love to engage. All right, so sticking with the multifamily market, we had a couple of articles published this week from the national association of Home Builders and National association of Realtors, both talking about how the multifamily sector is positioned in 2026. So going into 2026, we've had a pretty clear theme. The market is cooling, but it's not collapsing. And the story is increasingly regional. On one side, we're still digesting the tail end of a major supply wave. And the national association of Home Builders notes that the national multifamily vacancy rate hit 7.3% in December. That's wild. I mean, it's been a while since we've seen that creep up to the mid single digits like that. They frame it as new units colliding with sluggish demand. Even though we're past the peak of the construction surge, that supply pressure is showing up in rent performance as well. The NAHB points out that multifamily rents were down about 1% year over year, with strength holding in more supply constrained metros like Chicago, New York and Philadelphia. While rent weakness shows up in supply rich markets like Phoenix, Tampa and Las Vegas.
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I didn't read the piece in full detail, Stephen, to see exactly what the date range or the parameters were on the study, because I think from the data I've seen, that vacancy rate seems a little high given where we are today. I think national vacancy rate is probably somewhere in that 6, 6 plus range, maybe not 7 anymore. And I definitely think that we're starting to see certain markets come back with some positive rent growth. And so while this is a national piece, and so you're going to get the good with the bad, there's definitely some positive stories as it pertains to rent growth across the U.S. yeah, I
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mean, I think just to kind of summarize the overlap between these two pieces, we should see a material drop in supply at least through the back half of 2026. And if you look at permits and starts, basically all of the construction data, we should start seeing normalization here. But we're still very much burning off some of the lease up concessions for these new projects. So the bottom line is we're probably still looking at another six months of softness in multifamily rents and vacancy numbers. But over the back half of 2026, I'm hoping to see a stronger normalization in market trends.
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So let's pivot here to a hot topic as of late, data centers. We just saw JLL's year end 2025 North America report, which basically says the sector is still in hyperdrive and the constraint isn't demand, it's available capacity and power. So walk us through what the JLL report showed and what we're seeing with data centers.
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So let's start with one of the major headlines here. Vacancy is at 1% for the second straight year. That's amazing. 1% vacancy. Is that even vacancy when you're at 1%?
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Lonnie no, I mean, listen, that's less than frictional vacancy that you would underwrite when something's 100% occupied. So I think that's just to make it look like they didn't say it's 100% occupied. They had to have some vacancy factor.
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So that's a big statement in a market where some people still ask, is this a bubble? JLL's view is it's hard to square bubble concerns with 99% occupancy, especially because a huge share of new supply is already spoken for. They estimate that 92% of capacity under construction is pre committed through leases or owner occupied hyperscaler builds. So net net, they expect vacancy to stay in the low single digits through 2030. Now the supply wave is real. More than 35 gigawatts is under construction in North America. Or if you're a fan of Back to the Future, I believe it would be 35 gigawatts. Anyway, we've kicked that around on the podcast before. I just had to give Doc Brown a shout out there. So 35 gigawatts is under construction in North America. But what's really challenging, but what's really changing is where it's happening. JLL says 64% of the capacity under construction is now in frontier markets outside of the traditional hubs, with examples like West Texas, Tennessee, Wisconsin and Ohio. And they go a step further. Texas, viewed as one market, is positioned to overtake Northern Virginia as the world's largest data center market by 2030, with 6.5 gigawatts under construction in Texas alone. Pricing is moving the way you'd expect in a scarcity environment. JLO reports Data center rents rose 9% in 2025 and larger requirements are getting hit even harder. Listings over 1 megawatt saw premium increases around 13% they also note rents are up about 60% since 2020 and that many new leases are baking in 3% plus annual escalations with limited concessions. Which is why tenants are increasingly locking in capacity years ahead of delivery. And the why behind all of this? Hyperscalers and AI JLo flags top five hyperscalers announcing roughly $710 billion of planned 2026 capex. And they link pure play AI companies to about 10 gigawatts of project announcements in 2025. The catch is infrastructure. JLO says grid connection timelines average four years or longer, which is pushing strategies like interim power solutions and accelerating the move to markets where power is more attainable. To go a little bit off topic here, when I was listening to one of the C suite folks over at ge, their natural gas powered turbines business is absolutely killing it. I mean the forward contracts for construction on those gas powered turbines are. It's amazing. Like the two to three year construction timeline is just. It's fully spoken for. So there's a lot of trickle down benefits for this construction. Finally, capital markets. JLO frames the sector as maturing fast with abs volume exceeding 17 billion in 2025 and SASB lending over 11 billion alongside larger and more complex structures like JVS and preferred equity. So the takeaway data centers remain one of the tightest real estate supply demand setups out there. But the next chapter is increasingly about power procurements, delivery timelines and geography, not just leasing demand.
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I mean, I have to say I think this is a great article that kind of goes through exactly where we are with data centers. I wouldn't underestimate Texas's interest, capacity determination, government support for becoming an epicenter of data center construction. If you look at the West Texas markets, I mean it's poised for that type of development. And I don't think people generally realize just how expansive land is in Texas now. Obviously getting power out there is going to be a challenge at some level, but it's a challenge everywhere. And you have a very business friendly legislature here in Texas that would certainly welcome the opportunity to claim the mantle as the data center hub of the future. You know, some of these other markets is it. It's interesting. If you look at Wisconsin and Ohio, the weather's not super conducive. They have some pretty dramatic shifts in weather. I don't know how much of an impact that that is for them. Maybe the cold weather is okay because of the heat that's produced. I think it's mostly flooding that they're concerned about obviously, but it's nice to see some of these states step up. I'm sure Virginia, you know, at this point they wish they had more land and capacity because they obviously have some synergies and economy of scale benefits already. But what we've seen is investors will find the next available market when you run out of supply. And it feels like this is where we're at, you know, in terms of the bubble talk, that's not going to go away. I like the rationale saying that if you're 99% occupied, the data says what the data says, like not really in a bubble, but at the same time just the amount of capital flowing into this market, it's just so unprecedented that you just don't know how long, what the staying power is. And you know, I think we're starting to see some pushback as residential electricity rates and other things start to spike in some of these markets. You might start seeing people push back more than what they have in the past. So definitely something that's worth keeping an eye on. And I think, you know, I'd love to see a power breakthrough because if we, if we can get that, then it just unleashes this. And I think what we're seeing today in terms of spend could be dwarfed if we could get sustainable, you know, big scale power availability for these data centers.
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Yeah, there's been some pretty amazing breakthroughs over the last two years that I've read about. Just we need quicker time to market and scalability. I mean, you keep hearing about small scale modular nuclear reactors. There's been some even pretty promising breakthroughs with fusion. I mean, gosh, talk about solving the world's problems right there. We could get fusion, you know, stable and at a reasonable cost and safely. That would be amazing. But I think probably the most promising route right now. It could be wrong, but it seems like the most promising route is small scale modular nuclear.
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I don't know if you saw the stuff this week. There were a couple articles out about underwater data centers in China. So I mean it's, it's interesting kind of the, the talk track. It's either space or it's underwater. We'll see what prevails. I am with you. I think some of the small scale nuclear is probably the path that wins. But even then takes time to get those things developed and put on in place and connected. But I think with the current administration, now is the time for people that are entrepreneurial to try to get that in place before, before you have a shift of thought process relative to Nuclear power.
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Yeah, I mean, I wouldn't paint myself as like a traditional eco warrior here, but you know, it sounds like a terrible idea to me, Lonnie, putting a data center underwater. I mean warming, warming of the world's oceans has been a problem for 30 years now. And anybody who's seen bleached coral reef, you know, kind of, I feel like, has an appreciation for this problem. So hopefully we can find some other viable power alternatives here.
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Yeah, I agree with you. I mean it's, it's one of those things where it just doesn't make sense logically. Right. For the reasons you mentioned. And we already have depleted resources from the ocean and overfishing and coral reef decline and everything else like this would just accelerate that at a scale probably not seen in our lifetimes.
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What happens when a CMBS loan falls apart? In today's market, the CMBS special servicing rate is almost 11% and many securitized loans are struggling. It may be a good time to check in with our friends at the Henley Group. They are experts in CMBS and CRE C loan modifications and restructures. They have been trusted advisors to borrowers facing challenges with their CMBS loans for over 15 years and they have obtained an extraordinary success rate for their clients. If you are having issues with a securitized loan, they are definitely the team to reach out to. We know the team behind the Henley Group well and they are great people. We are confident they will give you valuable advice. Visit thehenleygroup.com for more info or send us an email and we will connect you with the team. So let's go further into our data and dig through it looking into some of our TREP CRE data. And this comes from a feature within our product called Trends and Rankings. We wanted to focus on industrial today and look at industrial occupancy rankings. Industrial weighted average revenue per square foot, delinquencies and origination. So Steven, give us the latest on what we're tracking for the industrial market.
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So the first stat that I wanted to dig through here was occupancy. So I looked at industrial property overall which, okay, I know there's a lot of different types of industrial, but let's just group this all into one collective property type across all capital sources. So cmbs, sasb, Conduit, creo, just everything. And look at weighted average trailing twelve month occupancy at the MSA level. So if you look at the top 25 largest MSAs by population size, number one on the list is the Charlotte MSA. Coming in at 100%. Next up, you have Pittsburgh, Pennsylvania. Then you have St. Louis, Riverside, San Bernardino, Phoenix, New York, San Francisco, Baltimore, Minneapolis, and Portland. So the first three markets I mentioned, Charlotte, Pittsburgh, and St. Louis, all are at 100%. And then those next seven range from about 98 and a half to 99.8%. So pretty much full up, incredibly tight.
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C
If you look across the top 25 MSAs there, Steven, but just over 92.33% occupancy. So, you know, you definitely have some of the top 25s at, you know, considerably less than 100, but still a really strong occupancy across the sector, especially in some of these major metros.
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Next, this is an especially fun statistic. It's the weighted average revenue per square foot rankings. Again, all industrial, all capital sources. Top 25 MSAs. So, Lonnie, pop quiz here. What do you think the number one ranking market on industrial rents would be?
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C
If I was guessing, I would say somewhere in California, Inland Empire, or somewhere super supply constrained with really strong demand.
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You got it. San Francisco.
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C
I believe it, because I know those markets in California. Remember when we had the shipping containers that they had no place to put the containers. They were locked out at the bay because there was nowhere to put them for the last, you know, couple of years after Covid. Demand seems to be really, really incredible there. But I, I remember when in top tier markets we're getting, you know, 10, 12, $14 a square foot rent was kind of what was top tier. I mean, like, if you had a really solid building and a great location with a, with a good tenant, you know, if you got 20 bucks a square foot, you were doing something that nobody else in the market was doing. And it's amazing just to see what these things have done.
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Well, in terms of the rest of the rankings, number two and number three ranking here is probably no surprise. Either you have New York, followed by LA, and then rounding out the top 10, you have Philadelphia, Riverside, San Bernardino, Chicago, Miami, Houston, St. Louis and Seattle. Now, just to round out our statistics here, next we'll turn to delinquency. Obviously, with those occupancy numbers that we saw along with the rents, that should translate into low delinquency. And that's exactly what you see. The market with the highest delinquency rate of those top 25 markets is the Chicago MSA, clocking in at 2.45%, followed by Boston at 1.73%, Tampa at 1.24%, New York at 1%. And Philadelphia at 0.68%. And then it pretty much falls off a cliff. Once you get outside the sixth highest delinquency rate MSA, you're looking at kind of below 20 basis points would be considered high. The total weighted average delinquency rate for those top 25 MSAs is a whopping 37 basis points. And you have a number of MSAs with just no delinquent industrial loans whatsoever.
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C
Yeah, I mean, I think this is the most telling statistic here is just that these loans are performing. You know, there's no other equivalent. I mean, if you look at the Fannie and Freddie data, the GSE multifamily, they're at about 50, 60 basis points delinquency, respectively. Industrial is at less than 40 basis points. I mean, just incredible market resiliency.
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A
And then finally, the last data point we'll go through is the origination over the last quarter. So this would be for fourth quarter 20, 25 loan originations across all capital sources. For industrial, the Riverside San Bernardino market had the highest amount of originations over the past quarter at 593 million, followed by Atlanta with 470 million, New York, 436 million, Los Angeles at 328 million, and then Dallas Fort Worth at 316 million. And across all top 25 MSAs, total origination of 3.8 billion.
- [34:57]
C
Yeah, I think that stat just highlights that there's a pretty broad geographic dispersion across where these deals are taking place. And you know, something we haven't mentioned, Stephen, it might be a good time to walk through is just on these industrial deals, a lot of them are portfolio transactions. So really consolidated to a couple of major players across the space, whether it be Prologis, Blackstone, etc. That'll take down 100 or 150 properties per deal in these large industrial transactions. You know, as a composite portfolio.
- [35:25]
A
Yeah, I mean, consolidation is the name of the game on how you get scale here. If you are a large money manager and this is your sector play, you're going big and you're going aggressive. And then since we're on the topic of industrial, I just figured I'd toss out a couple stories, a couple property stories that we had across the desk this week. Equus Capital has purchased a Durham, North Carolina area industrial property for 46.9 million. That pencils out to $137 per square for the Falls Lake Commerce Center, a 341,000 square foot industrial complex in Butner, North Carolina, about 14 miles northeast of Durham, North Carolina. That news coming to us from Connect CRE. The Newtown Square, Pennsylvania company purchased the three building property from TPG Angelo Gordon of New York, which had bought it in late 2021 for 37 million. So that's a nice pop on price over just the last five years. Falls Lake Commerce center sits on 300 acres at 200 Business Park Drive and is fully leased to three tenants. The other transaction we had was a 247,000 square foot industrial building in Concord, North Carolina sold for 30 million. National Kitchen and Bath Cabinetry has purchased a 247,000 square foot industrial building within the Axial Bounds Farm industrial complex in Concord, North Carolina for 30 million or $121 per square foot. That news coming to us from the Charlotte Business Journal. The local cabinet supplier for homes and commercial businesses purchased the building from its developer, a venture of Crescent Communities of Charlotte, North Carolina and AEW Capital Management of Boston. CBRE brokered the deal for the seller while Whiteside Properties represented the buyer. Axial Bond's farm was built on a 70 acre site at 655 Pitt School Road and near exit 52 of Interstate 85 and Poplar Tent Road about 22 miles northeast of Charlotte Douglas International Airport. The three building property totals 809,000 square feet and was delivered in 2024. The deal also includes a 1.2 acre industrial outdoor storage yard that houses 65 trailer stalls.
- [37:37]
C
Pretty impressive, Stephen, that we're seeing industrial deals in North Carolina. Price at 121 and 137 dollars a square foot. I think on that last story the only thing missing was the lat and long location.
- [37:49]
A
I know very specific. Very rarely have we ever quoted the exit number on a deal.
- [37:56]
B
We had a lot of big trading alerts this week for our clients, so let's share a few of the high level details here Today. I'll start us in the office market. We saw a Queen's Office value slash below the loan balance and it received a loan extension.
- [38:13]
A
Yes, according to our February Remit data, the $300 million the factory loan was recently reappraised at a 62% reduction and the collateral value now sits below the outstanding loan balance. The Asset was appraised at 530 million at securitization in 2020. The most recent appraisal issued in November 2025, but was just posted in this most recent remit cycle value the property at 204 million. We last mentioned this loan in a September 2025 edition of TruckWire when it transferred to Special servicing for eminent maturity default approaching its October 2025 maturity date. While the loan had never previously been delinquent, it has remained in a non performing matured balloon status since the loan matured. The loan was originally underwritten with an October 2022 maturity, but the borrower exercised extension options pushing the maturity out through October 2025, according to CRE Direct. The borrower has since negotiated a two year extension pushing the maturity out to October 2027. The loan collateral is an urban office property in Long Island City in the New York City borough of Queens. It was built in 1920 and renovated in 2020, spanning a total of 1.1 million square feet. The top tenant is Advertex Communications with 13% of leased space through October 2031. During the first half of 2025, the loan posted a DSCR based on net cash flow of 0.55 times with occupancy of 73%. Both readings are down slightly from 0.76 times coverage and 76% occupancy respectively for the full year 2024 financials. The last time the loan had a DSCR above 1.0 times was in 2022 when the reading was 1.46 times coverage.
- [39:56]
C
Is that story what we call a mixed green? Stephen Value below loan balance, but they do get an extension.
- [40:02]
A
I think that's absolutely fair to classify this one as mixed green. And just in case any of our listeners have been reading the Wall Street Journal this past week, Trup was recently quoted in an article by Peter Grant on an article that was just published this week titled Lenders to Commercial Real Estate Pay Up Now. The delinquency rate for office building owners jumped to a record high last month. And I have a nice little quote here in this article. I did some digging through the data like I love to do, and the last time we saw the volume of unresolved matured loans this high was in the first half of 2013. So I tried to put as much context as I could around the volume that we're seeing of matured loans and what's going on with basically their performance. So it's interesting to see that where we're sitting right now, the volume of matured unresolved loans is actually not the record high for cmbs. I don't know, Lonnie, like was that if I had asked you, like, is right now the record high for unresolved office loans? Or have we seen higher before? What would you have thought when you
- [41:13]
C
look at the other property types coming out of the GFC, which some of them eclipse 20 plus percent. So for the office sector, I mean we've, we've framed this a hundred different ways, but they've been able to maintain an unprecedented level of resiliency in the face of some, you know, paradigm shift in terms of usage, perspective, utility, et cetera, et cetera.
- [41:36]
A
Yeah, for me it was just a reminder of just how ugly and just how bad things got between 2010 and 2012. I was looking at some of the dollar volume amounts for matured, unresolved. I mean it was like I, I, I lived through it. I mean I traded through that. It was, it was crazy. I was just wild to see those, those numbers. To me it was at least nice to see that this is not the all time worst stat yet.
- [42:02]
C
Well, you know, I think one, one key thing to consider too, Stephen, was that so much of the office loans and all property sector loans during that time had such inflated valuations and corresponding loan balances. Right. So leverage was much higher than what median leverage is during this. CMBS 2.0, 3.0, whatever. We're in a call where we're at now versus that 1.0 era. And there was really no pay down. And a lot of those loans as we know, were made on underwritten pro forma financials that never materialized. So you had a perfect storm for a lot of those instances.
- [42:37]
A
Oh yeah. I mean it was a five year loan. Pro forma financials didn't really cover debt service, was basically underwritten with a debt service reserve. So left hand paying right hand. It was, it was absolutely wild. Some of the deals that got done, we look at those now, we're like, wow, we had zero discipline.
- [42:53]
C
Well, I mean it just, you know, look, everyone was making money and until the music stops. You know, musical chairs is fun when the music's playing. It's not so fun when the music stops and there's nowhere for you to sit.
- [43:04]
A
So we did have one other office trading alert this week. It was for a Chicago office SASB loan that's transferred back to Special servicing. According to our February Remit data, the $133.1 million 181 West Madison street loan transferred to Special Servicing for eminent default. The loan is slated to mature in December 2026. As of February, the loan status is now in foreclosure, which is the second delinquency during the loan's life and first in the past 12 months. This is the loan's second stint in special servicing following a previous stay from November 2021. To November 2023. The prior borrower filed for bankruptcy protection in 2021 and a 2023 court supervised equity auction in September of 2023 yielded a loan assumption by a new borrower and a return of the loan to the master servicer. Special servicer commentary reported that this transfer follows the borrower's projection of negative cash flow in 2026 due to a contraction of space and initiation of a four month free rent period for the anchor tenant, Northern Trust that started in January of 2026. The borrower also indicated it will not fund operating shortfalls. The special servicer is now engaging with the borrower to determine next steps and evaluate resolution options. The loan also includes a $106.9 million non trust a note which matures in December 2026 as well. So in other words, this is a multi loan split loan structure. The loan Collateral is a 946,000 square foot office property in Chicago, Illinois. The top tenants include Northern Trust, Quantitative Risk Management and union tank car company. These tenants occupy 41%, 11% and 5% of rentable space respectively on leases that run through year end 27, March of 27 and February of 2039 respectively. So there is some significant near term lease expiration risk for this property. The most recent financials for the trailing twelve month period ended June 2025 show a DSCR based on net cash flow of 1.32 and occupancy of 87%.
- [45:16]
B
And in our retail trading alerts we saw a massive New York City SASB retail loan transfer to Special Servicing and this was actually the $1.3 billion Saks Fifth Avenue building loan and the transfer is coming in the wake of the recent Chapter 11 bankruptcy filing last month.
- [45:34]
A
So this is really more of a formality. I would say when you have the tenants, the namesake namesake anchor tenant declare bankruptcy, you're pretty much guaranteed that the loan's going to transfer to Special Servicer. So there was no special servicer commentary that was provided in this remittance report. But the transfer comes in the wake of the Saks Global enterprises recent Chapter 11 bankruptcy last month. The loan status remains current as of February and it has never been delinquent during its life. So I'm sure we'll have more updates as this bankruptcy progresses. The loan Collateral is a 655,000 square foot retail property at the southeast corner of 50th street and 5th Avenue in Midtown Manhattan. The sole tenant is Sachs and Company. During the first 3/4 of 2025 the loan posted a DSCR based on net cash flow of 1.61 times. Now we have another retail trading alert here. A new New Jersey shopping center value has been slashed below its loan balance. According to our February data. The $120 million Paramus park loan was recently reappraised at a 71% reduction and the collateral value now sits below the outstanding loan balance. The asset was appraised at $210 million at securitization in 2015. This most recent appraisal that was delivered in November of 2025 was just posted in this most recent remit cycle has valued the property at $61.4 million. We last mentioned this loan in an October 2025 edition of Trupwire when it transferred to special servicing for balloon payment maturity default after it failed to pay off at its September maturity date. The loan had not been delinquent prior to October 2025, but now shows a status of and foreclosure. Cash management began in October 2025 followed by a formal default notice that same month. Special Servicer Commentary reports that the borrower initially indicated plans to cure, but occupancy declined amid substantial near term lease rollover risk and now the servicer is pursuing note holder remedies while continuing discussions with the borrower, so more will come on this story. The loan collateral consists of a 308,000 square foot community shopping center in Paramus, New Jersey which falls within the New York MSA. The property was built in 1974 and renovated in 2002. Its top two tenants each hold about 5% of square footage are Old Navy and L.L. bean, whose leases expire in January of 2030 and 2027 respectively. During the first 3/4 of 2025, the loan posted a DSCR based on net cash flow of 0.91 times, with an occupancy of 87%.
- [48:08]
B
And moving on from trading alerts, I had another headline that caught my eye this week because we've been talking about this property and loan for years. The Palisade Center There was a headline in biz now that the Palisade center, one of the largest malls in the US has sold for $175 million after foreclosure.
- [48:29]
A
Yes, this follows after years of distress. The Palisade Center, a 2.3 million square foot mall in West Nyack, New York has sold for less than half the value of its troubled mortgage. Black Diamond Capital Management paid $175 million for the mall, the 12th largest in the U.S. a far cry from its listed price of 463.4 million. The sale puts an end to a foreclosure process that began in February 2023 after its prior owner, Pyramid Management Group, defaulted on a $418.5 million debt. Palisade center was put into receivership a year later. In October, Black diamond purchased the debt for 170 million. The firm, with approximately 11 billion in assets under management, was the sole bidder at the auction, the Rockland County Business Journal is reported. Spinoza Real Estate Group, the receiver tapped to manage the property in 2024, will continue to oversee operations and leasing. According to an announcement by Black diamond, the new ownership plans to invest in the property, maintaining it as a retail, dining and entertainment destination.
- [49:33]
B
And finally, speaking of retail and dining, we saw that Wendy's is going to close 300 plus stores as sales falter. How do you guys feel about Wendy's? We've talked about Whataburger, other fast food chains, but I don't know if we've, we've heard your opinions on Wendy's.
- [49:48]
A
You know, I'm a little bit sad about this one because I never made it around during the holidays to try their Peppermint Frosty. Didn't they come out with a Peppermint Frosty?
- [49:56]
C
Look, I'm, I'm, I'm good with the original Frosty. Some things don't need to be changed. They don't. We don't need pumpkin spice. We don't need Peppermint Wendy's Frosty.
- [50:04]
B
Didn't they have a green one too?
- [50:06]
C
I don't know what you guys are talking about.
- [50:07]
B
It might be confusing fast food chains, but anyway, they're closing some stores. How do we feel about that?
- [50:13]
A
Yeah, I mean, this is, this is a rough one. That's, that's 5 to 6% of its U.S. stores after sales declined the fourth quarter. I mean, I, I can't say I'm too surprised just based on surveying Wendy's drive thru traffic in my local market relative to their competitors. I mean, same store sales at Wendy's, nearly 6,000 U.S. locations declined 11.3% during the quarter, largely due to a decline in traffic, QSR reported. Brand's Global sales declined 3.5% last year. Interim CEO Ken Cook said the company will double down on Project Fresh, its plan to revitalize the brand, close underperforming stores and strengthen its financial position. Wendy's announced plans to close hundreds of stores late last year, including the 28 restaurants that closed during the fourth quarter. Wendy's expects to shutter about 300 to 360 stores during the first half of this year. This comes on top of Wendy's 240 stores closed in 2024, saying at the time that many of its locations were outdated. According to the Associated Press that reported
- [51:15]
C
this look, I mean, fast food is not cheap anymore and people are not going to go spend 12 or $13, $20 if you're in New York on food, that's not that great. And I think you're seeing a business model that's kind of played itself out here. We talked about it a few weeks ago, but I don't think Wendy's will be the last one that we see some of these legacy brands closing major parts of their footprint.
- [51:37]
A
I still have fond memories of the days of Wendy's all you can eat buffet bar. I mean, talk about dating myself with
- [51:46]
C
those fake bacon bits.
- [51:48]
A
Oh yeah. I mean, I don't know how many people remember this, but at Wendy's you used to be able to get spaghetti like pasta at the all you can eat bar tacos even. I mean, it's just wild. Good times.
- [52:02]
B
Okay, and we have a few programming notes this week. Stay tuned for several new research reports from our research group will be releasing another edition of our Life Comps report, which is our Life insurance commercial Mortgage return index. So if you're interested in what's happening in the world of life insurance, send an email to podcastrep.com and we can share some of the information we've revealed in the past and our upcoming report and also walk you through what the LifeComps data set entails. We also will be digging into some GSE research, so if that's something you're interested in, reach out to us. We'd love to chat with you, understand what you'd like to see surrounding the GSE data set and also get pick anyone's brains if that's your area of expertise. Steven, you've plugged your CMBS Maturity Playbook over the last several weeks and that report is now live on trep.com across our LinkedIn page on X. And you can reach out to us@podcastrep.com if you'd like to get a copy of this in depth playbook on CMBS Maturities that looks at lessons from 2024 and 2025 and our outlook for 2026. So reach out to us. We'd love to give you access to that report and hear your thoughts or get on a call with you to chat through some of the findings. As a reminder, our teams will be at the Structured Finance Association Vegas conference February 22nd through 25th. If you are in the world of CMBS or corporate CLOs, reach out to us. We'd love to book time with you there. We will also be working with our partner Numerix to share insights into our cash flows and our data integration. So come talk to us. If you're at that event, we'd love to meet with you. Or if you're not attending that event and want to learn more about our structured business, please reach out to us and we'll connect you with an extra expert. And then of course I can't close this podcast without plugging our Trep Connect in New York City conference taking place May 6th through 7th in Rockefeller Center. We are so excited to see so many of our listeners there. If you're not signed up yet, you have until the end of February to lock in your early bird discount rate. And if you're a listener of this podcast and you send us a note, we can also offer you an extra 100 off your ticket. We'd love to see you in New York City. It's a two day, action packed conference filled with high impact panels, keynote sessions, lots of chances to network and meet people in the business, and a chance to chat with the Tripp team. So reach out to us. We'd love to see you there. And finally, some shout outs. This week we had a lot of people engaging and sharing the Wall Street Journal article that covered our delinquency data. We also had coverage last week Stephen in our friend Diana Olich of CNBC's Property Play newsletter covering our delinquency data. So thank you to everyone on LinkedIn and X who reshared some of the findings and gave us shout outs there on X. The gymers said thank you for the podcast. It was out just in time for their flight to the east coast, so we love to hear when our listeners share when and how they're listening to the show. Gavin C Said, great insights from Trep on debt yields and shared some of the findings from some of our data we released in our daily newsletter. Tom T. Was interested in finding out some more details on who attends Trep Connect. If you want to see some of our past attendee lists or get a breakdown of our speakers or the audience demographics, please reach out to us. Sarah B. Said, great episode last week and is interested in finding out more about our Trep Connect conference. Michael C is looking forward to our Market Pulse webinar. As a reminder, we have our next edition of the monthly Market Pulse webinar taking place on February 26th at 12:30pm Eastern. So reach out to us if you'd like to sign up for the webinar. James S. Listened to our new episode with Larry Connor and said it was a very interesting and dynamic episode. So we'll give a shout out to Larry Connor, founder and Managing Partner of the Conner Group, a multi billion dollar multifamily firm. If you haven't listened to that episode, that was an extremely interesting one. Larry Connor is a dynamic personality in commercial real estate. He's really built a huge business there. He also does so much in the world of philanthropy and he also flies planes, does deep sea expeditions, and a lot of other cool things. So check out our episode 380 with Larry Connor if you haven't heard that yet. And Steven S. Was interested in the CMBS Hard Maturities Report, so we now have that released across our website. Lots of good stuff this week. Thank you guys. I'll give a special shout out to you, Lonnie, because I think you're doing this podcast and working through it with the flu. We'll add that to our list of weeks. We've continued to record this Trepwire podcast with any sicknesses or ailments, so thanks for powering through today. And with that we'll close. Thanks to our producer Mariana Sibrana. Join us next week as we look at what's happened during the week and how it may be impacting. If you have a question or just a comment, send an email to Podcast trap. Com and subscribe to the Tripwire podcast with your favorite provider. Thank you for listening and stay well.
- [57:23]
A
All right.