Deloitte just asked 950 commercial real estate executives where they are putting their money for 2027, and the housing group gave the strangest answer in the survey. Twenty two percent of housing respondents said they plan to divest or exit assets in the next twelve to eighteen months, the highest share of any property type Deloitte tracked. Office, industrial, retail, and data centers all showed less appetite to sell than multifamily.

That would make sense if multifamily were the sector still searching for a bottom. It is not. Look at the capital markets data instead of the sentiment survey and you get a different story.

Apartment values are still 22.3 percent below their July 2022 peak, according to the Arbor and Chandan State of the Rental Housing Market report released this month. That is the number owners carry around in their heads, and it is the number that makes a sale feel like a loss. But the peak was the top of a zero rate market that was never going to hold. The more useful comparison is to February 2020, before any of that distortion started, and against that baseline apartment values are up 7.0 percent. Multifamily did not crash. It gave back a bubble and is still standing above where it started.

The spread data backs this up. Cap rate spreads over the ten year Treasury narrowed to 118 basis points in the second quarter of 2026, versus a historical average of 289 basis points going back to 2010. A narrower spread means buyers are paying up relative to the risk free rate, which only happens when capital believes the risk in the asset has already come down. Lending standards and borrower demand are both moving back toward neutral. Supply deliveries are moderating, absorption is broadening across more markets, and occupancy is firming. None of that is a forecast. It is what already happened in the data this year.

So why are housing owners the most eager sellers in the Deloitte survey? Because sentiment lags data, and it lags it by roughly the length of a bad vintage. Deloitte’s own sentiment index fell to 57.8 this year, down from 64.9 last year and 68.3 the year before, the third straight annual decline. Executives are not pricing current fundamentals. They are pricing the memory of the two years they just lived through, cost of capital, rate volatility, and a supply wave that scared everyone before it got absorbed. Those are the top three concerns in the same survey, and all three describe conditions the capital markets data says are already easing.

I keep coming back to the same mechanism across property types, and it is at work here again. The investors who get hurt are not the ones reading the spread data. They are the ones who sell on the anniversary of the worst year, right as the professional capital that actually prices risk has already moved on. If you are holding multifamily that cash flows and you are tempted to sell because the value is still below a 2022 number that should never have been your anchor, ask what the 2020 number says instead. If you are underwriting an acquisition from a motivated seller this quarter, that twenty two percent divestment share is your opportunity, not your warning sign.

Practitioners sitting on stabilized multifamily should run the pre pandemic comparison before they run the 2022 comparison, and buyers should treat every housing seller’s urgency as a data point about that seller’s mindset, not about the asset.

About the Author

I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.

Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.

Realtor.com put out its Generational Housing Succession report this morning, and most of the coverage will read it as good news for house hunters. More homes are coming. Inventory gets restored. Buyers finally get some leverage.

That's the homeowner read. I want to give you the investor read, because it's a different story. The silver tsunami isn't a supply wave. It's a product mix problem and a geography problem, and both of those decide where capital makes money over the next ten years and where it gets hurt.

The numbers

Baby Boomers and the Silent Generation own an estimated 36.7 million homes today. By 2036, Realtor.com projects that drops to 22.8 million. That's 13.9 million homes released from older owner occupancy, about 1.39 million a year, and 74% more than these same generations gave back over the last decade.

The pace keeps climbing, from about 1.27 million homes in 2027 to 1.52 million in 2036. The oldest Boomers turn 80 this year. Boomers pass the Silent Generation as the main source of released homes around 2029, and they are still climbing when the forecast ends. The real peak probably comes after 2036.

One definition matters before anyone builds a model on this. "Released" means the owner left the home through death, a move into care, moving in with family, or a move to a rental. It does not mean the home hits the MLS. Some get inherited and kept. Some get rented. Some sit in an estate for a year. Realtor.com's own math shows that if just 45% of the 2027 releases became listings, that alone would bring annual listings back to prepandemic levels. You don't need all of it to change the market. You need less than half.

The supply lands where the shortage isn't

This is the part every developer needs to sit with.

Of the 13.9 million homes, only about 380,000 have two bedrooms or fewer. That's 38,000 starter homes a year, nationally. Family homes with three or four bedrooms are 9.9 million of the total, about 71%. Homes with five or more bedrooms are another 3.6 million.

Now compare that to what's actually trading. Average annual releases equal about 3.2% of recent starter home listings, 24.7% of family home listings, and 67.2% of large home listings.

Read that last number again. If even half of the large homes that get released reach the market, large home listings go up by roughly a third. That's not a softening. That's a repricing.

Meanwhile, at the bottom of the market, nothing changes. A separate Realtor.com and NAR analysis from May found that homes affordable to a household earning about $75,000 make up just 23% of listings, about half of what a balanced market should look like. The silver tsunami does almost nothing for that buyer.

It gets worse at the entry level, not better. Using recent movers as a proxy for recent buyers, Realtor.com found about 30% of buyers of starter sized homes are 60 or older. Downsizers want the same two bedroom ranch the first time buyer wants. So the aging wave adds supply at the top and adds competition at the bottom.

Jiayi Xu, the Realtor.com economist who wrote the report, said it plainly: the trade up chain that frees starter homes is a secondary channel that takes time, and "the primary solution to the starter home shortage remains more new construction."

That sentence is the whole investment thesis.

Fewer new households to absorb it

Supply is only half the equation. On the demand side, Harvard's Joint Center for Housing Studies projects household growth of about 8.6 million from 2025 to 2035, roughly 860,000 a year. That's below every one of the last three decades. From 2035 to 2045 it drops to 5.1 million, which would be the weakest decade of household growth in at least 100 years.

JCHS translates that into new construction demand falling from about 1.4 million homes a year to roughly 1.1 million. Under their low immigration scenario, household growth from 2025 to 2035 falls by about another 20%. And the fastest growing household type over the next decade is a single person over 65. Households headed by someone 80 or older grow by close to 60% by 2035.

So the generation releasing the homes is also reshaping what demand looks like. Smaller households. Older households. More renters. Fewer young families needing four bedrooms on a half acre.

Put that on top of where the market already is. Realtor.com's September report showed 20.8% of active listings with a price cut, the highest September share since 2018. List prices have been down year over year for 11 straight months. Inventory is within about 9% of prepandemic norms. The tsunami isn't landing on a tight market. It's landing on one that's already loosening.

Nobody is forcing them to sell

Here's why the timing is uncertain, and why you can't underwrite this as a straight line.

Older owners mostly don't have mortgages. NAHB's analysis of Census data shows 58% of homeowners 65 to 74 own free and clear, 69% of those 75 to 84, and 82% of those 85 and older. Among starter home owners in their 70s, Realtor.com puts the free and clear share at 72.8%, which is a big reason those small homes are the stickiest of all.

No payment means no rate lock and no pressure. These homes come back through life events, not market cycles. That makes the flow lumpy and local. It also means the people on the other side of the transaction are often heirs and estate executors, and heirs behave differently than owner occupants. They live somewhere else. They don't want to carry taxes, insurance and a roof on a house they'll never live in. They want it settled. That's a motivated seller, and in segments where releases run 25% to 67% of listings, motivated sellers set the price.

The place they move to isn't being built

Every home released through a move into care needs somewhere to go. That's the other side of this trade, and it's badly undersupplied.

NIC MAP data shows senior housing occupancy across the top 99 metros hit 90.1% in the second quarter of 2026, the first time above 90% since 2007. Construction starts fell about 67% from 2021 to 2025, from more than 30,000 units to roughly 10,000. Units under construction are below 24,000, the lowest since 2012. NIC MAP projects the country needs more than 1 million additional senior housing units by 2035 and more than $1 trillion of investment through 2050 just to hold today's level of availability.

This connects back to the release forecast in a way most people miss. If there's nowhere to move, people stay. A shortage of senior housing slows the silver tsunami. Building senior and active adult housing doesn't just serve an aging population, it unlocks the family homes sitting behind them. And it's largely self funded demand. The median 65 and older household holds about $250,000 in home equity. The house pays for the move.

Geography decides everything

National averages are useless here. NAHB mapped where older owners are concentrated against how strong local household formation is, and the markets fall into four buckets.

Oversupply risk. Large shares of older owners, weak or negative population growth. NAHB flags Pittsburgh, Buffalo and Rochester. In Pittsburgh, a large share of homes owned by people 65 and older were built before 1980. That stock comes back needing real money, and in a lot of cases it's a redevelopment play, not a resale.

Absorption markets. Strong household formation, decent affordability, growing population, fewer older owners. Durham Chapel Hill, Knoxville and Jacksonville show up here. These markets can take the extra supply without breaking pricing.

Constrained high cost metros. New York, Los Angeles, San Diego. Huge pent up demand, limited exposure to released homes. The tsunami barely touches these markets. Supply still has to be built.

Senior concentration markets. Mostly Florida. Seven of the ten metros with the highest share of households headed by someone 65 or older are in Florida, led by The Villages at 68.2% and Homosassa Springs at 52.7%. These are the places that get hit with the most released inventory. They are also places where younger households have been squeezed out, so the right product at the right price can be absorbed. The wrong product will sit.

That last group is a big part of why we spend time in Florida. When the turnover is this concentrated, it creates distressed land, estate sales and repositioning opportunities that don't show up anywhere else. But it cuts both ways. A builder dropping move up spec homes into a retirement heavy county is going to compete with estate inventory priced to close.

How I'm underwriting it

Here's how this changes the way I look at deals.

1. Stop building the product the tsunami is about to flood. Move up spec homes and large lot executive product in markets with high 65 and older ownership and slow population growth are now competing with free and clear sellers who don't need to hold out. If your pro forma assumes today's resale comps for a four or five bedroom home in one of those markets, I'd stress the exit price.

2. Build what the tsunami doesn't deliver. Entry level and workforce housing. Small lot single family, townhomes, small multifamily, build to rent, ADUs. Before the Great Recession, new homes under 1,800 square feet were about 30% of new single family production. Today it's closer to 20%. Older owners are only giving back 38,000 starter homes a year. That gap isn't closing on its own, and it's the reason workforce and employer anchored housing stays at the center of what we do.

3. Treat estate inventory as land, not as housing. A tired 1970s ranch on a big lot in a good school district is an infill site. Lot splits, duplex conversions, ADUs, teardowns where zoning allows. Large homes can be repositioned too. Multigenerational households grew from 3.2 million to 3.9 million over the last decade, and those listings ask about 65% more than a standard home and still draw more buyer interest. A five bedroom house that's hard to sell as a single family home can be a strong multigenerational or ADU product.

4. Follow the people, not just the houses. Senior housing and active adult rental are running at or above 90% occupancy with almost nothing in the pipeline. NIC MAP's own CEO has pointed developers toward secondary and tertiary markets where costs pencil better. That's a supply gap with funded demand behind it.

5. Underwrite by market bucket, not by headline. A national number like 13.9 million tells you nothing about your deal. Know the 65 and older ownership share, the headship rate for 25 to 64 year olds, five year population growth, and the age of the housing stock in your submarket. Those four numbers tell you whether released homes are a risk or an opportunity.

6. If you lend, watch your collateral. Large home values in slow growth, retirement heavy markets carry more downside than they did two years ago. Construction loans on entry level product in absorption markets look better than they did.

The bottom line

The silver tsunami doesn't solve the housing shortage. It reshuffles it. The country gets plenty of four and five bedroom homes in places people are leaving, and almost nothing at the price point and size where the shortage actually lives.

For homeowners, that's a mixed headline. For developers and investors, it's a map. The opportunity is in building what aging owners aren't giving back, buying what they are giving back as land and repositioning plays, and financing the places they're moving into.

Same lesson as always. Follow the data, not the headline.

Sources: Realtor.com Generational Housing Succession Report (Oct. 5, 2026); Realtor.com September 2026 Monthly Housing Trends Report; Realtor.com and NAR affordability analysis (May 2026); Realtor.com multigenerational housing report (May 2026); Harvard Joint Center for Housing Studies household projections (McCue, 2025) and low immigration revision; NAHB Eye on Housing, "The Silver Tsunami Isn't Landing Where It's Needed Most" (Apr. 2026) and 55+ homeowner analysis (Sep. 2026); NIC MAP Senior Housing Market Outlook, 2nd ed. (Aug. 2026) and 2Q 2026 data; NCOA home equity data.

About the Author

Daniel Kaufman is the founder and CEO of Kaufman & Company, a private investment and holding firm spanning real estate development, venture investment and infrastructure. His work focuses on workforce housing, employer anchored development, land and mountain resort communities across the Mountain West, Texas, Florida and the Northeast. He writes The Kaufman Report from the operator's side of the table.

Contact: Daniel@kaufmanredev.com
Website: www.danielkaufmanre.com

That's not a labor collapse. Layoffs are still low and jobless claims are falling. What we have is a low hire, low fire economy, and it looks like it will carry us into 2027.

The number that matters for anyone building or buying housing is the mortgage rate. It went from 6.66% at the start of September to 7.28% this week.

The warning bells

Rate pressure isn't going away. The soft jobs report makes a hold at the October 27 and 28 Fed meeting more likely. Odds of a hold went to 85%, with the federal funds rate at 3.75% to 4%. Most people still expect one more hike before year end. The Fed under Kevin Warsh is focused on inflation from energy prices and geopolitical instability, and a 29,000 job print won't change that. The 10 year Treasury just hit a 24 year high. Mortgage rates follow the 10 year.

Your buyer just lost purchasing power in one month. That's what the chart shows. On a $400,000 loan, principal and interest went from $2,571 to $2,737 since early September, an extra $166 a month. Put it the other way. A buyer who could afford $2,419 a month at last year's low could borrow $400,000 then. Today the same payment supports about $354,000. That's $46,000 of buying power gone, without a single listing price changing.

Financial jobs keep shrinking. The sector lost 7,000 jobs in September and 129,000 since May 2025. Those are the people who underwrite, originate, and service real estate loans. Fewer of them means tighter, slower credit.

Revisions are trending one way. When back months keep getting revised down, the trend is weaker than the headlines.

The opportunities

Construction added 11,000 jobs. Builders are still hiring and labor is no worse. If you have entitled land and a reason to build, the trade base is there.

Health care added 17,000 jobs and manufacturing added 9,000. Those are employers that need workforce housing near the hospital, plant, or distribution hub. Markets anchored by those jobs hold up better than markets built on rate driven demand.

Rate driven sellers are your counterparties. Owners who bought or refinanced around 6% and need to sell or recap will meet a thinner buyer pool at 7.28%. Patient capital gets better pricing and terms when the other side has a clock running.

Low fire means demand isn't evaporating. People aren't losing jobs in large numbers. They're stuck. Rental demand, build to rent, and smaller product designed to fit a real payment still have a buyer.

What this means for developers and investors

1. Underwrite at today's rate or higher. Don't build a pro forma around a cut that isn't coming. Stress test exits at 7.5% plus.

2. Design to the payment, not the price. If your buyer lost $46,000 of borrowing power, smaller units, rate buydowns, and attainable product win.

3. Follow the employers. Health care and manufacturing job growth tells you where demand is durable.

4. Watch the land basis. Land priced on 2022 math will need to reset. Wait for it.

Free tools to help

At www.landbriefing.com we put together the data we use ourselves, free:

• The Watchlist, land and housing fundamentals across markets

• Market Pulse, what's moving and why

• Our scoring methodology, so you can see how we rank markets and apply it yourself

• Mountain Watch, coverage of mountain resort and gateway towns

• The newsletter, so the next data drop lands in your inbox

The jobs report didn't break anything. The rate math did. Underwrite for what's in front of you.

About the Author
Daniel Kaufman is the founder of Kaufman & Company, a private investment and holding firm focused on real estate development, venture investment, and infrastructure, with a focus on workforce housing.
Daniel@kaufmanredev.com | danielkaufmanre.com

Most market reports tell you what already happened. This one is more useful, because it grades the 100 largest metros on two things that matter together: are they building enough homes, and can a normal family afford one?

The report scores metros on permits relative to population, how new construction is priced against existing homes, and two affordability measures. It uses Realtor.com listing data and the NAR affordability score. The results matter more now because the 21st Century ROAD to Housing Act ties Community Development Block Grant money to homebuilding growth. For the first time, a city that refuses to build can lose federal dollars for it.

Here is how I read it as an operator, not an economist.

The headline: we're still short over 4 million homes

The country is short more than four million homes. The report says the only long term fix is to build, and I agree. The picture is clear. The South and Midwest are building and staying affordable. The coasts are doing neither.

Des Moines finished first. It permits 85% more homes than its population would suggest, and the median earner spends about 27.5% of income on a mortgage for the median home. Raleigh is close behind with a permit ratio of 2.51, among the highest in the country. The rest of the A list is Columbia, Houston, Indianapolis, Austin, Jacksonville, Oklahoma City, Palm Bay, and Columbus.

At the bottom is Los Angeles. The median earner there would spend 84.4% of income on the mortgage for a median priced home. The median listing is about $1.13 million against a median household income of about $91,000. That's a price to income ratio over 12. LA is building less than half the national average per resident. New York, Boston, Providence, Honolulu, San Francisco, San Diego, and Miami are all on the failing list too.

None of that is surprising. The opportunities are in the details.

Opportunity 1: Metros where new homes cost less than old ones

Look at the new construction premium, which compares new build prices to existing homes. In Raleigh it's negative 1.3%. In Austin it's negative 6.0%. In Columbia, Palm Bay, and Greenville it's around zero or below.

When new homes sell for less than existing ones, it means land, entitlement, and production are working. Builders are competing on price. These markets reward speed and volume.

That makes these metros the best places in the country for lot development, land banking ahead of the growth path, and build to rent communities. The builders there need a steady supply of finished lots and will pay for certainty. If you can deliver entitled, serviced dirt in Raleigh, Columbia, Houston, or Jacksonville, you have a buyer.

Opportunity 2: The Florida Gulf is overbuilt, and that's the point

North Port and Bradenton have a permit ratio of 4.17, the highest in the country. Cape Coral and Fort Myers are at 3.58. Both have negative new construction premiums, negative 4.6% and negative 11.9%. Cape Coral builders are selling new homes at nearly a 12% discount to existing stock.

That's an oversupplied market. Builders are cutting prices to move inventory. Some will slow down, some will shed land, and some will walk away from lot contracts.

That's where I want to be. Distressed land and finished lots in oversupplied Florida markets are among the best risk adjusted buys available right now, if you have your own capital and patience. You're not betting on today's absorption. You're buying the land the next cycle needs at a price set by this cycle's stress. Florida got a B at the state level. Orlando is a B minus with a permit ratio of 2.13. The fundamentals are intact. The pricing just hasn't caught up.

Opportunity 3: The Rust Belt is affordable but not building

This is the part of the report that stood out most to me.

Detroit, Pittsburgh, Cleveland, Toledo, Akron, Rochester, and Buffalo have some of the best affordability scores in the country. Pittsburgh's median listing is about $245,000 against income near $73,000, roughly 3.4 times income. That's what housing is supposed to cost.

But none of them are building. Toledo's permit ratio is 0.18. Akron's is 0.24. And their new construction premiums are enormous: Detroit 143%, Rochester 142%, Buffalo 140%, Toledo 120%, Pittsburgh 109%.

That tells you exactly what's wrong. In these markets a new home costs twice what an existing one sells for. Ground up construction doesn't pencil at local incomes, so nobody builds, and the housing stock gets older every year.

The opportunity is closing that gap. That means rehab and adaptive reuse of existing buildings, missing middle infill on lots that already have infrastructure, and modular or factory built housing that lowers the cost basis enough to compete. The first operator who can deliver new product in Detroit or Buffalo at close to existing home pricing has a market to themselves. The demand is there. The problem is the cost of delivery.

Opportunity 4: Miami's 248% problem

Miami got an F, the only failing metro in a state that otherwise did fine. The key number is its new construction premium: 248%. New homes in Miami cost roughly three and a half times existing ones.

That means almost everything being built is luxury. Land is scarce, with the Everglades on one side and the Atlantic on the other, so developers build for the top of the market. The workforce that runs the city gets priced out.

That's where I see opportunity. Workforce and attainable housing tied to employers in South Florida is badly underserved. Hospitals, school systems, hospitality groups, and logistics operators all have a staffing problem that is really a housing problem. Development anchored to an employer who needs the units fixes the demand side before you break ground.

Opportunity 5: Entitlement is the product in failing metros

In LA, Boston, New York, and the Bay Area, you won't win by building faster. You win by getting approvals. The report compares Boston and Austin using National Zoning Atlas data. Only 4% of Boston's land allows ADUs without restriction, compared to 29% in Austin. And 88% of Boston's land carries minimum parking mandates, compared to 37% in Austin.

In these markets the approval is worth more than the building. Buying land, carrying it through entitlement, and selling or partnering with approvals in hand is the value creation. It takes patience and local knowledge, but the returns match the scarcity.

Watch Riverside, San Diego, Stockton, and San Jose. They're still failing on affordability, but their homebuilding scores are much better than the rest of California. If any coastal failing metro climbs out, it will likely be one of these.

Opportunity 6: The ROAD to Housing Act turns laggards into partners

Now that CDBG money depends on homebuilding growth, the cities at the bottom of the permit rankings have a financial reason to say yes. Scranton, Hartford, New Orleans, Milwaukee, Albany, Virginia Beach, and much of the Northeast have permit ratios around 0.5 or lower.

Those municipalities will need projects that move their numbers. A developer who shows up with a credible plan and the capital to execute becomes a partner, not an opponent. I expect faster approvals, fee concessions, and public land deals in places that have been hostile to housing for decades. Early movers will get the best terms.

What I'm watching in the Mountain West and Northeast

The Mountain West and Northeast show the same tension. Boise is building fast, with a permit ratio of 2.47, but affordability is falling and it only earned a C. Denver and Salt Lake City are both C grades, with median listings near $580,000 to $590,000. Portland, Maine, earned a C minus, with a median listing around $639,000 and one of the weakest affordability scores in the country.

Resort and gateway towns aren't in the top 100, but they are the same story, only more extreme. Constrained land, high demand, and a workforce that can't afford to live where it works. The answer there is the same as Miami: employer anchored workforce housing, done at a scale the local market can support.

The bottom line

This report confirms what I see on the ground. Supply follows policy, and affordability follows supply. The best metros are mostly blue cities in red states, with local flexibility and no heavy state review layered on top. Austin's Affordability Unlocked program, which waives height, unit count, and parking limits for projects that are majority income restricted, is a playbook other cities should copy.

For investors, the grades aren't the point. The gaps are. Overbuilt markets are selling land at a discount. Affordable markets can't build at a price people can pay. Failing markets are about to face a federal incentive to change. Every one of those gaps is a deal for someone who understands it.

That's where I'm spending my time.

Daniel Kaufman
The Kaufman Report

Last week HUD set up its Innovative Housing Showcase on the National Mall, and for a few days the lawn in front of the Capitol looked more like a job site than a monument. Manufactured homes, 3D printed studios, compressed earth block prototypes, panelized duplexes, and a shippable emergency microunit built by a former SpaceX engineer, all lined up in the same place.

I've been saying for a long time that the problem in housing isn't demand. It's how we build. Seeing the federal government stage that argument on the Mall tells me the conversation has finally caught up to the job site.

The timing matters

The showcase landed right after Congress passed the 21st Century ROAD to Housing Act, the biggest housing reform package in about three decades. Builders will tell you plainly that this is a hard market. Materials are up, labor is thin, supply chains still break, local opposition kills projects, and disasters keep wiping out inventory we can't replace fast enough.

One panelist described the cost problem as "death by a thousand cuts," and that's exactly right. There's no single villain. It's every permit, every fee, every trade you wait three weeks for, every foundation poured in the rain. It stacks up until a starter home isn't a starter home anymore.

What was on the lawn

Uplift, an Austin startup backed by a $7 million seed round led by Andreessen Horowitz, showed its emergency microunit. Plug in power and water, self leveling feet, built in tie downs, and two or three fit on a single flatbed. They just sold their first unit. Their pitch is housing that arrives like an appliance: solar and battery as primary power, no sewer tie in, no foundation crew, no construction on site. Drop it and move in.

Azure Printed Homes, out of Gardena, California, prints small homes from recycled plastic. Their 180 square foot studio can be printed in hours and starts around $70,000, with interest from glamping operators and ADU buyers.

Civic Saint, a Kansas City contractor, is making compressed earth blocks from local clay, produced on site, with a claimed 70% cut in construction emissions. Their first test home debuts next spring.

Cavco showed a 1,250 square foot, two bedroom manufactured home that no longer sits on a permanent steel chassis, a change enabled by the new housing law. In one Pennsylvania community it retails for about $139,000 with monthly lot rent under $600. Compare that to a national median price above $400,000.

And the Structural Building Components Association assembled a two story duplex in hours from components built somewhere else.

HUD Secretary Scott Turner summed up the agency's posture in one line: "The private sector is the real engine of innovation." I'll take that. Government's best move in housing is usually getting out of the way of the people who actually build.

The real bottleneck isn't the technology

The most honest comment of the week came from the SBCA's Sean Shields, who pointed out that the building industry resists change because every innovation touches so many players. His example was the truss plate. It took decades for builders to adopt it, and they only did once someone stood on their job sites and showed them the time and labor it saved.

That's the lesson I keep coming back to. A great prototype on the Mall is not a housing solution. A housing solution is a product that a contractor, a lender, a zoning board, an insurer, and a transport company all say yes to, at scale, in a real market. Anyone who has actually closed out a production order knows the hard part isn't the box. It's everything around the box.

What we're doing about it

This is why we've put real time and capital into factory built housing instead of just writing about it.

At Mr. Good Container Homes, we've worked through the part nobody puts on a stage. Production verification, engineering, bonded insurance, DOT and motor carrier compliance, onsite storage, and a purchase order structure through LoneStar Kaufman. Our production runs through El Paso, and we're evaluating container product for infill and floodplain adjacent lots in North Texas, where a conventional stick built house often doesn't pencil. Tom Colangelo and Collin Hanks are also bringing their project and production management to our townhome work in Nashville. The goal isn't a showpiece. It's a repeatable unit that clears every approval and shows up on schedule.

At Oldivai, where I serve as President, the focus is workforce housing, specifically employer anchored housing in mountain resort towns and gateway communities. Those are the places where this problem is most acute. A ski town can have a billion dollar resort and nowhere for the lift operators, nurses, and teachers to live. Local labor is scarce, the building season is short, and every day a crew spends on site in winter costs money. Factory built and container product changes that math. You build in a controlled environment, ship, set, and have people living in homes while a traditional project is still waiting on its framers.

Put those two together and you get the model I believe in: a production partner that can deliver, paired with a development platform that knows where the housing is needed and who will live in it.

Where this goes

Uplift is right about one thing. Almost everything else we mass produce got better and cheaper over the last century. Cars did. Phones did. Rockets now land themselves. The home mostly didn't. We still build it one at a time, in place, at the mercy of weather and whatever labor shows up that morning.

The showcase proves the ideas exist. The new law opens some of the regulatory doors. What's left is execution: financing it, permitting it, insuring it, shipping it, and doing it again a thousand times. That's the work we're doing now, and it's the work that will decide whether any of this reaches the people who need it.

About the Author

Daniel Kaufman is Founder and CEO of Kaufman & Company, a private investment and holding firm spanning real estate development, venture investment, and infrastructure, and President of Oldivai, focused on workforce and employer anchored housing in mountain resort communities.

Daniel@kaufmanredev.com | www.danielkaufmanre.com

There is a real fight happening right now over the future of Vail Resorts. Oasis Management has built a stake of roughly 6.5%, converted its filing to a 13D, and nominated a board slate that includes Olympic gold medalist Picabo Street and former Disney CEO Robert Chapek, alongside financier M. Ashton Hudson and venture investor Bryce Roberts. In that 13D, Oasis calls Vail’s 42 resorts an “irreplaceable portfolio” and says it may explore or propose a review or sale of the company or some of its resorts.

Whatever you think of the politics, the question underneath it is a land and housing question. If Vail ends up shedding non-core mountains, what happens to the towns built around them?

That is exactly the question LandBriefing exists to answer before it shows up in a press release, and it is why we just launched Mountain Watch.

The volume story stopped working

I have said for a while now that the Epic Pass growth story is over. A pass model built on volume only works as long as volume keeps growing.

Look at what Vail itself reported. Skier visits across its 42 ski areas fell from 16.9 million in 2024/25 to 14.8 million in 2025/26, the steepest year over year drop in the company’s history. Early sales of Epic passes and advance lift products for next season came in about 10% lower, the steepest early season decline since the pass launched in 2008. Yes, the West had a brutal snow year, and weather explains a lot of one season. It does not explain why housing costs in so many gateway towns kept climbing through several seasons of flat visitation.

When a public company under activist pressure starts hearing the words “review or sale” about its resorts, that is usually the first public admission that the math stopped working somewhere. The mountain does not stop being a mountain. The operator just stops wanting to run it.

Mountain Watch is live

That is why we just launched Mountain Watch on LandBriefing. It is free, and you do not need to sign in.

Mountain Watch tracks land and housing fundamentals in mountain resort and gateway towns the way a lender tracks a covenant, continuously, not just when a deal is already on the table. Every market gets a score from 0 to 100, built on four factors:

• Momentum (30%): price trend, sales velocity, and transaction volume against the prior year

• Catalyst (25%): the scale of a named development, resort investment, or institutional transaction

• Housing Opportunity (25%): the size of the workforce housing gap against how funded and real the local response is

• Supply Constraint (20%): how scarce buildable land actually is, from public land share to build out caps and permit trends

Each market is then broken out by asset class: affordable and workforce, market rate, luxury, land, commercial, and hospitality. Every figure is dated and sourced, and where sources disagree we say so instead of averaging them into one confident number.

The launch set covers 10 markets. Four of them sit at the base of mountains Vail owns today, which makes this fight very real for them:

• Park City, UT (Park City Mountain): 87, Buy Window

• Breckenridge, CO (Breckenridge): 79, Selective / Steady

• Truckee, CA (Northstar): 75, Selective / Steady

• Stowe, VT (Stowe): 72, Selective / Steady

Park City is the top score in the whole set, and it is also the town at the center of the asset sale talk, with Matthew Prince publicly saying he wants to buy Park City Mountain. Land sales in Q2 2026 were up 46% in units and 74% in dollar volume year over year, Summit County permits fell 39% in 2025, and the Kimball Junction reinvestment zone approved in April includes 500 deed restricted workforce units. That is a funded housing response landing at the same time as a resort scale capital cycle.

Breckenridge has the most mature workforce program on the list, with about 75% of resident occupied housing deed restricted. But Breckenridge, Frisco, and Silverthorne are all at 90 to 97% of their residential build out caps, and Vail’s fiscal 2026 capital plan names no Breckenridge specific project. When the operator is not putting new money into the town, the land that is left matters more.

Stowe just voted 5 to 0 to cap short term rentals at 850, down from about 1,450, because long term rental vacancy is near zero. Only 27% of residential parcels claim the homestead exemption. That is a town trying to claw back housing for the people who work there.

Truckee has a new housing trust and a 295 worker employee housing complex coming out of the Palisades Tahoe settlement, but California FAIR Plan insurance increases of roughly a third are now a live cost on every deal.

The other six markets, Jackson, Steamboat Springs, Telluride, Big Sky, Mammoth Lakes, and Ketchum, give you the comparison set. Jackson scores 83 because 97% of Teton County is federally protected. Ketchum scores 64, the lowest on the list, after the town cut its affordable housing goal from 660 units to 100 to 125.

To be clear, no one has announced that any of these mountains are for sale. Mountain Watch is the list of towns worth understanding before anyone does, and we are adding markets as we go.

A proxy fight is not a transaction

None of this is a prediction that Vail sells anything specific. Boards say a lot of things during a proxy fight that never turn into a transaction. Even a former SEC enforcement official reading the 13D said it looks more focused on how Vail is run today than on selling it off.

But distressed and non-core mountain assets do not wait for certainty to trade, and the operators, lenders, and landowners around these towns are already positioning. That is the entire thesis behind DEK Builds: when a public operator retreats from a market, the workforce housing gap and the land opportunity underneath it do not retreat with it. Somebody still has to build for the people who run the lifts, staff the hotels, and work the shops.

Somebody has to find those markets before everyone else is looking at the same three parcels. That is what Mountain Watch is for.

If you are watching this fight for the stock price, that is one story. If you are watching it for what happens to the towns, that is ours. Mountain Watch is free, with no sign in, at landbriefing.com/mountain-watch, and the full national watchlist is at landbriefing.com.

About the Author

Daniel Kaufman is the founder of Kaufman & Company, a private investment and holding firm spanning real estate development, venture investment, and infrastructure, and of DEK Builds, which acquires ski resorts, distressed mountain assets, and ski real estate across North America. His work centers on workforce housing and employer anchored development in mountain resort communities.

Daniel@kaufmanredev.com · danielkaufmanre.com · landbriefing.com

Sources: LandBriefing Mountain Watch (September 2026); Vail Resorts season metrics release (April 2026); The Colorado Sun (June 15, 2026); Oasis Management Schedule 13D filed September 16, 2026; KPCW (September 16, 2026).

Realtor.com says the week of September 27 through October 3 is the best week to buy a home in 2026. Median listing prices that week are running 3.5% below the summer peak of $416,000, which works out to roughly $14,000 in savings for a typical buyer. That is a real number, not a marketing line. Inventory is sitting 31.9% above where it started the year and 13.3% above the weekly average, and buyer demand is running 30.1% below its annual peak. That is what a buyer’s market looks like when you read the data instead of the mood.

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Austin home prices are down 27.6% from their 2022 peak, according to Zillow data reported by ResiClub this month, one of the steepest declines of any major market in the country. San Antonio, Tampa, and a handful of other Sun Belt metros are seeing similar softness. If you only read the price data, you’d think affordability in the Sun Belt is finally healing. It isn’t, and the numbers explain why.

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Everyone in this business talks about power like it's the whole game. Get the megawatts, and the rest is paperwork.

MSCI's new review of US data center development says otherwise, and it matches what I've seen on the ground. Power is the first gate. It is not the last one.

The scale changed faster than the system

MSCI estimates the AI buildout could require up to $5.2 trillion in data center investment by 2030, and 70% of the world's data center capacity under construction sits in the US. When most of the global pipeline lands in one country, execution risk stops being a national story and becomes a county story.

The facilities themselves got enormous. The median data center went from 11 MW in 2016 to 130 MW by June of this year. Meanwhile, the average wait for new power in regions with data center development is 64 months. That's more than five years of carrying costs before a single server turns on.

So developers are going around the grid: small modular reactors, long duration batteries, new gas plants. I understand the logic. But MSCI makes a point I'd underline twice. Going on site trades one risk for another. First of its kind technology can miss its commercial readiness dates, and conventional generation runs into the same shortage of transformers, switchgear and turbines everyone else is chasing. You didn't escape the queue. You joined a different one.

The county commission is now the real gatekeeper

MSCI counted at least 75 US projects delayed or canceled in the first quarter of 2026 alone, equal to the total for all of 2025. More than half the projects in development sit in counties that have seen a prior withdrawal or passed data center specific rules. Roughly 80% of the pipeline is in jurisdictions with active or pending data center legislation, 14% face pending moratorium decisions, and another 12% sit in places with upcoming elections that could rewrite the rules.

What caught my attention is how the objections have shifted. A year ago, opposition talked in broad environmental terms. Now it's specific: water use, zoning, what this does to my electric bill, what this does to the grid. Those are pocketbook questions, and pocketbook questions are much harder to answer with a glossy rendering and a jobs estimate.

I've sat in those hearings. Neighbors aren't irrational. They're looking at a windowless box the size of several football fields, a water draw they can't picture, and a developer who won't be around after the ribbon cutting. If you can't answer those concerns directly, you don't have a project. You have a land position.

Water is the risk nobody priced

MSCI identified 365 planned or under construction data centers near rivers and found 50 of them, about 14%, exposed to both water scarcity and low river flow, concentrated in Texas, Illinois, Oregon and Georgia. Securing power does nothing for you if your cooling plan depends on a river that runs thin in August.

Insurance didn't scale with the projects

This is the one I'd watch most closely as a lender. Project values have gone from roughly $150 million to as much as $20 billion for a hyperscale campus, and the insurance market hasn't kept pace. When coverage falls short, the gap doesn't vanish. It lands on the developer and the lender, who end up holding catastrophe, outage and delay risk they never meant to underwrite.

What this means for underwriting

The lesson for investors and lenders is simple: stop treating power as the only gating item. Underwrite the site. Energy procurement, local relationships, water exposure, physical hazards and insurance all overlap, and a project that solves one of them can still die on another.

How we're approaching it

I'm not writing this to pitch anything, but it would be incomplete to talk about these risks without saying how we think about them in our own work.

With ServerDomes, the design goes after several of these problems at once. Cooling uses a fraction of the water of a conventional facility, which takes the river question largely off the table. Power is planned behind the meter from day one rather than as a fallback. The modular build shortens the timeline and keeps the equipment list manageable. And the geodesic form changes the conversation in the hearing room. In Utah, when the community saw a dome instead of a big box, the permitting discussion changed.

Our micro data center project takes the opposite approach to the hyperscale trend: go small. Smaller loads can fit within existing grid capacity instead of waiting years in an interconnection queue. A smaller footprint is easier for a community to accept, easier to site away from stressed water basins, and easier to insure because the replacement value stays within what the market will actually cover.

Neither one makes risk disappear. Nothing does. But both start from the question MSCI is now asking everyone: not just can you get power, but can you get this built, here, with these neighbors.

The opportunity in this sector is real. The winners won't be the ones with the biggest megawatt number in the press release. They'll be the ones who underwrote every gate, not just the first one.

About the Author

Daniel Kaufman is the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment and infrastructure. His work centers on workforce housing, employer anchored development, and infrastructure that communities can actually live alongside. He writes about housing, development and the markets behind them from an operator's point of view.

Daniel@kaufmanredev.com danielkaufmanre.com linkedin.com/in/danielekaufman

Source: MSCI, US data center development risk review, 2026.

The headline last week was the Fed. On September 16 the FOMC voted 12 to 0 to raise the funds rate a quarter point to a range of 3.75% to 4.00%, the first increase since 2023. Sixteen of the eighteen participants penciled in at least one more before the year is out.

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For two years, the entire commercial real estate industry has been waiting for the same thing: rate relief. Yesterday the Fed told us to stop waiting.

The Federal Reserve raised its benchmark rate by 25 basis points to a target range of 3.75% to 4%, its first increase since 2023. The vote was unanimous, and the dot plot shows the Fed expects to hike one more time in 2026. The move ended roughly nine months of holding steady, driven by high inflation tied to rising oil prices and supply disruptions in the Middle East.

I've been building, lending, and investing through rate cycles since I started in Detroit in 1992. I've seen what a quarter point does to a deal, and I've seen what it doesn't do. So let me cut through the headlines and tell you what I actually think this means.

The quarter point is noise. The 5% is signal.

A 25 basis point move on the short end doesn't break a well structured deal. What matters for real estate is the long end of the curve, and the long end is flashing.

The 10 year Treasury reached 5.041% on September 15, its highest level since 2007, and it moved back above 5% after the Fed's decision and Chair Kevin Warsh's comments on persistent inflation. That's the rate that prices our permanent debt, our cap rates, and the return every investor demands before they write a check.

Parkview Financial CEO Paul Rahimian made the point well this week: the 10 year controls real estate valuations and capital markets, not the Fed funds rate. If you're underwriting off the short end and ignoring the long end, you're underwriting the wrong number.

Homeowners feel it too. Thirty year fixed mortgage rates remain elevated at 6.76%, which keeps pressure squarely on the affordability problem I've been writing about for years. When buying a home stays out of reach, that demand doesn't disappear. It moves into the rent roll.

Why the Fed did it

This wasn't a surprise, and it wasn't reckless. Warsh pointed to consumer prices rising 3.4% year over year in August, well above the 2% target. Oil prices spiked on escalations in the conflict with Iran, and those energy costs have started showing up in inflation reports.

Here's the part people are skipping: the Fed isn't signaling a long tightening campaign. The dot plot showed 16 of 18 participants expecting at least one more increase this year, with nothing penciled in beyond 2026, one cut indicated for 2028, and at least one more in 2029. Read that again. Relief isn't coming next quarter or next year. Anyone whose business plan depends on a 2027 refinance at lower rates needs a new business plan.

The negatives: where the pain lands

The refinance wall gets taller. The owners who get hurt aren't the ones with long term fixed debt. It's the ones with near term maturities, floating rate loans, and extensions they were counting on. Multifamily properties financed with floating rate bridge loans in 2021 and 2022, when borrowing was far cheaper and rent growth expectations were stronger, are a known weak spot. I've looked at a lot of those capital stacks. Many of them only worked if rates came back down.

Extend and pretend is ending. Baker Tilly's Brent Maier said this hike could speed up the shift away from extensions, with lenders pushing borrowers to put in fresh equity, restructure, or sell. I agree completely. Lenders gave borrowers time because they believed rates would fall. That belief just took a hit, and patience is going to run out faster.

Distress keeps building. The share of distressed commercial real estate loans rose for three straight months to 10.8% in July. A higher rate environment doesn't reverse that trend. It feeds it.

Development math gets harder. Every basis point on a construction loan comes straight out of the margin. On a $30 million construction loan, a quarter point is another $75,000 a year in interest, before you even talk about what a higher exit cap rate does to your valuation. Marginal projects that penciled at 4% money won't pencil now. Some of them shouldn't have been started in the first place.

Housing supply falls further behind. This is the one that worries me most. When development stalls, the housing shortage doesn't pause. It compounds. Fewer starts today means tighter supply and higher rents in 2028 and 2029, which lands hardest on the workforce households who can least absorb it.

The positives: yes, there are real ones

Inflation credibility can bring long rates down. This is the counterintuitive point. A Fed that's serious about inflation is exactly what bond investors need to see before they'll accept lower yields on the 10 year. Rahimian argued the tougher stance could ultimately help pull Treasury yields down, and I think he's right. Short term pain on the Fed funds rate may be the price of long term relief where it actually matters.

Price discovery finally arrives. The biggest problem in this market hasn't been rates. It's been a bid ask gap that wouldn't close because sellers kept waiting for a rescue. This hike removes the rescue. Sellers facing maturities are getting more flexible on price, and that's how deals start trading again, sometimes below replacement cost.

Capital hasn't left the building. Don't mistake stress for a frozen market. U.S. commercial real estate investment hit $74.4 billion in July, the highest July total since 2005 and 78% above a year earlier. The money is there. It's just getting a lot more selective.

Fundamentals separate from leverage. Industrial, data centers, and infrastructure keep attracting capital, while overleveraged and marginal projects get squeezed. That's a healthy sorting, and it's a big reason I've spent so much time on data center and infrastructure work. When the cost of money goes up, real demand and durable income are what get funded.

The disciplined buyer gets paid. Every cycle I've been through has the same pattern. The operators who overextended in the easy money years become sellers. The operators who kept dry powder and conservative leverage become buyers. This hike accelerates that handoff.

What to watch next

Duration matters more than the headline number. Strategists told CNBC that markets can usually absorb a brief move above 5%, but a sustained stretch of six to twelve months or more becomes much harder to ignore, and a 5% yield held for two or three quarters would make refinancing pressure increasingly difficult to avoid.

On timing, Goldman Sachs Asset Management expects the Fed will likely skip its October meeting given how close it falls to the midterm elections. That puts December squarely in play for the second hike.

My playbook for the next 12 months

If you own, build, or lend, here's how I'd be thinking right now.

1. Underwrite at today's rates, not the rates you hope for. If a deal only works with a cut, it doesn't work.

2. Push exit cap rates higher in your models. A 10 year at 5% doesn't support the exit caps a lot of 2021 pro formas assumed.

3. Get ahead of your maturities. Call your lender now, while you still have options. The borrowers who show up early with a plan get better outcomes than the ones who show up late with an excuse.

4. Keep equity ready. The best opportunities over the next year will go to buyers who can close with certainty, not buyers who need perfect financing.

5. Follow demand, not narrative. Workforce housing, data centers, and infrastructure have real demand behind them. Build where the demand is durable.

The takeaway

Rates didn't kill deals. Bad capital structures kill deals. This hike doesn't change what makes a good project. It just stops hiding the bad ones.

Higher for longer is now the base case, not the risk case. The owners who accept that first will be the ones buying from the owners who accept it last.

If this was useful, subscribe so you get my next breakdown the day news breaks, and share it with someone sitting on a maturity in the next 18 months. They need to read it more than you do.

And if you have a site, a deal, or a capital stack that needs a new plan in this rate environment, reach out. I'd rather talk before the maturity date than after.

About the Author

Daniel Kaufman is a real estate developer, investor, and the Founder and CEO of Kaufman & Company, a private investment and holding firm spanning real estate development, venture investment, and infrastructure. He began his real estate career in Detroit in 1992 and has spent more than 25 years building, lending, and investing across housing markets nationwide, overseeing more than $2 billion in project value, including more than 1,800 affordable and mixed income units. His work spans build to rent communities, mixed use development, workforce housing, hospitality, and data center infrastructure. You don't need another opinion. You need someone who's done it.

Contact
Email: Daniel@kaufmanredev.com
Phone: (341) 217 2580
Website: www.danielkaufmanre.com
Kaufman & Company: www.thekaufmanco.com
LinkedIn: linkedin.com/in/danielekaufman

I have been doing this since 1992. I have watched three separate media cycles declare the American mall finished. Time magazine did it in 1998. The trade press did it again in the mid 2000s. Then Amazon showed up and an entire content industry got built on the corpse, drone footage of empty food courts, dead mall channels with millions of views, the whole thing. Somewhere in there, "the mall is dead" stopped being an argument and became a background assumption, the kind of thing a reporter can put in a subordinate clause and nobody asks for a citation.

Here is what nobody was doing while the obituaries piled up. Nobody was building new ones.

This is the same pattern I wrote about with the Rust Belt markets and with the K shaped rent roll. The narrative and the data separate, the narrative gets louder because it is emotionally satisfying, and the gap between what a thing is worth and what people believe it is worth becomes the entire opportunity. I do not get paid to hold the popular opinion. I get paid to price the asset correctly.

Start with the actual numbers

Green Street's September index is the one to read, not the headline about it.

Mall values rose 2.5 percent in August alone and roughly 14 percent over the trailing twelve months. Set that against the rest of the table:

- All property index, up 0.8 percent in August, up 5 percent for the year, still roughly 13 percent below its 2022 peak.

- Industrial, the sector every institution crowded into, up 0.6 percent in August, up 7 percent for the year, still 8 percent below peak.

- Strip retail, up 2.1 percent in August, up 8 percent for the year, essentially back to peak.

- Health care, up 3.1 percent in August.

- Office, still the anchor dragging the aggregate down.

The two sectors at the top of that table are the two that spent a decade being described as structurally impaired. The sector at the bottom was considered the safest institutional allocation in America in 2019.

The equity market got there first, as usual. Simon Property Group's stock passed its prior record high in July for the first time since 2016 and has beaten the S&P over the past twelve months. Morgan Stanley's Ronald Kamdem told the Journal this is the best the mall fundamentals have felt since Covid.

One honest caveat that the Journal includes and most of the coverage of the coverage will drop. Mall values are still far below where they peaked a decade ago. Being 6 percent above the 2022 mark is not the same as a full recovery, and anyone quoting the 13 percent without that context is selling something.

Why the narrative was wrong

The Journal actually names the mechanism in one line, and it is worth stopping on, because it is the entire thesis. Occupancy and rent growth held up in retail in large part because there was no new supply.

That is it. That is the whole thing.

No new indoor megamall has been built in this country since 2019. Roughly 200 malls have closed since 2008, leaving about 900 operating nationwide, per Green Street. Subtract inventory for fifteen straight years, hold demand anywhere above zero, and price goes up. That is not a retail insight. That is the same arithmetic I run on every workforce housing deal I underwrite, and it is why I keep saying that the supply curve tells you more about the next ten years than any sentiment survey ever will.

Two other things the story gets right.

The mall" was never one asset class.

It is at least three. Class A centers in affluent trade areas are running vacancy near 5.6 percent. Class B is closer to 9 percent. The bottom tier is land with a roof on it. Averaging those together and calling the result an asset class is how you get a decade of bad analysis. And the part that matters most for anyone deploying capital right now is that the recovery has moved past the trophy assets. Middle market centers are posting occupancy and sales growth too.

The capital that quit is coming back and paying up.

Unibail Rodamco Westfield announced four years ago that it was leaving the United States. It is now committing close to a billion dollars this year to buy out its partners at Westfield UTC in San Diego and Westfield Southcenter, taking full control of both. Its chief executive describes rent growth he has not seen since the start of the 2010s. That is not a contrarian value buyer. That is an institution paying retail to rebuy the exposure it dumped at the bottom. When that shows up in print, you are no longer early.

The deal that tells the real story

Forget the index. The instructive item in the piece is CBL's West County Center in St. Louis, because it is a financing story, and financing is where I live.

In 2022, that 1.2 million square foot mall had debt coming due into a market where lenders had blacklisted midtier malls as a category. CBL could not refinance it. Value down 30 percent over the prior decade. Vacancy climbing. Three of the four prime restaurant spaces sitting empty. A competing mall pulling sales away from its Nordstrom.

Today tenant sales are up 13 percent since 2023, the competitor's Nordstrom closed instead, Macy's put money into its store, Cheesecake Factory and Urban Outfitters are opening, and CBL expects to close the refinancing inside 60 days.

Nothing structural changed about that building. What changed is that the lenders who had priced it as a category finally priced it as an asset. CBL itself is the broader version of the same story. It went through bankruptcy after the pandemic, walked away from or sold more than two dozen malls since 2013, and has bought five properties since July of last year. Its stock is up 48 percent this year.

That is the trade in one sentence. The people who were forced sellers in 2021 are buyers in 2026, and the spread between those two dates was created entirely by narrative.

Where the opportunity actually is

The trade is not "buy malls." The window on A quality product is largely closed, and the arrival of URW writing billion dollar checks is the tell. Here is where I still see room.

The dirt.

Bob Neighoff at Mariner is the skeptic in the article, and his skepticism is the most useful line in it. In his words, unlocking the dirt is the true value of the mall, and he is cautious about hanging a thesis on the retail experience itself. I agree with him completely, and that is a bullish position, not a bearish one. A dead or dying mall is 40 to 80 acres at the best signalized intersection in a first ring suburb, with water, sewer, road capacity and parking already built and paid for by somebody else in 1974. I do not underwrite that as retail. I underwrite it as entitled land with existing infrastructure and a cash flowing carry while I entitle the rest.

Anchor box recapture.

A vacant department store is 120,000 square feet of structure you can cut into smaller boxes at a multiple of the prior rent. The public REITs have spent three years proving out that math with sporting goods, fast fashion and grocery backfill. Private owners who cannot fund the capital to execute it are your sellers.

Mixed use conversion, which is really a housing play.

Close to half of mall redevelopments now carry a mixed use component and a growing share is straight residential. Vallco in Cupertino is the cleanest example, a mall that fell to 24 percent occupancy, demolished, now entitled under state housing law for more than 2,600 units including 890 affordable. That is not a retail story. That is a workforce housing story sitting on a retail basis. This is where I am spending real time, because it solves the problem I actually care about, which is getting units in the ground near jobs at a cost basis that supports attainable rent.

The debt.

Plenty of these assets still carry loans underwritten to a narrative the data has now falsified. West County Center is the template. Lenders who marked retail down as a category rather than asset by asset are holding paper worth more than their own risk committee believes, and borrowers with good real estate are still paying a category penalty to refinance it. I would rather write that credit than bid against ten buyers for a trophy center.

And the discipline to pass.

The Journal's caution is the right one. Owners who filled dead anchors with entertainment and restaurants have taken on tenants that are genuinely hard to replace if they go dark. The bottom tier is still the bottom tier. A center in a shrinking trade area with no anchor, no daytime population and a four million dollar deferred maintenance number is a demolition project you are paying retail for. Anyone selling you the sector rather than the asset is selling you something.

The part that actually transfers

I do not really care about malls as a category. I care that this happened again.

An asset class acquires a narrative. The narrative is emotionally clean, it explains something real that did happen, and it gets repeated until it is treated as a closed question. Capital exits. Supply stops. The underlying cash flow quietly stabilizes. Then eight or ten years later a value index prints a number that makes the front page and everybody acts surprised, including the institution that sold at the bottom and is now buying back in at a billion dollars a pop.

It happened with Detroit, where I started in 1992. It happened with the Midwest markets I have been buying in while the consensus said the growth was all in the Sun Belt. It is happening right now in the mountain towns I work in, where the story is that workforce housing does not pencil, told mostly by people who have never run the sheet.

Read the index, not the headline about the index. Underwrite the asset, not the category. The crowd is usually right about what already happened and almost always wrong about what happens next.

About the Author

Daniel Kaufman is the founder and CEO of Kaufman & Company, a private investment and holding firm active in real estate development, venture investment and infrastructure. He has more than 25 years of experience building, lending and investing across housing markets in the Mountain West, Texas, Florida, Vermont and the Northeast, with a focus on workforce housing and employer anchored development. He has led investment across seven equity funds representing more than 2 billion dollars in property investments and the financing or development of more than 10,000 housing units.

Reach him at Daniel@kaufmanredev.com or at https://www.danielkaufmanre.com

*Sources: Kate King, "Malls Were Left for Dead. Now They Are the Top Performer in Commercial Real Estate," The Wall Street Journal, September 14, 2026; Green Street Commercial Property Price Index, September 2026; Coresight Research; Simon Property Group, Macerich and CBL Properties disclosures.

For the better part of five years, our real estate thesis has been pretty simple.

Go smaller.

Smaller cities. Smaller metropolitan areas. Markets where the fundamentals make sense, the basis makes sense, and you are not competing with 30 institutional buyers to buy land at a price that requires everything to go perfectly for the next seven years.

It was not always the fashionable strategy.

For a long time, institutional real estate operated under the assumption that bigger was inherently safer. New York. Los Angeles. San Francisco. Boston. Chicago. Washington.

Big employment base. Deep capital markets. Liquidity. Institutional buyers waiting on the other side.

All of that is true.

But it also comes with expensive land, expensive construction, expensive labor, complicated entitlement environments, compressed yields, and increasingly difficult mathematics.

Meanwhile, we kept looking at places most institutional investors barely had on their maps.

Not because they were cheap.

Cheap real estate is often cheap for a reason.

We were looking for smaller markets where something fundamental was changing.

Population.

Employment.

Infrastructure.

Housing demand.

Employer investment.

Transportation.

Universities.

Healthcare.

Manufacturing.

Technology.

Tourism.

Or simply a chronic mismatch between the housing a community needed and what developers were actually building.

That distinction matters.

We were never betting on small markets simply because they were small.

We were betting on overlooked markets where the underlying economics were becoming better than the perception.

Now the capital markets are beginning to agree.

The Numbers Have Changed

The shift taking place in commercial real estate is much larger than most people realize.

In 2010, primary markets accounted for roughly 46.5 percent of commercial real estate transaction counts across the four major property sectors. Tertiary markets represented approximately 35 percent.

By 2023, tertiary markets had crossed 50 percent.

They have largely stayed there.

Today, primary markets account for only about 34 percent of transaction counts.

Think about that for a minute.

The places that were historically considered the periphery of institutional commercial real estate now represent more transactions than America’s largest markets.

And this is not just apartments.

Since 2017, the tertiary share of office transactions has risen from approximately 39 percent to 48 percent.

Single tenant retail went from roughly 48 percent to 58 percent.

Multi tenant retail increased from about 41 percent to 52 percent.

Industrial moved from approximately 37 percent to 51 percent.

Apartments increased from roughly 28 percent to 40 percent.

In 2010, tertiary markets recorded around 7,700 transactions.

Today that number exceeds 44,000.

That is not noise.

That is a structural change in where American real estate capital is being deployed.

This Is the Thesis We Have Been Building Around

When we started leaning harder into smaller markets several years ago, I wasn’t trying to predict some mass institutional migration.

I was looking at individual deals.

That is still how I look at real estate.

I don’t start with a national chart and work backward until I can make a property fit the narrative.

I start with dirt.

What does the land cost?

What can I build?

Who is going to live there?

Who employs them?

What do they earn?

What alternatives do they have?

What is the municipality like?

How difficult are entitlements?

What is my construction cost?

What is my replacement cost?

What can the renter or buyer actually afford?

What does my debt look like?

And most importantly, what happens if I’m wrong?

That last question has probably killed more deals for us than any spreadsheet metric.

Because a good real estate deal should not require perfection.

That became increasingly difficult in many major markets.

When land is priced perfectly, construction is priced perfectly, rents assume continued growth, interest rates have to fall, and your exit cap rate has to cooperate, you don’t have a development thesis.

You have a collection of assumptions.

Smaller markets gave us something increasingly difficult to find elsewhere.

Margin for error.

The Real Opportunity Is Basis

Everyone wants to talk about cap rates.

I care just as much about basis.

Probably more.

You make a tremendous amount of money in real estate by buying or building something at a basis the next owner cannot easily replicate.

That becomes especially important when construction costs remain elevated.

Labor is more expensive.

Materials are more expensive.

Insurance is more expensive.

Financing is more expensive.

The days when you could cover mediocre underwriting with cheap debt and cap rate compression are gone.

That is probably healthy for the industry.

It forces developers to actually develop again.

In many smaller markets, land remains a significantly smaller percentage of total development cost than it does in major coastal metros.

Entitlements can be more predictable.

Municipalities may actually want development.

Parking is easier.

Density battles can be less contentious.

Infrastructure can be more manageable.

None of those things individually make a project work.

Together, they can create an enormous difference in basis.

And basis gives you options.

You can rent.

You can sell.

You can refinance.

You can hold.

You can survive a slower lease up.

You can absorb a construction overrun.

Optionality is one of the most undervalued assets in real estate.

Yield Still Matters

There is another reason capital has moved toward smaller markets.

Yield.

Historically, investors accepted lower cap rates in primary markets because they believed they were buying greater liquidity and lower risk.

That trade made sense.

But the yield premium available in smaller markets was substantial.

What is interesting now is that the spread has compressed.

Investors are increasingly willing to pay more for assets in smaller metropolitan areas.

That tells you something.

The market is repricing the perceived risk.

In apartments, for example, the cap rate spread between primary and tertiary markets fell dramatically over the past decade.

That does not mean smaller markets have become risk free.

Far from it.

It means investors are no longer demanding the same enormous discount to own there.

That is an important distinction.

Liquidity Was Always the Argument Against Us

Whenever I talked about smaller markets, one objection came up repeatedly.

Who buys it from you?

Fair question.

Liquidity has historically been one of the biggest weaknesses of tertiary real estate.

A property in Los Angeles might have dozens of credible buyers.

A property in a city with 150,000 people might have six.

That matters.

But transaction velocity changes the equation.

As more private capital, family offices, regional operators, local investors, and smaller institutions enter these markets, price discovery improves.

There are more comparable transactions.

Lenders have more data.

Appraisers have more data.

Brokers have more data.

Buyers have more confidence.

And ultimately, owners have more potential exits.

That creates a virtuous cycle.

Liquidity attracts capital.

Capital creates transactions.

Transactions improve price discovery.

Better price discovery reduces perceived liquidity risk.

Reduced risk attracts more capital.

That is exactly what we are watching happen.

Private Capital Has an Advantage Here

There is another part of this story that does not get enough attention.

Private investors are becoming an increasingly important force in commercial real estate.

That favors smaller markets.

A giant institution needs giant transactions.

If you manage tens of billions of dollars, spending nine months buying a $12 million property does not move the needle.

For private investors, family offices, developers, and entrepreneurial capital, it absolutely can.

That creates an interesting inefficiency.

Some of the best risk adjusted opportunities in America may simply be too small for the largest pools of capital to care about.

I like those situations.

I would rather compete against five sophisticated buyers than fifty.

I would rather understand a local market deeply than bid against institutions whose cost of capital allows them to accept returns that don’t make sense for us.

And I would much rather buy something because I understand it than because everybody else wants it.

But Smaller Does Not Mean Better

This is where people can get themselves into trouble.

Once a trend becomes obvious, investors tend to turn it into a rule.

Smaller markets are outperforming, therefore buy smaller markets.

No.

That is not the thesis.

There are plenty of small cities where I would not buy anything.

Population alone doesn’t create an investment market.

Cheap land doesn’t create demand.

A new highway interchange doesn’t guarantee growth.

One factory announcement doesn’t create a diversified economy.

And a 7 percent cap rate in a market with declining population is not necessarily better than a 5.5 percent cap rate in a market with durable demand.

Sometimes the higher yield is simply the market telling you that the risk is higher.

You still have to do the work.

The Employer Matters More Than the Population Headline

One of the first things I look for in smaller markets is employment concentration.

If one company represents a disproportionate share of the local economy, you need to understand that risk.

I love employer anchored growth.

I do not love employer dependent markets.

There is a difference.

A major hospital system, university, manufacturing operation, corporate headquarters, logistics hub, military installation, or technology investment can create tremendous housing demand.

But I want layers.

Healthcare plus education.

Manufacturing plus logistics.

Tourism plus permanent population.

Government plus private employment.

Technology plus traditional industry.

The deeper the economic ecosystem, the more durable the housing demand.

The headline population number tells you where people are.

The employment base helps tell you whether they can stay.

Infrastructure Can Change a Market Faster Than People Think

Smaller cities can also respond disproportionately to infrastructure investment.

A new interstate connection.

Airport expansion.

Utility capacity.

Fiber infrastructure.

A major hospital.

A university expansion.

A manufacturing plant.

A distribution facility.

Even something as simple as sewer capacity can transform what is developable.

Large cities already have enormous infrastructure networks.

In a smaller market, one significant investment can materially change the development map.

That creates opportunity for developers willing to get there before the transformation is obvious.

Once everybody can see it, you’re usually paying for it.

Housing Affordability Is Becoming an Economic Development Issue

This may be the biggest opportunity of all.

For years, housing was treated primarily as a social issue.

Increasingly, employers understand it as an economic issue.

You cannot recruit workers if they cannot afford to live near the job.

You cannot open a manufacturing facility without housing.

You cannot expand a hospital without nurses.

You cannot operate a resort without employees.

You cannot grow a university town if professors, staff, hospitality workers, and young families are being priced out.

This is one reason I remain particularly interested in workforce housing and build to rent.

There is a huge segment of America that earns too much to qualify for traditional affordable housing but not enough to comfortably buy the median priced home.

I call that the missing middle.

They don’t need marble lobbies.

They need good housing.

A garage.

A backyard.

A neighborhood.

Good schools.

Access to employment.

Predictable monthly costs.

That product works particularly well in smaller metropolitan areas where land economics can still support it.

The Sun Belt Taught Investors an Important Lesson

The last cycle also provided a useful warning.

Population growth does not automatically equal investment performance.

Some of the fastest growing Sun Belt markets became magnets for capital and development.

Developers followed the migration.

Then more developers followed the developers.

Eventually supply outran demand.

National multifamily data now shows just how concentrated that building wave became. Since early 2021, roughly half of new apartment completions occurred in Sun Belt markets.

That is what happens when everyone discovers the same thesis at the same time.

The market can be fundamentally good and the investment can still be bad.

That is why I don’t want the fastest growing market.

I want the market where demand is growing faster than intelligent supply can respond.

Those are very different things.

Smaller Markets Have Their Own Traps

There are risks investors should not underestimate.

Liquidity can disappear quickly.

Construction labor can be thin.

Municipal capacity can be limited.

A project that would take six months to entitle in a sophisticated development department can take longer in a small municipality simply because there are fewer people processing applications.

Contractor depth matters.

Property management matters.

Local banking relationships matter.

Insurance matters.

Infrastructure matters.

And exit assumptions matter enormously.

You cannot underwrite a tertiary market using a primary market exit.

I also pay close attention to rents.

Sometimes a smaller market looks incredibly attractive on paper because land is cheap and construction costs are reasonable.

Then you discover the renter simply cannot support the rent required to justify new construction.

That is not an opportunity.

That is cheap dirt.

There is a difference.

Development Is Becoming Local Again

For years, cheap capital made real estate increasingly financial.

Spreadsheet first.

Asset second.

I think this cycle is pushing the business back toward fundamentals.

Local knowledge matters again.

Entitlement knowledge matters.

Construction knowledge matters.

Relationships with municipalities matter.

Knowing the employers matters.

Knowing the neighborhoods matters.

Knowing which side of town people actually want to live on matters.

You cannot download that from a data provider.

That is one reason smaller markets are interesting to me.

They reward operators.

They reward people willing to get on an airplane, drive the market, meet the planning department, talk to employers, visit competing properties, understand the schools, walk the land, and figure out what is actually happening.

Real estate should be a ground game.

It always was.

What We Are Looking For Now

The next phase of this thesis is not simply finding more tertiary markets.

The easy version of that trade is already becoming crowded.

The opportunity now is identifying the next group of markets before capital fully reprices them.

I am looking for several things at the same time.

Population stability or growth.

Multiple durable employers.

Rising household formation.

Housing affordability relative to nearby major metros.

Limited new supply.

Reasonable land basis.

Municipalities that understand the need for housing.

Infrastructure capacity.

A credible path to liquidity.

And enough economic diversity that one corporate decision does not destroy the entire thesis.

When those pieces line up, smaller markets can offer something increasingly difficult to find in American real estate.

Growth without paying growth market prices.

The Market Is Catching Up

Five years ago, talking about tertiary markets often sounded like talking about the places institutional capital had not reached yet.

Today they account for more than half of commercial real estate transaction counts.

That is a remarkable change.

But I don’t think the takeaway is that everyone should suddenly rush into small cities.

If anything, that would miss the point entirely.

The lesson is that real estate returns are often created where perception and reality have not yet caught up with each other.

For years, the perception was that smaller markets meant less liquidity, less growth, less institutional capital, and more risk.

Sometimes that was true.

Sometimes it still is.

But in many places, the reality changed before the perception did.

Population moved.

Employers moved.

Infrastructure improved.

Housing became scarce.

Capital followed.

Liquidity improved.

And eventually the data caught up.

That gap between perception and reality is where I like to operate.

Not because I want to be contrarian for the sake of being contrarian.

Being early and being wrong look exactly the same for a while.

You still have to survive long enough to find out which one you are.

But when the dirt makes sense, the demand is real, the basis gives you room, and the downside doesn’t require a miracle to manage, I would rather be early than stand in line with everyone else.

For the past five years, our thesis has been smaller cities, smaller markets, and overlooked opportunities.

The market is finally validating it.

That doesn’t mean the opportunity is over.

It means the next part requires us to be even more selective.

Because once Wall Street discovers Main Street, Main Street doesn’t stay cheap forever.

About the Author

Daniel Kaufman is a real estate developer, investor, and founder with more than 25 years of experience across residential, commercial, mixed use, hospitality, workforce housing, and build to rent development. He has overseen more than $2 billion in project value and approaches real estate from the ground up, with a focus on site selection, underwriting, entitlement, construction, financing, and long term operations.

His investment philosophy is built around disciplined basis, durable demand, practical execution, and finding opportunities where market perception has not yet caught up with the underlying fundamentals.

Read more of Daniel’s work and follow his current projects at DanielKaufmanRE.com.

There is a strange thing happening in America right now.

We are preparing to spend extraordinary amounts of money building infrastructure for artificial intelligence while continuing to struggle to build enough places for actual people to live.

I don’t think those are separate conversations anymore.

In fact, I think one of the biggest opportunities in real estate over the next decade sits directly at the intersection of the two.

Housing.

Power.

Land.

Infrastructure.

Data centers.

Capital.

For most of my career, the real estate industry has treated these as separate businesses.

I’m increasingly convinced that is the wrong way to look at it.

The Numbers Are Getting Hard to Ignore

The AI infrastructure boom is no longer theoretical.

According to JLL, North American data center absorption reached a record 25 gigawatts during the first half of 2026.

That was double the level from a year earlier and roughly five times the level from two years earlier.

Vacancy is sitting around 1%.

Think about that for a second.

We spend a lot of time in commercial real estate talking about oversupply, vacancy, concessions and weak absorption.

Data centers have almost the opposite problem.

Demand is running ahead of the industry’s ability to deliver capacity.

And the capital behind this expansion is enormous.

JLL estimates roughly $700 billion of permanent financing could be required through 2028, with approximately $250 billion of AI related bond issuance occurring in the first half of 2026 alone.

But the number I find even more interesting comes from Lawrence Berkeley National Laboratory.

Its latest estimate suggests data centers could consume approximately 11.8% of total US electricity by 2030.

The range of possible outcomes is even wider, roughly 9.5% to 15.3%.

The reference case works out to approximately 649 terawatt hours of electricity.

That is not a niche real estate sector anymore.

That is infrastructure.

And infrastructure at that scale changes everything around it.

Now Look at Housing

At the same time, America continues to have a housing supply problem.

We can debate the exact size of the shortage.

Economists do.

What is harder to debate is why housing has become so difficult to produce.

Land is expensive.

Entitlements take too long.

Construction costs remain high.

Financing has become more difficult.

Insurance has become a larger consideration.

Municipal infrastructure is frequently inadequate.

Utilities can determine whether a project is viable before an architect has finished drawing it.

And increasingly, power availability matters.

Anyone who has actually tried to take a development from a piece of dirt through entitlement, financing, construction and stabilization understands this.

Real estate isn’t just about the building anymore.

It is about everything required to make the building possible.

That is where the housing conversation starts colliding with the AI conversation.

AI Has a Real Estate Problem

AI feels like a technology story.

Physically, it is also a massive real estate and infrastructure story.

AI needs servers.

Servers need buildings.

Buildings need land.

They need enormous amounts of electricity.

They need transmission capacity.

They need cooling.

They need fiber.

They need roads.

They need water in certain configurations.

They need local approvals.

They need construction labor.

They need financing.

And ultimately, the people who build, operate and service the surrounding economy need somewhere to live.

That sounds remarkably familiar to anyone who has spent a career developing real estate.

The difference is scale.

We are effectively building a new category of industrial infrastructure across America at a speed that many communities have never experienced.

And we are beginning to see the consequences.

The Backlash Shouldn’t Surprise Anyone

Here is perhaps the most important number in this entire discussion.

JLL reports that 79% of Americans support the United States maintaining leadership in artificial intelligence.

But only 14% support data center development in their own community.

That is a 65 point gap.

It tells us something important.

People aren’t necessarily rejecting AI.

They are asking a much more basic question.

What’s in it for us?

That is a fair question.

Imagine someone arrives in your community proposing a massive facility.

It may consume substantial electricity.

It may require new transmission infrastructure.

Depending on the design, water consumption can become an issue.

There may be generators, noise, construction traffic and visual impacts.

The project may receive incentives.

Then residents discover that once construction is finished, the permanent employment impact may not resemble that of a traditional manufacturing plant.

Why wouldn’t they ask questions?

The industry sometimes treats community opposition as an obstacle to development.

I think that is a mistake.

It is information.

Communities are telling developers that the old model of arriving with engineers, attorneys, an economic impact study and a request for approvals isn’t going to be enough everywhere.

And that is probably a good thing.

The Social License to Develop Is Becoming an Asset

Developers understand entitlements.

We understand zoning.

We understand permits.

But there is another entitlement that doesn’t appear on a zoning map.

The social license to develop.

You can have the right zoning, enough capital and a sophisticated engineering team and still discover that a community simply doesn’t want what you are proposing.

We are watching that happen with data centers across the country.

And I think the developers who solve this problem will have an enormous competitive advantage.

Not by creating better public relations.

By creating better projects.

There is a difference.

What If Infrastructure Investment Did More?

This is where I think the conversation gets interesting.

What if a major infrastructure development didn’t begin with:

How do we get this approved?

What if it began with:

What can this investment unlock for the community around it?

Maybe that means workforce housing.

Maybe it means electrical infrastructure that benefits more than one property.

Maybe it means roads.

Maybe it means schools.

Maybe it means public space.

Maybe it means tax revenue structured in a way residents can actually see.

Maybe it means local workforce development.

Maybe it means housing for teachers, nurses, first responders and the people working in the new economy being created around the project.

Not every data center needs an apartment community next door.

That isn’t the point.

The point is that we should stop thinking about infrastructure projects as isolated boxes.

This Is Where My Thinking Has Changed

I’ve spent more than 25 years developing real estate.

Residential.

Affordable housing.

Mixed income housing.

Build to rent.

Mixed use.

Hospitality.

Commercial.

And increasingly, modular construction and AI infrastructure.

For years, I thought about these primarily as different asset classes.

I don’t anymore.

I think they are becoming parts of an interconnected infrastructure system.

Housing requires land, utilities, entitlements, transportation, construction capacity and capital.

AI infrastructure requires land, utilities, entitlements, transportation, construction capacity and capital.

Different buildings.

Different economics.

Different operating models.

But much of the development DNA is surprisingly similar.

That realization has changed how I’m thinking about the next chapter of our business.

BUILD 2030

We have started calling this thesis BUILD 2030 inside Kaufman & Company.

It isn’t another fund.

It isn’t a new asset class.

And I don’t really think of it as a marketing campaign.

It is a framework for how we intend to look at development opportunities over the rest of this decade.

The basic idea is simple.

Infrastructure for people and infrastructure for AI should not be separate conversations.

Across our businesses, we already touch housing, development, construction, modular building systems, technology, investment and AI infrastructure.

The opportunity now is to think about how those pieces work together.

That may mean developing them together.

It may mean investing in infrastructure that enables housing.

It may mean using modular construction to attack development costs.

It may mean looking at smaller distributed AI infrastructure rather than assuming every solution needs to be hyperscale.

It may mean structuring community benefits differently.

And in some cases, it may mean deciding a project shouldn’t be built at all.

That last part matters.

Not every available site should become a development.

Not every community should host a data center.

Not every housing deal pencils.

And not every technological trend deserves unlimited capital.

Good development still comes down to disciplined underwriting.

There Is Another Risk Nobody Talks About Enough

AI infrastructure is attracting capital at extraordinary speed.

That should make developers more disciplined, not less.

I’ve lived through enough real estate cycles to know what happens when everyone decides an asset class can’t lose.

Capital arrives.

Underwriting gets aggressive.

Landowners adjust expectations.

Development pipelines explode.

People start underwriting tomorrow’s economics instead of today’s reality.

Then something changes.

The cost of capital.

Technology.

Demand.

Regulation.

Power pricing.

Politics.

Or all of them at once.

AI may transform the global economy and there can still be bad AI infrastructure investments.

Both things can be true.

That is why I believe the real opportunity isn’t simply to build more data centers.

It is to understand the infrastructure ecosystem around them.

The Developer of the Future Looks Different

For decades, specialization made enormous sense in real estate.

The multifamily developer built apartments.

The industrial developer built warehouses.

The hotel developer built hotels.

The utility handled power.

Technology companies handled technology.

Capital providers financed everything.

Those boundaries are getting blurry.

A development company looking at a site today may need to understand housing demand, electrical capacity, grid interconnection, municipal politics, construction technology, modular manufacturing, tax incentives, capital markets and AI driven demand.

That is a very different job description.

I think the best developers of the next 20 years will look less like builders of individual asset classes and more like allocators of land, infrastructure and capital.

The building will still matter.

But understanding what belongs on the land may matter even more.

America Doesn’t Need to Choose

There is a tendency to frame these conversations as tradeoffs.

AI or the environment.

Data centers or affordable electricity.

Growth or quality of life.

Housing or infrastructure.

I don’t think that is particularly useful.

America needs AI infrastructure.

It also needs housing.

It needs more power generation.

It needs transmission.

It needs modernized utilities.

It needs manufacturing.

It needs construction innovation.

And it needs communities willing to accept development.

The challenge is figuring out how those pieces reinforce each other instead of compete with each other.

That is partly an engineering problem.

It is partly a capital problem.

It is partly a political problem.

But it is also a development problem.

And development problems are solvable.

One Question I Keep Coming Back To

If we are about to spend hundreds of billions of dollars building the physical infrastructure required for artificial intelligence, what else can that investment accomplish?

Can it help unlock housing?

Can it modernize power infrastructure?

Can it create meaningful community benefits?

Can it support new forms of construction?

Can it leave a community stronger than it found it?

I don’t have all of those answers yet.

BUILD 2030 is partly about finding them.

But I am increasingly convinced that building infrastructure for machines while ignoring the infrastructure required by people is not a sustainable development model.

The next great real estate opportunity may not be multifamily.

It may not be data centers.

It may not be modular housing.

It may be understanding how all of them fit together.

And that is where we’re going to spend a lot of our time.

I’m curious how others see this.

If you’re a developer, investor, utility executive, local official or simply someone living in a community where data center development is being proposed, I’d like to hear your perspective.

Should communities expect more from the developers building AI infrastructure in their backyard?

I think they should.

About the Author

Daniel Kaufman is a real estate developer, investor and founder with more than 25 years of experience building and investing across residential, mixed use, workforce and affordable housing, hospitality and emerging infrastructure.

Over his career, Daniel has overseen more than $2 billion in project value, including more than 1,800 affordable and mixed income housing units and more than 2,200 market rate, hotel and mixed use units.

His approach is practitioner led. He has worked across the full development lifecycle, from land acquisition, zoning and entitlement through underwriting, financing, design, construction and long term operations. More recently, his work has expanded into modular construction and data center and AI infrastructure, with a growing focus on how housing, technology, energy, land and capital are beginning to converge.

Daniel writes about real estate from the perspective of someone actively building it. His work focuses on housing, development, capital markets, infrastructure, cities and the lessons that come from navigating projects through real world market cycles.

He believes good development should create durable economic value while also improving the places and communities around it.

Read more from Daniel at DanielKaufmanRE.com and DanielKaufman.info.

Every year the National Low Income Housing Coalition puts out Out of Reach, and every year I look for one number, what does a full time worker need to earn to afford a modest two bedroom apartment. The 2026 report is out. The number is $34.73 an hour. The average renter in this country earns $24.84 an hour. That is a $9.89 gap, and it means most working…

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I read a lot of headlines like that. I also read the actual data behind them, because that's the job. And three years of regional business survey data just told a very different story than the one everyone's sharing.

Here's what the feed isn't telling you, AI adoption is exploding, and layoffs are not.

How We Got Here

Every August, businesses across the New York and Northern New Jersey region get asked the same question, are you using AI in your operations. This year's answers should stop the doom scrolling cold.

Sixty one percent of service firms now use AI, up from 40 percent last year and 25 percent in 2024. Manufacturers jumped to 51 percent, roughly double last year's 26 percent and triple the 16 percent from 2024. Knowledge heavy sectors, information, business services, finance, are leading the pack.

That's not a slow creep. That's a technology going from niche to standard practice in three years flat.

The Part The Panic Narrative Skips

If AI adoption is everywhere, the layoffs should be everywhere too. They're not.

Three quarters of service firms and more than 90 percent of manufacturers describe their AI investment as minimal to modest, think free tools or a small slice of the budget. Just 15 percent of service firms call it a significant investment. Only 5 percent call it a major strategic bet. No manufacturers are betting big at all.

Even where firms have adopted AI, usage inside the company is thin. The median share of workers actually using it is 17 percent at service firms and 7 percent at manufacturers.

Widespread adoption. Shallow investment. Concentrated usage. That combination does not produce mass layoffs, and the numbers back that up. Four percent of service firms reported layoffs tied to AI this year, up from 1 percent last year. Zero manufacturers, both years. About 15 percent of service firms hired fewer people than they otherwise would have. But 13 percent hired more people specifically to help them use the technology.

Run the math and the hiring picture is closer to a wash than a wipeout.

Retraining, Not Replacing

Here's the pattern that actually matters, and it's the one nobody's putting in a headline. Firms are retraining people, not replacing them.

More than a third of service firms and over 20 percent of manufacturers that use AI are retraining existing workers because of it. That's across the education spectrum, though a bit more concentrated among college educated employees. The training itself is practical, learning the tools, automating repetitive tasks, writing better prompts, applying AI to specific job functions like marketing or accounts payable, always with a human still checking the output.

Companies are also spending real time teaching people how to use this responsibly, verifying outputs, watching for bias, protecting data, not leaning on the tool so hard they stop thinking for themselves. That's not what a company preparing for mass elimination of headcount looks like. That's a company investing in the people it already has.

Why Some Firms Are Staying Out

Interesting wrinkle here too. Cost is barely a factor in why firms haven't adopted AI yet. About half say their work just doesn't lend itself to it. A quarter say the technology isn't good enough yet to move the needle for them. Another third cite data privacy and security concerns, a similar share worries about accuracy, and roughly a third say they don't have the technical talent in house to use it well.

None of that reads like fear of the technology. It reads like operators being disciplined about where a tool actually fits their business, which is exactly how I'd want the businesses I'm invested in to think about it.

One Real Caveat

I'm not going to pretend the data is all upside. There's a legitimate concern buried in the research, entry level workers may be absorbing more of the impact than anyone else. AI is good at routine tasks, and routine tasks are often the on ramp for someone's first job. That's worth watching closely, because it's not the same story as senior employees getting replaced. It's a question about whether the bottom rung of the ladder is getting harder to reach.

That's a real issue. It's just a different issue than "AI is destroying jobs," and it deserves its own conversation instead of getting flattened into the same panic narrative.

The Bottom Line

The mainstream story is AI is here to eliminate your job. The actual data says AI is here, adoption is real and accelerating, and companies are responding by retraining the people they already have, not clearing them out.

This is the same mistake I see in real estate all the time, people react to the headline instead of the underlying numbers, and they end up positioned for a story that isn't actually happening. AI is changing how work gets done. It is not, at least not yet and not at the scale the narrative suggests, eliminating the workforce.

Three years of data on the same question from the same firms is a real trend line, not a hot take. Pay attention to that instead of the panic in your feed.

The Kaufman Report covers markets, capital, and the data behind the headlines from an operator's perspective. No fluff. No consensus takes.

— Daniel Kaufman

Here's the thing about this newsletter. We're not selling a seminar. We're not gatekeeping a strategy behind a paywall or a course fee. Every idea in here is the same thing we're actually doing with our own capital, and we're putting it out to everybody for free, no catch, no ask.

Right now, every investor, every conference, every allocator wants to talk about data centers. That's where the capital is flooding in, that's where the headlines are, that's where the institutional money has piled up. And that makes sense, the AI infrastructure buildout is real and the numbers are enormous.

But when institutional capital floods an asset class this hard, this fast, it's worth looking at what everyone is walking past to get there. Wayne Gretzky put it better than anyone, skate to where the puck is going, not to where it's been. Right now the whole industry is skating hard toward data centers. We think the better play is a step behind that, in the industrial buildings and manufacturing capacity that actually make the data center buildout possible in the first place.

That's not a bet on data centers. That's a bet on what data centers can't exist without, and almost nobody is pricing it in yet. That's the strategy we want to share, plainly, with anyone reading this.

The Real Opportunity Isn't the Building, It's What Fills It

Across the country, there's a whole new category of industrial tenant showing up in leasing activity, and three years ago most of these companies barely registered. Today, by some estimates, they're accounting for somewhere between 10 and 30 percent of recent industrial leasing volume in major portfolios.

Who are they? They're the companies building the components, the infrastructure, and the supply chains that support the AI buildout. Not the data centers themselves, those aren't industrial properties, but everything that has to exist around them. Contractors, electrical infrastructure firms, construction and materials companies, logistics providers. The value chain servicing data center construction has grown something like 10 to 15 times over the past seven years.

We've also watched the robotics piece of this evolve in real time. A few years back, tenants were installing automated picking systems in distribution centers, nothing revolutionary, just efficiency. Now we're seeing tenants that manufacture advanced robotics capable of far more complex work than pulling inventory off a shelf. That's a different kind of occupier with different space needs, different power needs, and frankly different lease terms than what most industrial landlords are used to underwriting.

This is exactly the point we want to share, don't chase the trophy asset everyone's already bidding on. Follow the supply chain nobody's pricing correctly yet. The manufacturing and industrial capacity behind this buildout is the trade that's still available. The data centers themselves are already crowded.

Two Things Happening at Once

Here's what a lot of operators are missing. There are two separate forces at work simultaneously.

First, you've got a cyclical recovery among the traditional industrial tenant base, the consumer goods companies and distribution operators that have always occupied large format warehouse space. That demand is coming back.

Second, and this is the part that's newer, you've got a structural wave of demand from companies doing things the industrial market has never really had to accommodate before. That's not a blip. That's a new category of tenant that's here to stay, and it changes how underwriting a deal has to work.

For anyone developing, lending, or investing in this space, that combination widens the opportunity set. But it also means where this demand actually lands matters just as much as how big the wave gets.

Location Still Wins, But Not the Way You'd Think

Location and fundamentals beat hype, and the research backs that up here too. A recent analysis looked at roughly 1,500 industrial submarkets across the U.S. to figure out where advanced manufacturing activity has historically translated into stronger real estate performance. Only 167 markets rose to the top. That's a tight concentration, and it tells you something important.

The markets that performed best weren't necessarily the ones growing fastest. They were the ones with existing depth, meaning established manufacturing presence, built out infrastructure, and a substantial industrial base already in place. Markets growing quickly off a small base generally underperformed the ones that already had the bones.

That distinction matters a lot right now, because a single headline grabbing project can put a market on everyone's radar overnight. A big announcement goes out, and suddenly a market is "hot." But one project doesn't build an ecosystem. Advanced manufacturing needs suppliers nearby, expandable logistics networks, qualified labor, reliable power, and infrastructure that can actually support growth. Without those pieces already in motion, a splashy project can end up sitting on its own.

Where the ecosystem does exist, though, a major data center campus can pull in construction firms, logistics providers, power infrastructure companies, MEP contractors, and other occupiers who all want to be close to the action. In markets with the workforce and industrial depth to support it, every new investment tends to strengthen the pull for the next one.

Why We'd Rather Be Early Than Crowded

For most of the recent cycle, industrial real estate demand came from familiar places, logistics, ecommerce, retail, traditional manufacturing. That demand hasn't gone away, and its recovery is still supporting the sector.

What's changed, and what most investors are still missing, is that a second group of occupiers has joined them. Their growth is tied directly to advanced manufacturing and the sheer scale of capital moving into AI infrastructure, but they aren't the data centers themselves, they're everything around them. The headline deals will keep grabbing attention because that's where the noise is. We'd rather be somewhere the noise hasn't reached yet.

Everyone chasing the same asset class at the same time is how you end up overpaying for what's left. We've watched that happen in resort towns, in multifamily, in every hot sector that got discovered by institutional money a cycle too late. Manufacturing and the industrial ecosystem supporting this buildout hasn't been discovered yet, not the way data centers have. That's exactly why we're looking there. Find the markets where this demand is converging with real, existing industrial depth, get in before the crowd shows up, and let everyone else fight over the trophy asset.

This is free, no catch, no ask. We put this out because we believe in putting real information and honest analysis in front of people who are trying to make sense of where this market is headed, without a paywall or a pitch attached to it. If you want to talk through a deal, an opportunity, or just compare notes on what you're seeing in your market, reach out.

Daniel Kaufman

Founder & CEO, Kaufman & Company

Email: Daniel@kaufmanredev.com

Phone: (341) 217-2580

LinkedIn: linkedin.com/in/danielekaufman

Web: danielkaufmanre.com

I've spent more than 25 years building and financing housing, from Detroit in the early 90s to the mountain resort towns I work in today. In that time I've watched manufactured housing get treated like the ugly stepchild of the industry. Too often it got lumped in with mobile homes and written off before anyone looked at what was actually being built. That perception is finally cracking, and the timing lines up with an affordability crisis that's forcing every serious operator to look at faster, cheaper ways to build.

The last two years of this administration could end up being the most consequential stretch manufactured housing has seen in decades. There's political pressure building from every direction to address the housing shortage, and manufactured housing keeps coming up as one of the few levers that can actually move the needle at scale.

The Policy Is Catching Up to the Product

2026 brought us the bipartisan 21st Century Road to Housing Act, and it includes real reforms aimed at manufactured housing. Suzanne Garwood, a managing director and associate general counsel at JPMorgan Chase, put it plainly at a recent Mortgage Industry Standards Maintenance Organization conference. She called it a direct response to the affordability crisis, and noted that manufactured housing has historically been a weak product for lenders to underwrite.

That's changing because HUD is signaling it wants to change it. HUD is the agency that oversees the manufactured housing code, and Garwood thinks the next two years are the window for HUD to make real moves. JPMorgan itself has been pushing regulators to legalize more manufactured housing product types nationally, which tells you this isn't just a policy talking point, it's a bank underwriting thesis. One of the biggest items on the table is removing the permanent chassis requirement, which could open the door to multistory manufactured homes and cut real cost out of every unit.

I read that and think about every deal I've underwritten where the chassis requirement added cost and killed design flexibility for no good reason. Removing that one rule could reshape what gets built.

The Product Itself Has Changed

The old stigma was that manufactured meant cheap. That's not the industry anymore. Bryan Henson, president and CEO of factory builder BevyHouse, just installed a home in fire ravaged Altadena, California, rebuilding what are often modern redesigns of decades old properties. His process lets site prep and vertical construction happen in parallel. A home that would take 18 months to custom build gets assembled in six.

That kind of timeline compression is exactly why I've stayed close to this space through my own container home work with Mr. Good Container Homes. When you can run site work and structure fabrication at the same time, you're not just saving money, you're de-risking the whole project timeline. Anyone who has carried a construction loan through an 18 month build knows what that timeline compression is actually worth.

It's not just single-family either. PTM Partners and Peacock Capital in Florida launched Inception Housing, a vertically integrated workforce housing developer using cold-formed steel to cut welding time and procuring 90 percent of materials directly. They're already building two complexes in the state. PTM's Michael Tillman and Nicholas Pantuliano say the fast assembly time on their 24 to 30 unit modular buildings speeds up inspection too. Tillman's line stuck with me: the promise of modular is that you're shipping something over nearly fully built, but every city pulls it apart differently.

That last part is the whole ballgame, and it's exactly what I focus on with Oldivai. Workforce housing doesn't fail because the building science is bad. It fails because zoning, permitting, and local politics treat every jurisdiction like a blank slate. Oldivai exists because I believe the model for solving housing in mountain resort and employer anchored communities has to account for that reality from day one, not bolt it on after the fact.

Zoning Is Still the Real Barrier

Legalization is moving. Virginia and North Carolina both opened up single-family zoning to manufactured homes across most of the state, removing an extra hurdle builders used to have to clear. California is looking at backstops to help incentivize new startup factory builders. The federal bill removing the chassis requirement alone could cut up to 10,000 dollars off the cost of a home.

But the experts are right that local zoning is still the bottleneck. The minutiae in different codes make it nearly impossible to build one standardized panel or module across multiple cities. Tillman's point about needing a more standardized zoning code to scale the business is the same conclusion I've come to on every workforce housing project I've touched. As he put it, the federal bill doesn't pass anything on offsite prefab directly, but it legitimizes the conversation when it comes to financing. That legitimacy matters more than people think. Once lenders believe in a product type, capital starts moving toward it.

Where I Come Down

I've built my career on the idea that housing gets solved at the intersection of financing, construction method, and local policy, not any one of those alone. Manufactured and modular housing finally has all three moving in the same direction at once. That's rare, and it's why I'm paying close attention over the next two years.

If you're a developer, lender, or municipality trying to figure out how manufactured and modular housing fits into your market, this is the moment to get in the conversation early. That's the work I do through Oldivai on the workforce housing side and through my partnership with Mr. Good Container Homes on the container and modular construction side. Both are built around the same idea, faster construction methods only create value if you've already solved for the zoning and financing reality on the ground.

About the Author

I'm Daniel Kaufman, founder and CEO of Kaufman & Company. I've spent more than 25 years building, lending, and investing across housing markets from Detroit to the Mountain West, Texas, Florida, and the Northeast. My work today focuses on workforce housing and employer anchored development in mountain resort communities through Oldivai, and on modular and container based construction through my partnership with Mr. Good Container Homes.

If you want to talk manufactured housing, modular construction, or workforce housing strategy, reach me directly.

Daniel Kaufman

Email: Daniel@kaufmanredev.com

Website: www.danielkaufmanre.com

LinkedIn: linkedin.com/in/danielekaufman

There is a comfortable story America tells itself about the 1970s and 1980s, that our factories left for China because of cheap labor and unfair trade. That's part of it. But it leaves out the part we don't like to admit, that we also pushed a lot of that industry out the door ourselves, one permit denial, one lawsuit, one "not in my backyard" campaign at a time. Environmental review boards, local zoning fights, and a public that had grown tired of smokestacks all played a role in making it easier to build a plant in Shenzhen than in Ohio.

We are doing it again right now, this time to AI infrastructure, and I think it is going to cost us just as much.

The First Time We Did This to Ourselves

The scale of what economists call the "China Shock" is not in dispute, even if the exact number is argued over. The most cited research, from MIT economist David Autor and his coauthors, put direct and indirect manufacturing job losses tied to Chinese import competition between 1999 and 2011 at somewhere around one million manufacturing jobs and closer to two million jobs across the broader economy. Other estimates, including a Census Bureau working paper, put the China Shock's share of all US manufacturing job losses between 2001 and 2019 at close to sixty percent.

Youngstown, Ohio is the case study everyone reaches for, and for good reason. On September 19, 1977, a day locals still call Black Monday, Youngstown Sheet and Tube announced it was cutting five thousand jobs effective immediately. The city never recovered its footing. Decades later, Brookings Institution research found Youngstown had the highest rate of concentrated poverty of any of the top one hundred US metro areas. That is not a temporary dip. That is a permanent scar on a place that once anchored American steel production.

What gets left out of the Youngstown story, and the broader Rust Belt story, is how much of the underlying shift was not purely a trade story. Manufacturing had already become politically unpopular in a lot of American towns well before China joined the WTO in 2001. Environmental concerns about air and water quality, lawsuits over pollution, and organized local opposition to expansion made it harder and more expensive to keep heavy industry running domestically. Companies did not need much of a push to look overseas once the cost of building or expanding at home kept climbing for reasons that had nothing to do with the product itself.

The Pattern Didn't Stop, It Just Changed Targets

Fast forward to today and the same playbook is still running, just aimed at different industries.

In central Pennsylvania, a company called Encina spent two years and planned a $1.1 billion chemical recycling facility along the Susquehanna River, only to cancel the project after sustained community opposition and permitting trouble. In Louisiana, Shintech abandoned plans for a polyvinyl chloride plant in Convent after intense pressure from local and international activist groups, and simply relocated to a nearby community instead of leaving the country, but the underlying dynamic, local resistance overriding a major industrial investment, was identical to what happened decades earlier. And right now in Inola, Oklahoma, a proposed aluminum smelting plant is caught in exactly this fight, with the state attorney general trying to halt it and a community coalition organizing against it on environmental and agricultural grounds, even as the governor argues it would restore real domestic manufacturing capacity.

None of this is new. It is the same fight, decade after decade, dressed in the concerns of the moment. In the seventies it was smokestacks and acid rain. Today it is water usage and grid strain. The specifics shift, the mechanism does not.

Now Watch the Same Fight Aim at AI

Every argument being raised against AI data centers today, that they will destroy jobs, strain the environment, and hollow out communities, is the same argument that got used against manufacturing for fifty years. And just like before, a lot of it does not hold up well against the numbers.

AI infrastructure investment is not a marginal story in the economy right now, it is arguably the story. Data on AI related capital investment, including computers, peripheral equipment, and software, has been running at over a percentage point of contribution to quarterly GDP growth through 2025 and into 2026, according to Federal Reserve research notes and the St. Louis Fed. Epoch AI's analysis found that spending on AI data centers, hardware, and networking together jumped from 0.7 percent to 1.4 percent of US GDP in a single year. One market research estimate this year found that the dollar value AI data center buildout contributed to GDP growth had actually surpassed consumer spending's contribution for the first time in modern history.

I will be straight with you on the employment side, because the honest case is stronger than an oversold one. Data centers are not big direct employers relative to their capital cost, and some analyses, including one using Virginia state economic data, have pegged it at roughly one permanent job for every thirteen million dollars invested. But Brookings research on markets receiving their first large data center found data processing sector employment rising fifty six percent over the following decade, and the broader construction, engineering, and supply chain activity around these builds is real, even if it concentrates most heavily in metro areas with existing labor market depth. That regional imbalance is a genuine policy problem worth solving. It is not a reason to stop building.

What Losing This One Actually Costs Us

Here is the stakes that I do not think enough people are sitting with. We already ran this experiment with manufacturing and we know how the story ends when American communities successfully organize against a critical industry building at scale inside our own borders. The industry does not disappear. It goes somewhere else. China absorbed the manufacturing capacity we made too expensive and too slow to build here, and thirty years later we are dependent on them for products, from steel to solar panels to semiconductors, that we used to make ourselves.

AI infrastructure is the current version of that fork in the road. China is not waiting for our permitting fights to resolve. Every data center we slow walk or block here is capacity that gets built somewhere else, by someone else, running on someone else's technology stack. The compute, the models trained on it, and the industries built on top of both do not pause while a county board debates a zoning variance.

I am not arguing that every concern raised about AI infrastructure is fake or that communities should have no say in what gets built near them. Some of the concerns are legitimate and deserve real engineering solutions, particularly around water use and grid capacity. What I am arguing is that we have direct historical evidence of what happens when legitimate local concerns get weaponized into blanket opposition against an entire technological transition, and the answer is that the jobs, the tax base, and the technical leadership move somewhere else, permanently. Youngstown never got its jobs back. The towns that lose the AI infrastructure fight in the next ten years will not get a second chance either.

We built the modern American economy once by out building everyone else. We are being handed the opportunity to do it again. The only question is whether we learned anything from the last time we let politics talk us out of it.

If you follow the mainstream real estate narrative, you would think nobody wants to build apartments anymore.

Interest rates are too high. Construction costs are too high. Banks aren’t lending. Insurance is expensive. Deals don’t pencil. Developers are sitting on their hands waiting for the Fed to save them.

There is truth in all of that.

But there is another story developing underneath the headlines.

Multifamily development isn’t disappearing. It is moving.

And that distinction matters enormously if you are trying to figure out where the next cycle of opportunity will come from.

According to the latest U.S. Census Bureau permitting data analyzed by RealPage, New York permitted 35,888 multifamily units during the 12 months ending in July.

That’s up 47.9% year over year.

Los Angeles permitted 16,789 units.

That’s up 97.8%.

Yes, Los Angeles.

The same Los Angeles that has become shorthand in much of the real estate industry for regulatory dysfunction, high construction costs, expensive land and a difficult entitlement environment.

Meanwhile, some of the markets developers couldn’t build fast enough in a few years ago are hitting the brakes.

Austin is down 3,921 units year over year.

Orlando is down 2,835.

Miami is down 2,703.

Dallas and Houston each permitted roughly 1,850 fewer units than a year earlier.

The map is changing.

And I think investors who continue looking at real estate through the rearview mirror are going to miss what comes next.

The Sun Belt Trade Got Crowded

For most of the last cycle, the development thesis was relatively straightforward.

Follow population growth.

Follow jobs.

Follow business migration.

Follow people leaving expensive coastal cities for Texas, Florida, Arizona and the Carolinas.

Developers did exactly that.

So did institutional capital.

So did lenders.

And eventually, everybody discovered the same markets.

That’s how good investment theses become crowded trades.

Austin may be the clearest example.

The market became one of America’s great growth stories. Developers responded with enormous amounts of housing. RealPage data now shows Austin’s annual multifamily permitting has fallen dramatically from its previous peak.

That’s not because Austin suddenly became a bad city.

It’s because real estate is cyclical.

Capital responds to opportunity. Development responds to capital. Supply eventually responds to development.

Then the economics change.

The same dynamic has played out across parts of Florida and Texas.

Markets that couldn’t get enough apartments several years ago spent the last few years absorbing a historic wave of them.

Now developers are reacting.

Meanwhile, Look at the Coasts

This is where things get interesting.

The conventional narrative says people left New York and California.

Therefore, you shouldn’t build there.

But real estate doesn’t work in slogans.

New York is now the largest multifamily permitting market in the country.

Its 35,888 permitted units are spread across Brooklyn, the Bronx, Queens and Manhattan.

Los Angeles is different.

Approximately 12,724 of the metro division’s 16,789 permitted units are concentrated within the City of Los Angeles itself.

That tells me something.

Developers aren’t abandoning expensive coastal markets.

They’re selectively returning to them.

Why?

Because barriers to entry can eventually become barriers to competition.

Land constraints matter.

Entitlement difficulty matters.

Construction costs matter.

Political complexity matters.

But so does replacement cost.

And so does the simple fact that millions of people still need somewhere to live.

The markets that are hardest to build in can become extremely interesting when everybody else decides they are too hard.

This Is Contrary to the Narrative. That’s the Point.

I have spent enough time in real estate to know that the best opportunities rarely arrive with universal agreement.

By the time everybody agrees a market is attractive, the opportunity is usually already priced accordingly.

A few years ago, virtually every institutional presentation seemed to contain some version of the same map.

Arrows pointed toward Texas, Florida, Arizona and the Southeast.

Capital followed those arrows.

Development followed the capital.

Supply followed development.

Now we’re beginning to see the other side of that trade.

And simultaneously, markets that investors spent years writing off are starting to show renewed development activity.

That’s not something I view as contradictory.

That’s the cycle doing what cycles do.

The National Numbers Matter Too

There is another piece of this story that shouldn’t be ignored.

America’s apartment supply wave is already slowing.

Roughly 340,200 apartments were delivered nationally during the year ending in the second quarter of 2026, according to RealPage.

That was the first time in three years annual supply fell below the decade norm.

More importantly, annual deliveries have now declined for six consecutive quarters after peaking near 588,000 units in late 2024.

At the same time, apartment demand remains resilient.

More than 187,000 units were absorbed nationally during the second quarter alone.

Occupancy reached 95.5% in July.

And national effective asking rents finally returned to positive annual growth.

None of those numbers suggest an apartment market without demand.

They suggest a market working through the tail end of an extraordinary supply cycle.

And development decisions being made today aren’t really about 2026.

They’re about 2028, 2029 and 2030.

That’s where I think the opportunity becomes much more interesting.

So Where Are the Opportunities?

I’m not suggesting everyone should suddenly start buying land in Los Angeles and New York.

That would be replacing one simplistic investment thesis with another.

The opportunity is more nuanced.

First, look at markets where today’s supply problem may become tomorrow’s supply shortage.

If permitting, starts and construction pipelines continue declining in certain high-growth markets, today’s oversupply can eventually become tomorrow’s undersupply.

Austin is worth watching for exactly that reason.

A market can be overbuilt and still have excellent long-term fundamentals.

Timing matters.

Basis matters even more.

Second, look at high-barrier coastal markets where housing demand remains structurally stronger than the development environment.

New York, Los Angeles, San Jose and portions of the West Coast deserve another look.

Not every project works.

Most probably won’t.

But where zoning, density, land basis, financing and construction costs align, barriers to entry can protect the projects that actually get built.

Third, look for distress created by yesterday’s assumptions.

This may be one of the more compelling opportunities of the next several years.

Projects were bought and financed based on assumptions made when money was cheap, rents were accelerating and cap rates were compressing.

Some of those assumptions no longer work.

That creates opportunities in land.

It creates opportunities in partially entitled projects.

It creates opportunities in stalled developments.

It creates opportunities in recapitalizations.

And eventually, it creates opportunities to acquire assets below replacement cost.

I would much rather inherit someone else’s entitlement work at the right basis than pay them for the optimism they had three years ago.

Fourth, follow supply, not headlines.

Population growth matters.

Job growth matters.

Household formation matters.

But none of those statistics should be viewed independently of supply.

A market growing 3% with enormous new supply can be less attractive than a market growing 1% where virtually nothing can get built.

Real estate happens at the intersection of demand, supply and basis.

You need all three.

What We’re Looking For

Our development and investment thesis isn’t based on chasing whichever market topped last year’s rankings.

We’re looking for dislocations.

Markets where perception and fundamentals have separated.

Markets where development has become difficult enough that future supply may be constrained.

Markets where existing developers or landowners are under pressure.

Markets where projects can be acquired or recapitalized at a basis that makes sense under today’s financing environment, not yesterday’s.

And markets where housing demand is durable enough to survive the inevitable economic cycles between acquisition and stabilization.

That is a very different exercise from asking which cities have the highest population growth.

It requires underwriting.

It requires patience.

And sometimes it requires being willing to invest where the prevailing narrative says you shouldn’t.

Los Angeles Is a Good Example

I know firsthand how difficult it can be to develop housing in Los Angeles.

That difficulty is real.

But so is the housing shortage.

So is the cost of replacement.

So are the barriers facing new competitors.

And so is the demand for housing in one of the largest economic centers in the world.

When Los Angeles multifamily permitting increases nearly 98% in a year, I pay attention.

Not because every one of those projects will get financed or built.

Permits are not completions.

But because developers are voting with something much more meaningful than opinions.

They’re voting with capital, time and entitlement risk.

The Next Cycle Won’t Look Like the Last One

That’s probably the most important takeaway.

The winners of the next real estate cycle aren’t necessarily going to be the winners of the last one.

The development map is already being redrawn.

Some Sun Belt markets are digesting supply.

Some coastal markets are seeing development return.

National deliveries are falling.

Demand is holding up.

And projects that were underwritten during the era of cheap money are being forced to confront today’s capital markets.

That’s not a reason to sit on the sidelines.

That’s where opportunity comes from.

Real estate investing gets interesting when the consensus breaks down.

Right now, the consensus still says development is dead, the coasts are broken and everybody moved south.

The actual numbers are telling us something considerably more complicated.

And considerably more interesting.

The apartment development cycle isn’t ending.

It’s rotating.

The question isn’t whether apartments will continue to be built.

The question is who recognizes where the economics are moving before everyone else does.

That’s the part I’m paying attention to.

Daniel Kaufman is a real estate developer and investor focused on housing, build-to-rent, mixed-use development and opportunistic real estate investments across the United States.