Bisnow Reports: First Draft Live

With the 10-year Treasury hovering near 5% and President Donald Trump’s $3T tax plan rattling the bond market, capital costs are surging — and CRE is feeling the heat. 

On this episode, Peachtree Group CEO Greg Friedman dove into how the rising 10-year Treasury is impacting deals, the challenge of projecting values in a rapidly shifting environment, how extend-and-pretend is hurting deals, and why he’s still doing development deals even though he expects CRE to underperform for a while.

Trump’s One Big Beautiful Bill Act is being negotiated in the Senate, and how it gets hammered out could have major implications for commercial real estate. The breadth of possible impacts is huge, from the return of bonus depreciation, which could finally make the math work on deals, to qualified business income deductions allowing CRE to write off more debt and a possible ban on state regulations on AI, which could kill local rules on rent-setting software and change the data center map.

On this episode, EisnerAmper partner Ryan Sievers broke down what CRE needs to have its eye on to maximize profit and get deals moving in a new tax environment.

The Federal Reserve decided yet again to hold interest rates steady at the June FOMC meeting. But CRE sees a turning point.

On this episode, Avison Young CEO Mark Rose said the decision was irrelevant anyway. The CRE recovery isn't coming soon, he said. It's here now.

U.S. foreign policy these days is a sea of uncertainty — CRE investors' least favorite thing. From whipsaw tariffs to taxes seen as “revenge” against international players who don't fall in line with Trump administration goals, money managers are increasingly reluctant to put their money on American soil. 

This week, Trepp Senior Research Manager Tom Taylor discussed why it makes sense that some global investors are pulling back from the U.S., why it doesn’t worry him too much, and who is still investing and in what.

The One Big Beautiful Bill Act is now law, and its impact on housing could be massive. 

The Low-Income Housing Tax Credit received its biggest reform in 25 years, including halving the requirements of how much of its funding must come from municipal bonds.

LIHTC and the Opportunity Zones program were both made permanent, and major adjustments to OZs — including a wave of new zones to come and a new focus on rural areas — could supercharge housing development. 

It's not just a welcome step from the U.S. government, Camden President and Chief Financial Officer Alex Jessett said on this week's episode — new tax treatment and a deregulation push are absolutely critical to get housing supply up and start to chip away at the nation's affordable housing crisis.

Though a few brave (or crazy) pioneers have dabbled with using crypto in commercial real estate, the industry has mostly sat on the sidelines for years.

The reason: not enough regulation, no stability or guardrails. 

This week, that started to change. The passage of the GENIUS Act to create a framework for stablecoins, plus two other bills making their way through Congress, could lead to a rapid rise of building tokenization, digital transactions and rents paid by bitcoin. 

On this week’s episode, Savills Vice Chairman Gabe Marans said the federal framework will kick off a new era for real estate in which deals are done faster and cheaper. And he doesn’t think CRE is ready for it.

The rise of AI is pushing data centers to their limits. Calls for bigger, denser facilities are increasing, and tenant power requirements are doubling in many markets.

It’s still not enough to meet the needs of today’s market or tomorrow’s users. 

On this episode, Bisnow National Data Center Reporter Dan Rabb said keeping the momentum of the data center boom is all about finding power. And while possible solutions abound — microgrids and nuclear among them — they aren’t going to come through fast enough.

“Liberation Day” Part 2 has come and gone, and the U.S. has more clarity on the global trade landscape.

Some of the levies will have CRE breathing easier, but some — including the 35% rate on Canada, a hugely important market for construction material imports — might be worse than the industry feared. Already, tariffs have driven construction costs up anywhere from 6% to 10%.

But at least some of the uncertainty has been chipped away. How will CRE react? 

Cushman & Wakefield Senior Economist James Bohnaker said he expects deals to start moving forward again, though in a slow slog, not a rush. But with the U.S. in an unprecedented macroeconomic environment, scenario planning by CRE investors is crucial.

The original opportunity zone program drove more than $100B into real estate and business investment, but it also faced criticism that it missed its mark, failing to spur development in the areas that needed it most.

The One Big Beautiful Bill Act just made OZs permanent, and it aims to fix all that, tightening the rules on what areas may be designated OZs, lowering the area median income threshold and heavily incentivizing rural development.

On this week’s First Draft Live, Steve Glickman, co-author of the original OZ program and CEO of Statt, said OZs have been a wild success, especially at spurring much-needed housing.

“You're talking bang for the buck that's unparalleled,” he said.

Glickman said the new rules will make OZ 2.0 even better, though how much it drives rural development all comes down to designating sites at “the nexus between need and investability.” 

It’s been a chaotic year for the construction industry.

Between a volatile tariff regime, elevated interest rates and increased pressures on its labor force, contractors have had to navigate one of the most difficult environments in recent memory.

On this week’s First Draft Live, Shawmut Design and Construction CEO Les Hiscoe breaks down the impacts of the uncertainty and how his $2B Boston-based company is handling the turmoil.

“When things aren’t known and you can’t really plan on them in our industry, you can’t give our clients predictability,” he said on the show.

While many developers are responding to the moment by delaying projects — Hiscoe said one of his clients won’t start building until interest rates fall a full percentage point — Shawmut is advising them against it as the impacts of tariffs have yet to fully be realized.

“Waiting is a mistake,” he said. 

The godfather of the CMBS market issued a warning that commercial real estate is not out of the woods of its downturn, which is a potential problem for the U.S. economy.

“The losses in CRE are so big that the rippling effect of those losses to the economy are so big that they could be quite harmful,” Ethan Penner, the founder of Mosaic Real Estate Investors, said on this week’s First Draft Live.

Roughly $23B of CMBS loans have matured without a resolution, and more than 10% are delinquent or in special servicing. Yet the CMBS lending market is roaring, with $60B in new debt issued in just the first six months of this year.

“The truth is there are massive, massive losses in real estate,” said Penner, who is credited with inventing the commercial mortgage-backed security in the early 1990s. “These are breathtaking losses, and I think that clearly the system hasn’t recognized that on any level.”

Penner also spoke about his candidacy for the California governor’s race in 2026, with a platform focused on deregulation and a radical new approach to the homelessness crisis in the state.

“I don’t know where the toilets are in the state house, that makes me an outsider,” he said. “But I do know that the systems are broken.” 

Global bond markets are under siege, and CRE is caught in the crossfire.  

UK 30-year gilt yields surged to their highest level since 1998, and volatility in U.S. Treasuries has repeatedly brushed them against 5%.

For commercial real estate, that means more expensive debt, climbing cap rates and global investors second-guessing allocations. 

Christopher Stanley, banking industry practice lead at Moody’s Analytics, said the tightness of the spread shows increased competition in the market, but the entire yield curve has moved up considerably. 

That's going to hit net operating income, and Stanley said staying on top of liquidity and forecasting out volatility all the way through the life cycle of the project have become crucial.

“When we're in a nervous economy like we're in right now, everyone immediately jumps to what kind of credit problems are there going to be,” Stanley said on the show. “Credit is a part of it, but we're really playing a balance sheet management game.”

It's a high-pressure year for multifamily. Looming maturities, tough capital markets, changing policies, a major shake-up of Fannie Mae and Freddie Mac on the horizon and intensified national attention are all converging to complicate the sector.

But multifamily fundamentals are strong, Sharon Karaffa, president of multifamily debt and structured finance at Newmark, said on this week's episode.

“Absorption has been very high and vacancies are very low. Most of the supply wave is behind us,” she said. “So we think we’re on the upswing.”

The ending of the conservatorship of Fannie Mae and Freddie Mac could disrupt the market, depending on how exactly it happens.

Karaffa said it is critical that the privatized organizations have a line to the Treasury to maintain affordability, that a strict regulatory framework is put in place to avoid the mess of the Global Financial Crisis, and that the agencies are not combined — the market needs both to keep competition alive.

The starting gun has gone off: The Federal Reserve lowered interest rates 25 basis points. Now CRE can be off to the races. 

At least that's the narrative. 

In practice, CRE cares more about long-term debt, and the 10-year Treasury ran counter to expectations and actually rose 10 bps, Jim Costello, MSCI’s director of real estate economics, said on this week’s show. Besides, the industry’s problems go far beyond interest rates, and 25 bps isn’t large enough to make much difference. 

“If you want to be successful in CRE, it’s not about that home run of capital market forces lifting the value tremendously,” Costello said. “It’s going to be a lot of singles and doubles.”

That means a focus on proper leasing, getting the right broker, careful analysis of tenants and focusing on operating expenses.

How about all that money waiting on the sidelines — will that finally loosen up with the drop in rates? 

“Here's the thing about dry powder: When you get a little wind, it can blow it away,” Costello said.

”If you don’t have a situation where managers can place money effectively and hit their IRRs, that dry powder will dissipate.”

The AI trade is reshaping markets, and CRE is riding shotgun.

A surge of capital into chips and data centers has turned AI into the backbone of U.S. growth — pushing tech spending to dot-com-era highs and doubling data center pipelines.

But will it pay off? Alarm bells are ringing that adoption may not match optimism. That could quickly mean swathes of massive data centers sitting vacant.

Michael Pearce, deputy chief U.S. economist at Oxford Economics, sees the opposite problem. On this week's episode, he said adoption curves are running much closer to forecasts.

His concern: CRE can't keep up.

"All the limits are on the supply side," he said. "On the demand side it feels limitless." 

The optimism that permeated commercial real estate at the start of 2025 has died down as the year has gone on.

That's the headline from Deloitte's annual CRE executive survey, but Deloitte partner Sally Ann Flood said on this week's episode that the responses showed an increasingly bifurcated market. Some asset classes, like data centers and warehouses, are "red hot," while investors are still grappling with distress in office and multifamily.

But Flood said the most important theme to come out of this year's survey is the technological inflection point the industry has reached.

“The technology revolution is here for real estate. I really believe this is the time that we can embrace it and really see improvements to the bottom line by adopting the technology.”

From companies embracing AI to digitize leases, partnerships between big tech, real estate companies and energy providers and increased operational efficiency, Flood says this is the year the notoriously tech-averse industry leaps into the digital age.

Once the poster child for excess, WeWork clawed its way out of bankruptcy, turned profitable and is now pulling in $2.2B in revenue, with 550,000 members and 47 Fortune 100 clients pushing the company to 77% occupancy across the globe.  

In this special edition of First Draft Live, recorded at CREtech at New York’s Javits Center, WeWork CEO John Santora sat down with Bisnow Editor-in-Chief Mark F. Bonner for a raw look at one of the wildest comeback stories in real estate.

Santora broke down how he rebuilt the culture, fixed the math and turned the company everyone wrote off into the blueprint for the future of work.

After years of cautious experimentation, CRE’s biggest players are finally scaling artificial intelligence.

JLL has been at the forefront of it, launching an in-house AI platform called Falcon that is cutting deal timelines from weeks to hours and automating the drudgery that once bogged down teams. The result is higher revenue per head, higher success rates when pitching and faster closings.

On this week’s show, CEO Christian Ulbrich gave a peek under the hood of how JLL is getting the most out of AI and how he sees it reshaping the industry.

It’s difficult to get an edge from AI, he said. Tools that drive productivity become table stakes within six months. The real differentiation only comes from new-to-market strategy, agentic AI that reinvents parts of CRE dealmaking.

Still, the industry must act.

“Don’t wait too long,” he said. “The train has left the station, and it is going at Japanese speed levels of train — very, very fast.”

The U.S. office market is molting.

The industry has spent the last five years shedding its old skin — and underperforming assets — and is attempting to emerge fresh and appealing to workers.

Return-to-office mandates are helping bring workers back to their desks, and vacancy just ticked down for the first time since 2019. But few mandates come with teeth, meaning how many employees actually show up on any given day still comes down to how many want to, CBRE Building Operations and Experience CEO Jamie Hodari, who also co-founded and still runs Industrious, said on this week’s show.

And while pingpong tables and pizza parties can help bring a space to life, he said he judges the success of the office based on whether people have their heads up, talking to each other.

“If people are interacting with each other, if people are learning from each other, I don’t care what the lighting is,” he said. “I don’t care if the windows are 13 feet or 10 feet or whatever — that’s a commute-worthy office.”

While the longest government shutdown in U.S. history may be over, the commercial real estate industry will be feeling its impact for some time.

From HUD halting originations and approvals to hotel demand drying up and data going away, the pain has been widespread.

And it will continue to impact underwriting and kill deals, especially in the multifamily realm, Origin Investments co-CEO Michael Episcope said.

Roughly 2,000 multifamily starts were delayed as HUD went dark, he said. That doesn’t get resolved immediately and will impact rent growth.

“You have to assume that there’s going to be lower demand as a result of this government shutdown,” Episcope said on this week’s show.

2025 has not gone according to plan. 

Real estate has faced headwinds in economic, policy and fundamental changes. Interest rate reductions and rising deal flow have the industry feeling better, but stability is a pipe dream these days, especially when federal data is missing and CRE research can conflict.

But forget about the data, economist Peter Linneman said on this week's show — how is it really going in your apartments or your office building? 

He said CRE has gotten hooked on data analysis and has forgotten that what really matters are the fundamentals on the ground. 

And while he agrees that uncertainty is the new normal, and that's trouble for CRE, “people adjust.”

He foresees a meaningful return to transactions in 2026. 

“There are people out there with courage, but they don't have capital. And there are others out there whose short investment horizons have made them understandably and correctly not courageous,” he said. 

“But when everybody else starts jumping, it'll be like the wildebeests crossing the river. They all jump in.”