New York's Office-to-Apartment Conversions Restart After the Pfizer Scare

Good morning. A Midtown tower buckled in July under a conversion gone wrong, yet New York's office-to-apartment push is already back in motion. The city has cleared 16 more projects to break ground since.

🎙️ This Week on No Cap: Former 7-Eleven and Blockbuster CEO Jim Keyes reveals what really led to Blockbuster’s collapse, the deals that could have saved it, and how 7-Eleven reinvented retail.

CRE Trivia 🧠 

Which Philadelphia merchant is credited with popularizing the price tag and the money-back guarantee in retail?

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Market Snapshot

Capital Markets

• Year-end financing: Nothing haunts a sponsor like a deal that slips into next year. Submit your project and we’ll show you how C-PACE can help it pencil before 2027. (sponsored)

• DFW crowned: Dallas-Fort Worth ranked the top US market to watch for a third straight year in ULI and PwC's 2027 outlook, with Southern and Southeastern metros taking six of the top 10 spots.

• Formation record: US business formation hit a record 562,579 filings in September, up 13.7% YoY, with Missouri, Texas, Wyoming and Colorado driving more than 40% of the yearly gain.

• Debt wall: CRE borrowers face $733.2B of debt maturing in 2027, and with lenders pulling back on extensions, more distress and discounted buying opportunities are likely to surface.

• Payoff split: Just 12.79% of maturing CMBS office loans paid off on time in September while retail hit 89.60%, showing how sharply loan performance now splits by property type.

• Fed hold: Futures markets expect the Fed to hold rates this week, with traders now betting its next move is more likely a hike than a cut as inflation lingers.

• Small buyers: Small investors grabbed a record share of investor home purchases in H1 2026 as mega-investors pulled back to just 5.7%, reshaping who competes for SFR homes.

• West tilt: Institutional capital is edging back into multifamily through supply-constrained West Coast markets like coastal California and Puget Sound, where thin construction is opening value-add entry points.

• Senior sweep: Public REITs have more than doubled their share of senior housing deals to 36% since 2023, winning the best assets on speed and a cheaper cost of capital.

• Tower bid: A New York developer filed plans for Fort Lauderdale's tallest tower, a 56-story, 696-unit high-rise rising 645 feet over a downtown parking lot and small warehouse.

• Big-box surge: Big-box tenants signed 170.6M SF of new leases in H1 2026, the busiest since 2022, pulling vacancy down to 9.4% as data center and logistics users absorb space.

• Starts rebuild: Developers broke ground on 274.4M SF of industrial through September, on pace for the most since 2022, even as power access increasingly decides which sites can move forward.

• Cluster premium: Warehouses near big data center clusters command about 6.8% higher rents than comparable buildings, rising to 9.8% next to the densest hubs as power and tenant mix reprice space.

• Direct demand: Anthropic will lease dedicated data centers at scale to cut its reliance on Amazon, Google and Microsoft, part of the $542B to $567B in computing spend disclosed in its IPO filing.

• Bond build: Blackstone's data center operator QTS is seeking about $800M in private-placement debt, the latest financing feeding the capital-hungry race to build AI computing capacity.

• Rent cools: Retail asking-rent growth slowed to 1.6% in Q3, the weakest since 2017, as high operating costs and choosier tenants cap what landlords can push through.

• Traffic returns: Taco Bell visits are clawing back from the summer cyclospora outbreak, though Q3 foot traffic still ran about 12% below a year earlier.

• Lease lens: A pricing lawsuit against Dollar General is drawing scrutiny from net-lease investors, who hold thousands of its stores and watch tenant health closely for rent risk.

• Grocery grab: A Northeast grocer is expanding through acquisitions as supermarket consolidation rolls on, keeping grocery-anchored centers a favorite target for yield-seeking investors.

• Equity gap: Three of every four maturing Class A office CMBS loans would need fresh equity to refinance at today's rates, a sign the strain now reaches the market's best buildings.

• Zombie glut: About 5.5M SF of "zombie" office space across 30 large DC blocks sits unleaseable because owners lack capital for improvements, distorting how much supply tenants really have.

• Loop turn: A $550M, $392-per-SF sale of 1 N. Wacker marked Chicago's priciest office deal in years and the first 700K-SF-plus tower to trade up since 2024.

• Quality cap: Tenants keep upgrading to better buildings without leasing more space, as the flight to quality lifts rents on top offices but not the size of the deals.

• Deal thaw: US hotel sales reached $6.76B in Q3, up 8% YoY, as investors keep chasing lodging income even with financing costs still high.

• Dream loan: A joint venture landed a $145M construction loan for the Dream Hotel at Miami's Riverside Wharf, financing a marquee piece of the city's waterfront entertainment district.

📈 CHART OF THE DAY

CRE Trivia (Answer)🧠

John Wanamaker. He opened Oak Hall in 1861, then converted an abandoned railroad depot into his "Grand Depot" store in 1875.

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