Monday, October 26, 2026

On Tap Today

  • Prompting togetherness: Rather than decimating the demand for office, so far AI has been a boon to certain markets.

  • Instant metropolis: Arizona's largest new town started with no staff, no money, and 104,000 residents.

  • Closing costs: A buyer in Pennsylvania is challenging a $650 brokerage fee disclosed only at closing.

Essential Metrics

Daily Market Snapshot
S&P 500 7,623.68 −39.75 (−0.52%)
FTSE Nareit All Equity REITs 816.36 +2.78 (+0.34%)
10-Year Treasury 5.00% +4 bp
SOFR 3.90% +2 bp
Data as of market close October 23, 2026. SOFR reflects the October 22 trade date.
The S&P 500 slipped 0.52 percent to 7,623.68 on Friday, its lowest close of October, as higher oil prices outweighed a steadier session for chip stocks and left the index down 0.5 percent for the week. Energy was the only clear winner, nearly three of every four S&P 500 stocks fell, and the Dow dropped 1.23 percent. The 10-year Treasury yield rose 4 basis points to 5.00 percent, giving back part of Thursday's 17 basis point plunge as crude settling above $100 a barrel revived inflation worries and put the 5 percent threshold back in play for fixed-rate take-out and refi pricing ahead of the October 27 to 28 Fed meeting. The FTSE Nareit All Equity REITs index still added 0.34 percent to 816.36, extending Thursday's rally even as long-term yields climbed. SOFR ticked up 2 basis points to 3.90 percent on the October 22 trade date, the top of its October range, nudging floating-rate carry on bridge and construction paper slightly higher.

Office

AI Was Supposed to Reduce Office Demand. So Far It Has Done the Opposite.

The AI boom is creating an unexpected beneficiary: the office market. With $206 billion flowing into US private AI funding in the first quarter of 2026 alone, the companies racing to build the technology are snapping up space for engineers, researchers, and infrastructure teams. VTS data shows national AI office demand climbing 85 percent year over year, with requirements growing larger as tech companies push employees back into the office, weekends included.

The surge is concentrated in a handful of markets, but the pecking order is shifting. San Francisco remains the epicenter of AI leasing, while New York has edged past Silicon Valley for second place, fueled by companies building AI applications and infrastructure for its financial, legal, and media industries. Seattle and Northern Virginia are also seeing sharp increases, and the speed of the expansion is setting this cycle apart from previous tech booms.

But the rush to lease space raises a question for an industry that has spent years bracing for AI-driven job losses and shrinking office footprints. Could the technology expected to automate knowledge work actually help revive office demand? Early data suggests it might, though funding volatility, future productivity gains, and the concentration of leasing in a few submarkets leave plenty of room for uncertainty.

Read More
Fast Take

Instant City Races to Build Tax Base From Scratch

San Tan Valley incorporated in September 2025 as an instant town of 104,000 residents in Pinal County, Arizona — the largest new incorporation in state history. Starting with zero staff, no infrastructure, and no access to tax revenue, the town borrowed operating funds from neighboring Queen Creek for ten months while building out basic municipal functions. Brent Billingsley, hired as the first employee in December 2025, led a 15-person team to operational independence by July 1, 2026. The town had to navigate federal and state bureaucracy to unlock state-shared revenue, which remains its primary funding source alongside a new transaction privilege tax that took effect October 1.
San Tan Valley leases office space from Pinal County and contracts with the county sheriff's office and Rural Metro Fire for emergency services. Residents will vote November 3 to raise the state-imposed spending cap from $91 million to $850 million, a ceiling the town expects to grow into over time. Neighboring Queen Creek, with a smaller population, operates under a $650 million limit. First-year revenue reached roughly $51 million. Financial priorities hinge on a 10-year general plan now in development, with goals including land acquisition, a town hall, parks, and road expansion.
Mayor Daren Schnepf and Billingsley both aim to diversify beyond the town's bedroom-community reputation by attracting industrial and commercial tenants. An estimated 600 businesses currently operate in San Tan Valley, serving 37,000 to 39,491 housing units. A battery storage site has been approved, and town leaders are touring data centers to educate the Council on potential energy infrastructure projects. A 3,238-acre state-owned parcel bounded by Hash Knife Draw Road, Bella Vista Road, Hunt Highway, and Gantzel Road is envisioned as a walkable downtown core where developers can pitch mixed-use plans to the state through the town.
Economic development leaders from Queen Creek, Casa Grande, and Maricopa cautioned San Tan Valley to manage expectations and treat growth as a marathon. Doreen Cott, Queen Creek's economic development director, noted that projects often take years to materialize. The advice comes as San Tan Valley seeks to recapture sales tax leaking to neighboring cities and build a commercial base capable of supporting its population. Recent openings of a Winco Foods and In-N-Out Burger mark early commercial traction in a town that had no billing system or computers a year ago.
 
Fast Take

Buyer Sues Broker Over $650 Administrative Fee in Post-Commission Settlement Era

Gregory Deivert filed suit against Keller Williams Elite in Lancaster County, Pennsylvania, alleging the brokerage charged him a $650 fee at closing in October 2023 without proper disclosure or corresponding service. Deivert claims the fee breached fiduciary duty and violated Pennsylvania consumer protection law. The complaint states the charge first appeared on the closing statement, a point at which buyers rarely walk away from a transaction. Deivert is seeking class action status for all buyers who paid similar flat fees to the brokerage beyond commissions already paid by sellers.
Keller Williams Elite allegedly instructed agents to describe the fee as mandatory and tied to administrative costs such as document preparation. Deivert's complaint argues that document preparation is a legal obligation of brokers under Pennsylvania law, not a separate billable service. Other Keller Williams franchises across the country have reportedly charged similar fees under names including "Additional Broker Commission" and "Compliance Fee." Keller Williams Elite did not respond to requests for comment.
A parallel case in Florida ended in voluntary dismissal two months after filing. Jeff and Melissa Efron had challenged a $475 transaction fee from Compass, also seeking class action status. Industry estimates suggest consumers pay up to $2 billion annually in brokerage transaction fees. Deivert has demanded a jury trial and seeks both damages and a permanent injunction barring the $650 charge.

Overheard

Popular Articles

The Questions Real Estate Organizations Should Answer Before Deploying AI

How real estate organizations can prepare for AI by defining outcomes, auditing data, planning integrations, managing costs, and building flexibility into their tech stacks.

https://propmodo.com/the-questions-real-estate-organizations-should-answer-before-deploying-ai/

Big Office Tenants Are Running Out of Places to Go

U.S. office availability is falling as construction stalls, leaving large tenants competing for scarce Class A, trophy and flexible space.

https://propmodo.com/big-office-tenants-are-running-out-of-places-to-go/

Your CRE Software Knows What’s Happening. Why Isn’t It Doing More?

Property management software already captures most of what happens at a building, but turning that into automation requires mapping workflows in far more detail than most operators expect.

https://propmodo.com/your-cre-software-knows-whats-happening-why-isnt-it-doing-more/

Yardi Picks Up the Rent Pricing Fight Where RealPage Left Off

A judge denied Yardi summary judgment and opened discovery to its landlord co-defendants, putting the rent pricing case on a different path than RealPage took.

https://propmodo.com/yardi-picks-up-the-rent-pricing-fight-where-realpage-left-off/

Why Over 90% of Real Estate AI Pilots Fall Short of Their Goals

Nearly every CRE team is racing to put AI to work in real estate, but only a fraction report hitting their goals, and the reasons go well beyond bad data.

https://propmodo.com/why-over-90-of-real-estate-ai-pilots-fall-short-of-their-goals/

What Happens to Proptech When Anyone Can Build Software?

AI has made writing software dramatically easier, which has flooded proptech with new products and given real estate companies a credible path to building their own tools.

https://propmodo.com/what-happens-to-proptech-when-anyone-can-build-software/

Commercial Real Estate’s Tax Problem Is Finally Getting Smarter

Centralized data, automated monitoring, and managed payment platforms are helping commercial real estate owners reduce property tax risk across large and complex portfolios.

https://propmodo.com/commercial-real-estates-tax-problem-is-finally-getting-smarter/

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