Wednesday, October 21, 2026

On Tap Today

  • No place like work: U.S. office availability is falling as construction stalls, leaving large tenants competing for scarce Class A, trophy, and flexible space.

  • Compute conquest: CBRE's $1 billion Onnec acquisition adds data center cabling and equipment installation to its traditional services.

  • Small space, big bet: Seattle's largest apartment project trades square footage for hotel-like perks and location.

Essential Metrics

Daily Market Snapshot
S&P 500 7,712.57 +21.84 (+0.28%)
FTSE Nareit All Equity REITs 810.87 +13.57 (+1.70%)
10-Year Treasury 5.12% −2 bp
SOFR 3.87% −1 bp
Data as of market close October 20, 2026. SOFR reflects the October 19 trade date.
The S&P 500 rose 0.28 percent to 7,712.57 on Tuesday as upbeat earnings and lower oil prices fueled a broad rotation into small caps and defensive sectors, while megacap technology lagged. The FTSE Nareit All Equity REITs index jumped 1.70 percent to 810.87, more than erasing Monday's decline as real estate ranked among the best-performing sectors of the day. The 10-year Treasury yield slipped two basis points to 5.12 percent ahead of the October 27 to 28 Fed meeting, offering modest relief on fixed-rate take-out math and easing pressure on cap rates in refi underwriting. SOFR eased one basis point to 3.87 percent on the October 19 trade date, keeping floating-rate carry on bridge and construction paper essentially flat.

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Office

Big Office Tenants Are Running Out of Places to Go

The office market’s headline availability numbers are telling the wrong story. Across most major U.S. markets, rates above 20% suggest plenty of room, but for large tenants looking for quality space in the right locations, the supply picture looks nothing like that. A decade of underbuilding, accelerated by a construction pipeline now 82% below its 2020 peak, has quietly created a shortage at the top of the market even as the broader availability numbers stay elevated.

The scarcity becomes visible once you filter for what large tenants actually need. When availability data is narrowed to Class A buildings in top submarkets with contiguous blocks of 50,000 square feet or more, the options across most major cities collapse to a fraction of what the headline rate implies. Manhattan, Dallas, and San Francisco all show the same pattern: high overall availability, almost nothing viable at the trophy level. With almost no new construction coming to market for years, the squeeze is expected to deepen before it eases.

The recovery is also highly uneven. Markets like Manhattan, Dallas, Atlanta, and San Francisco are tightening fast, with rents rising and large tenants competing for a shrinking pool of options. Others like Denver, Houston, and San Diego show a split between a strong upper tier and a weaker mid-market that is still working through excess space. The clearest signal for what comes next is in the renewal data: large tenants are staying put in growing numbers, which is both a sign of confidence in their current space and a reflection of how hard it has become to find something better.

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Fast Take

Tiny Apartments, Massive Amenities: How Seattle's 1,131-Unit Tower Bets on Luxury Living

Seattle House, a 1,131-unit development near Amazon's headquarters, opens to its first tenants on November 15 after seven years of construction. Developed by Vancouver, British Columbia-based Concord Pacific and Seattle-based HB Management, the $371 million project features two 45-story towers connected by a 13-story podium across a half-block site. General manager Nathan Leible reported more than 200 tours and over 50 signed leases in the first four weekends of showings, though he declined to share overall occupancy rates.
Units run smaller than national averages, matching Seattle's position as the city with the smallest new apartments in the country at 645 square feet on average. Monthly rents start at $2,200 for a studio, $2,600 for a one-bedroom, and $4,100 for a two-bedroom, topping out at $7,200 for a two-bedroom unit just under 1,000 square feet on the top floor. Tenants trade floor space for access to more than 50,000 square feet of amenities including an outdoor infinity pool, a large gym with steam room and sauna, a dog spa roughly double the size of a small studio, and a second-floor co-working area with five phone rooms, five meeting rooms, and a coffee bar.
Construction began in 2019 but faced years of delays from the pandemic, a street-use permit dispute, and a concrete truck driver strike that paused work for more than a year. Seattle House joins several other large apartment projects in the area, including a neighboring 45-story tower by Holland Partner Group and NASH and a two-tower project by Vancouver's Onni Group. Centreville Construction served as general contractor, with Arcadis as architect and Avenue5 Residential handling property management.
 
Fast Take

CBRE's Billion-Dollar Bet Follows Data Center Boom Inside the Racks

CBRE agreed to acquire London-based Onnec Group for roughly $610 million in cash plus up to $400 million in performance-based payments. Onnec employs 800 people who install and maintain cabling and equipment racks inside data centers for major technology clients across Europe and Asia Pacific. Combined with CBRE's 2024 purchase of U.S.-based Direct Line, the deal shifts the firm's data center business from traditional construction and brokerage services into the technical infrastructure where servers operate. Chief Executive Bob Sulentic said the moves take CBRE into "where the actual compute happens."
Data center capacity in eight major U.S. markets grew nearly 34% in the year ended June 30, with vacancy at just 1.4%. Infrastructure work, including data centers, energy, and transportation, now generates 14% of CBRE's earnings, up from 3% in 2021. The firm expects roughly $7 billion in infrastructure revenue by 2027. JLL, the second-largest commercial real estate services firm, has also expanded its data center team, roughly doubling headcount over the past two years.
The expansion ties commercial real estate firms more closely to technology spending cycles, raising questions about concentration risk. Sulentic acknowledged the AI and data center market is "extremely frothy," though he pointed to revenue opportunities beyond new construction, including facility upgrades and management. Shares of CBRE, JLL, and other services firms fell sharply in February as investors weighed whether AI could automate research, valuations, and dealmaking functions. JPMorgan analyst Anthony Paolone called fears of AI replacing brokers overblown, citing the complexity of negotiations and due diligence.

Overheard

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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.

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