Your best tenant’s stock is down 71% since October.
You don’t know it yet.
Because the rent still hits your account on the first. The lease runs through 2027. The tenant is a mid-cap SaaS name everyone’s heard of...
The kind of logo you put on the first page of your OM when you refi’d in 2024.
Here’s what you also don’t know.
The board greenlit a 30% reduction in force last week.
The CFO already quietly asked the real estate team what it costs to sublease three full floors of your 280,000 sq ft Class A tower in SoMa (San Francisco).
And the broker they’re about to call...
Is the same one who’s been leaving you voicemails about “two blocks over” trading at a 40% discount to replacement cost.
That landlord is you😔.
Or it’s your neighbor…
Or it’s the GP in your LP pool who’s been emailing you about a “great Class A opportunity in a gateway market.”
Let me give you the numbers nobody in CRE is pricing in yet.
Figma... down 87% from its 2025 peak.
Duolingo... down 80%.
Monday.com... down 79%.
Microsoft... shed $357 billion in a single day on January 30.
The second-largest single-day market cap loss on record.
For the first time in modern history:
Software is trading at a discount to the S&P 500.
Every one of those companies is a tenant.
Or was…
They signed Class A leases in San Francisco, Austin, Seattle, and Bay Area suburbs in 2021 and 2022. Back when WeWork-adjacent fit-outs and 18 months of free rent were a status symbol.
They will not be signing renewals at those terms.
Many will not be signing renewals at all.
Meanwhile...
Blackstone is sitting on $65 billion of real estate dry powder.
Apollo is weaponizing its insurance arm to out-lever the banks.
Oaktree’s John Brady is calling this “one of the most significant real estate distressed investment cycles of the last 40 years.”
The mid-market is still pitching 2021 cap rates.
The next 180 days are not a recovery.
They are a sorting.
The Mid-Market Sponsor Is Cooked
Here’s where I lose half my subscribers.
Ready?
Not the institutional shop with a $2B fund.
The squishy middle.
The $50M-to-$200M AUM sponsor who spent the last decade acquiring B-minus assets in C-plus markets using bridge debt and telling investors they were “opportunistic.”
That playbook is a smoldering pile.
McKinsey’s 2026 Global Private Markets Report put it cleanly...
McKinsey’s 2026 Global Private Markets Report
Translation.
You have to actually be good now.
The capital tells the story. PERE reported $164.4 billion of global real estate fundraising in the first three quarters of 2025 alone. $115 billion of it targeting North America.
That’s not a shortage.
That’s a flood.
But nearly all of it is flying first class.
S&P Global is calling it an LP “flight to quality.” Blackstone, Apollo, Brookfield, Ares...
F E A S T.
Tier 2 and Tier 3 sponsors... famine.
The top four GPs control more disclosed real estate dry powder than every other GP in the market combined.
It is the most violent barbell the CRE capital stack has ever produced.
$875 billion of commercial and multifamily mortgage debt coming due per the MBA. Multifamily alone jumping 56% year-over-year to $162 billion.
The “extend and pretend“ window that saved everyone’s tofu in 2024 and 2025 is officially closing.
Lenders are out of patience.
Patience is out of lenders.
The assets are mostly fine.
Occupancy is mostly fine.
NOI is mostly…fine…it’s okay…trending in some markets (cough cough…red ones.)
The capital stack is what’s broken.
This is 2010 with better fundamentals.
Which is arguably more dangerous for the seller.
And more lucrative for the buyer.
The SaaSpocalypse (say that 3X fast) Is a Real Estate Story, Not a Tech Story
This is the piece nobody wants to be writing.
And it’s the one that should keep every office owner in a tech-heavy submarket up at night.
Per-seat SaaS pricing is forecast to drop 30–50% within 18 months as agentic AI eats the per-seat model.
Recent enterprise surveys show 40% of IT budgets are being reallocated from traditional SaaS subscriptions to agentic platforms.
Now ask yourself a harder question.
If a software company can fire half its engineers and replace them with agents that work 24 hours a day for pennies on the dollar...
Who sits in the seat?
Nobody.
That’s the point.
Software companies are about to shed headcount they already have. Not hire the headcount their 2023 leases assumed.
Figma. Duolingo. Monday. Asana. These names didn’t just lose market cap.
They lost their hiring plan. Their seat-count plan. Their office footprint plan.
And unlike 2023, when tech tenants did the slow-bleed sublease dance quietly in the background...
This round is going to be faster. Louder. More concentrated.
Stocks down 80% don’t buy you patience from an activist board.
RIFs come in quarters, not years.
Subleases hit the market in waves.
Landlords get a phone call that starts with “we’d like to terminate early, what can we work out?“
And ends with “or we’ll just stop paying and let you chase us.”
SF. Austin. Seattle. Mountain View. Palo Alto. The North Bay. The East Bay. Bellevue.
Anywhere with heavy SaaS tenancy is staring down a second leg of office distress. Just as the market was starting to stabilize.
If you own Class A office in a tech-heavy submarket...
And you’re patting yourself on the back for the 2025 leasing bounce...
You’ll need a contingency plan.
Raising Capital Right Now
Getting easier if you are:
A sponsor with real, full-cycle, through-a-cycle, through-the-fire-on-a-tightrope-blindfolded-on-a-tri…cycle track record. DPI, not TVPI. Actual distributions
An operator in a boring sector. Self-storage, grocery-anchored retail, medical office, IOS, MHC. Pension money is quietly flooding in
Anyone with a credible private credit angle
Getting brutally harder if you are:
A Sun Belt multifamily syndicator. Your LPs heard the Phoenix/Dallas thesis already. They got burned
An office-only opportunistic fund outside of trophy
A sponsor who went dark in 2023 and 2024. Your LPs remember
Capital in 2026 is a trust business. Not a deal business
The deal memo does not close the round.
The relationship does.
The End-of-2026 Prediction
1. Transaction volume is up 15–20% year-over-year. Concentrated in industrial, multifamily, and the unsexy alternatives.
2. Office volume is up 30%+. Almost entirely at steep discounts to replacement cost.
3. Trophy cap rates compress. Tertiary cap rates expand (repeat that 10X to yourself in the bathroom mirror at the office daily).
Distress becomes a real asset class. Not a rumor.
4. The top 20 sponsors capture 70% of new institutional capital.
5. Mid-market sponsors merge, wind down, or pivot to retail capital through 506(c) (because they find out they are competing with Wallstreet)
A real shakeout finally happens.
It is overdue.
And the new cycle begins. The one that rewards operators who can actually operate.
No more multiple expansion. No more cheap debt bailouts.
Money gets made on NOI growth, basis, and discipline.
The way it used to.
The way it’s supposed to.
This is the best entry point most of us will see in our careers.
It is also the most unforgiving entry point...
One More Thing
If you’re a sponsor staring at the maturity wall...
Or sitting on a deal that needs equity in the next 90-180 days...
Or rebuilding an LP base that went quiet during the hard years...(I know the feeling)
I help operators raise capital in exactly this market. Direct to HNWIs and family offices. 506(b) and 506(c). The kind of capital that actually shows up when the wire is due.
GP-side coaching. I help make your sponsorship investable before we introduce a single LP.
Family office targeting. I help map the 200+ family offices actively writing real estate checks right now and qualify the fit.
Skin in the game. I only work with sponsors and managers who personally invest alongside their investors.
Not every sponsor is a fit. That’s the point.
If you want to find out if you are:
I keep these conversations tight. And off the record. Just you and me, and a free, no strings attached, custom blueprint to help you grow.
Wishing for the best end of week and weekend to you,
Andrew LeBaron
P.S. I’m active on LinkedIn. Let’s connect.
P.S.S. I’m new to YouTube. Check out my channel.
Why You Should Meet F6 Partners
$1.3B AUM
Led by Co-founder of Invitation Homes (NYSE: INVH)
The same leader partnered with Blackstone to allocate over $4.5B in the world’s largest SFR portfolio
F6 Partners is an alternative real estate asset manager that I’m currently advising, specifically assisting in the buildout of their Investor Relations department to raise another $100M for Student Housing, and so far they are on a roll.
I build LP investor relations infrastructure (lead list building, pitch development, data room, family office strategy, nurture systems, and accountability structures) so your raise actually closes.
Three things I do that most placement firms don’t:
If you’re raising for a real estate deal or a fund in the next 90 days, reply to this email or visit this page and fill out the form and let’s see how my team and I can help you.
A $1.3B ASSET MANAGER’S THESIS ON STUDENT HOUSING
🧠🎓What to expect in the Coming “Power Four University Student Housing Series”:
The Enrollment Moat
The Supply-Side Crunch
Recessions and Student Housing Rent
The Institutional Migration to Student Housing
The University AI Research Arms Race
The Exit Is Built In: Institutional Capital Is Starving for The University Paper
The Triple Revenue Stream: Students, Gameday, Corporate Housing
The F6 Advantage
THIS WEEK’S📈HIGHLIGHTS
🏦➕🤖➕💰🟰🚀 Pension funds just crowned data centers as core real estate.
Digital Realty closed $3.25B the same week Blackstone filed a $2B data center REIT IPO. The institutional floodgates opened… CRE Direct
📉➕🏠➕🔑🟰👀 Mortgage rates broke below 6% for the first time since 2022.
Then bounced back to 6.39% within 72 hours. The refi window is flashing open and shut… CBS News
🗽➕🏛️➕💵➕🏘️🟰🤝 NYC just bet $4B in pension money on affordable housing.
One of the largest municipal allocations to housing on record. Every blue city is about to copy this playbook… Law360
🦉🟦➕🏢➕🔻➕🤫🟰💸 Blue Owl is taking Sila Realty Trust private for $2.4B. 🤫
Meanwhile, $5B+ in foreclosure trades hit the tape in 12 months. Smart money says the floor is finally in… The Real Deal
THIS WEEK’S📉LOWLIGHTS
🏢➕⁉️💸➕🗓️➕🕑🟰📉➕😭 CMBS distress is forcing office towers to sell at 90% off.
One Chicago building just traded for $4M after fetching $68.1M a decade ago. The fire sale is here… Commercial Observer
🏨➕📈➕⚠️🟰😬 Hotel CMBS delinquencies just spiked 137 bps in a single month.
Lodging was supposed to be the sector recovering. Something just broke… ZeroHedge/Trepp
🤖🏢➖🏗️➕⚡➕🛑🟰🚧📉 Data center NIMBYism is now blocking ~$100B in projects nationally.
Ohio activists are pushing to cap data centers at 25MW. The supply-demand mismatch in this sector just got structurally worse… The Real Deal
MULTI-SECTOR REAL ESTATE DASHBOARD
WHAT I POSTED ON LINKEDIN THIS WEEK
A POST I FOUND INTERESTING
TRY THE NEW CAPITAL RAISING CHECKLIST & SEE WHERE YOU CAN IMPROVE
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