Author: Lauren

Prologis, the world’s largest industrial real estate owner, reported strong third-quarter results last week, fueled by another wave of warehouse leasing. The company signed a record 62 million square feet of new leases and raised its full-year earnings forecast, pointing to continued demand from logistics, manufacturing, and e-commerce tenants. Management noted that occupancy remains near historic highs and new construction has slowed, helping to keep rent growth steady even as interest rates remain elevated.

Our Take

For portfolio strategy, industrial continues to serve as a defensive anchor. Investors seeking dependable yield and inflation protection may keep allocating toward modern logistics and light-industrial assets in key transportation hubs. However, the market is becoming more selective—properties with older layouts, weaker locations, or shorter leases are likely to underperform.

This performance reinforces the industrial sector’s position as the most durable part of commercial real estate today. While some expected demand to taper after the pandemic boom, long-term drivers—such as supply chain reshoring, regional manufacturing growth, and steady consumer spending—continue to support healthy occupancy and rent levels. For investors, this stability stands in sharp contrast to the ongoing uncertainty in office and certain retail assets.

The results also suggest industrial property values may be closer to finding a floor. Strong leasing allows owners to offset higher borrowing costs with better rent growth and lower vacancy risk. For underwriters, that could justify slightly firmer income assumptions in core logistics markets, though conservative exit cap rates and debt terms remain prudent.

Overall, Prologis’ results are a reminder that industrial real estate functions as essential infrastructure for the economy—and that’s keeping the sector’s long-term outlook firmly positive.

Source: Prologis tops quarterly estimates on strong warehouse leasing

If you’re curious about how our approach could fit into your portfolio, visit our website or schedule a call to connect with our team. We’d love to talk through what we’re seeing and where we’re going next.

New data from the Financial Times shows that 4.1 million square feet of office space in New York City was converted into housing during the first eight months of 2025 — the fastest pace since the 2008 financial crisis. With office vacancies still high and many older buildings struggling to attract tenants, more developers are choosing to redevelop these properties into residential units. Supportive city policies and changing demand have helped make these projects more financially viable.

Our Take

This shift signals more than just a short-term strategy to deal with vacant buildings — it points to a deeper change in how investors, lenders, and cities are thinking about office real estate. For years, offices in major markets were seen as reliable, long-term income generators. But with remote and hybrid work sticking around, and with interest rates staying elevated, that stability is no longer a given. When the land beneath a building becomes more valuable than the office use itself, the case for conversion becomes compelling — and telling.

For investors, this changes the math. Office buildings once valued on income potential are now being evaluated for their potential to be something entirely different. This makes deal underwriting more complex. What was once a question of lease-up timelines or tenant credit is now a question of zoning, floorplate depth, construction feasibility, and residential demand. That means different risks — and different opportunities.

It also affects other property types. As offices disappear and become apartments, housing supply grows while office supply shrinks. That can influence everything from rent trends to how investors think about supply and demand across sectors. In some cases, industrial and logistics markets may even be impacted if former office corridors begin to evolve into mixed-use zones.

Conversions aren’t a silver bullet, but they’re becoming a meaningful tool in reshaping cities — and rebalancing the commercial real estate landscape.

Source: New York’s vacant offices converted to housing at highest rate since 2008

If you’re curious about how our approach could fit into your portfolio, visit our website or schedule a call to connect with our team. We’d love to talk through what we’re seeing and where we’re going next.

The Federal Reserve’s recent 25-basis-point rate cut has sparked renewed optimism in the commercial property market. As The Wall Street Journal reports, lower borrowing costs could “juice” deal activity and refinancing volume, particularly for borrowers grappling with maturing loans or cash flow pressure. However, the article also notes that 10-year Treasury yields remain elevated, tempering the immediate benefit of short-term rate relief. While some investors view the Fed’s shift as a turning point, others caution that long-duration capital costs remain sticky. 

Our Take

For private market investors, the signal is mixed—but worth unpacking. On one hand, falling policy rates reduce floating-rate pressure and open the door for refinancing activity in sectors like industrial and multifamily, especially where valuations have reset. Lenders that pulled back in 2023–2024 are reassessing risk in light of stronger tenant performance and higher equity cushions. This shift could support new originations at more favorable terms, particularly in senior and structured credit layers with stable cash flow.

On the other hand, persistently high long-term rates complicate the picture. Exit cap rates and construction loan takeouts still hinge on 10-year benchmarks, which haven’t fallen in lockstep with short-term rates. For equity investors, this keeps pressure on underwriting assumptions: conservative hold periods, higher interest reserves, and elevated exit cap assumptions remain prudent. In short, debt may be getting cheaper—but not uniformly so.

Strategically, this environment favors platforms that can act decisively in transitional lending, rescue capital, or short-duration structured finance. For allocators, it may signal a near-term window to deploy into credit opportunities with enhanced pricing power—but only where long-term rate risk is fully priced in.

Source: Lower Rates are Set to Juice the Commercial-Property Market

If you’re curious about how our approach could fit into your portfolio, visit our website or schedule a call to connect with our team. We’d love to talk through what we’re seeing and where we’re going next.

Last week, BlackRock Investment Institute changed its stance on long-term U.S. Treasurys from underweight to neutral, signaling that it no longer expects long-term yields to rise meaningfully from here. The move reflects a growing belief that the Federal Reserve is likely to start cutting interest rates in the coming months as economic growth slows. However, BlackRock also pointed to bigger-picture risks—like persistent government deficits—that could keep longer-term yields elevated even as the Fed begins to ease.

Our Take

For investors in real estate and private credit, this shift carries important implications. If short-term rates come down but longer-term rates stay stubbornly high, the cost of borrowing for larger, longer-duration deals may not improve as much as hoped. That could put pressure on pricing, on some asset classes where cap rates tend to move with the broader rate environment.

This more balanced outlook from BlackRock suggests it’s time to revisit assumptions. Underwriting models that rely on falling rates to support higher values or easier refinancings may need to be adjusted. Deals that looked attractive a few months ago may now require more conservative projections on interest costs and exit pricing.

At the same time, this development reinforces a key trend: capital will continue to favor investments like industrial real estate with strong cash flow, shorter duration risk, and pricing power in a still-uncertain interest rate landscape. Investors should prioritize flexibility and focus on assets and strategies that can perform across a range of rate scenarios.

Source: BlackRock turns ‘neutral’ on long-term Treasurys ahead of potential Fed rate cuts

If you’re curious about how our approach could fit into your portfolio, visit our website or schedule a call to connect with our team. We’d love to talk through what we’re seeing and where we’re going next.

A recent survey highlighted by Investopedia shows that nearly one in four retirement plan administrators plan to add alternative assets—including private equity, private credit, and real estate—to their portfolios within the next year. BlackRock and other large asset managers note that this marks a significant evolution in long-term allocation strategies, as retirement plans—traditionally anchored in public stocks and bonds—look to alternatives for diversification, inflation protection, and more consistent return streams.

Our Take

For private market investors, this shift represents a powerful tailwind. Retirement plans are among the deepest sources of long-duration capital, and their entry into alternatives suggests a more stable, long-term funding base for private credit and real estate strategies. This broadens demand well beyond institutional specialists and family offices, helping to reduce volatility in capital flows and reinforcing the resilience of these markets through cycles.

In real estate, the benefits are particularly clear in small-bay industrial. This segment—typically multi-tenant, last-mile facilities under 100,000 square feet—has consistently shown low vacancy, durable tenant demand, and strong rent growth, often outpacing larger logistics assets. With retirement capital flowing in, these properties may enjoy greater liquidity and more competitive pricing, as allocators seek inflation-linked income and stable occupancy in markets with constrained supply. Investors positioned in this niche stand to benefit from compressed cap rates, higher tenant stickiness, and stronger total return potential relative to other property types.

Private credit also stands to gain. As retirement plans increase allocations, managers can deploy capital across sponsor-backed mid-market companies, creating an expanding universe of yield-oriented opportunities. The resulting scale may support innovation in fund structures and financing tools, delivering more efficient ways to channel savings into productive assets.

Ultimately, the inclusion of alternatives into retirement plans reflects a maturing asset class. Far from being a niche, private credit and industrial real estate are becoming mainstream portfolio pillars—providing durable income, inflation protection, and diversification at a time when traditional 60/40 models are under pressure. For investors already active in alternatives, this trend validates the strategy and suggests further upside as capital deepens and broadens across the sector.

Source: Why More Plan Administrators Are Turning to Alternative Investments

If you’re curious about how our approach could fit into your portfolio, visit our website or schedule a call to connect with our team. We’d love to talk through what we’re seeing and where we’re going next.

A recent Baker Tilly report affirms that industrial real estate continues to lead the commercial property landscape, even as broader capital markets remain cautious. Investor appetite for modern, flexible logistics space remains intact, particularly in infill and small-bay formats that offer adaptability and location advantages. Notably, bid-ask spreads in industrial deals have narrowed—a signal that buyers and sellers are regaining alignment after months of pricing dislocation. This stabilization is catalyzing renewed activity, especially for well-leased assets in supply-constrained markets.

Our Take

For private market investors, this development marks a meaningful shift. After a period of pricing ambiguity and widening spreads, industrial real estate is emerging as the first CRE sector to reprice and resume trading momentum. Investors with dry powder and conviction in industrial’s long-term fundamentals are beginning to step off the sidelines. Importantly, this rebound is not uniform—it favors institutional-quality product with tenant durability, strong basis, and minimal near-term rollover risk.

This convergence of bid and ask expectations is also refining underwriting behavior. Where once cap rate expansion dominated pricing models, investors are now evaluating stabilized deals with more nuanced assumptions: tempered rent growth, realistic expense forecasts, and a greater emphasis on in-place income. In parallel, lenders are gradually re-entering the market, albeit with conservative leverage levels and tighter covenants—further reinforcing discipline at the asset level.

The takeaway is clear: while volatility and macro risk remain, industrial real estate is proving its resilience and strategic value. For allocators seeking durable income, inflation protection, and asset-level control, the current environment offers a window to acquire high-quality logistics properties at more rational valuations. As clarity returns to capital markets, the ability to act decisively—and with underwriting rigor—will separate opportunistic from reactionary capital.

Source: Commercial Real Estate Market Report: Q2 2025

If you’re curious about how our approach could fit into your portfolio, visit our website or schedule a call to connect with our team. We’d love to talk through what we’re seeing and where we’re going next.

Despite growing expectations for monetary easing, hotter-than-expected U.S. inflation data has prompted the Federal Reserve to temper its stance on aggressive rate cuts. The Producer Price Index (PPI) rose 0.9% in July, surprising markets and reducing the likelihood of a 50-basis-point rate cut in September. Instead, most analysts now anticipate a more measured 25-basis-point reduction. Treasury yields responded accordingly, ticking upward as policymakers—including Fed Governors Goolsbee and Daly—emphasized the need to preserve credibility and maintain a data-dependent posture.

Our Take

This inflation surprise reinforces the “higher for longer” narrative—a macro backdrop that private market investors can’t afford to ignore. While falling short of a policy reversal, the Fed’s caution illustrates how residual inflationary pressure continues to constrain the central bank’s flexibility, even as employment trends soften and political voices call for looser conditions.

For investors in private credit and commercial real estate (CRE), the implications are material. Elevated long-term rates weigh on cap rates, debt service costs, and underwriting assumptions. Duration risk is also back in focus—fixed-rate deal structures that were once deemed conservative may now look misaligned with market realities. And as volatility persists, investor preferences are shifting toward more conservative structures, stronger covenants, and better compensation for illiquidity risk.

The bottom line is that the path to lower rates still exists — but it will likely be slower, more data-driven, and more volatile than investors may have hoped. Pricing, structure, and discipline will matter more than ever.

Source: Hot wholesale prices data puts wrinkle in Fed’s rate-cut roadmap

If you’re curious about how our approach could fit into your portfolio, visit our website or schedule a call to connect with our team. We’d love to talk through what we’re seeing and where we’re going next.

A recent JLL report highlights that Phoenix has become one of the fastest-growing manufacturing hubs in the U.S., with demand for industrial space tied to manufacturing up 385% since 2020. Much of this growth is being driven by semiconductor and consumer-products companies bringing production back onshore. At the same time, companies are taking longer to make leasing decisions—up from about 3.5 months to nearly 11 months—as they navigate tariffs, supply chain risks, and infrastructure needs.

Our Take

Phoenix’s industrial boom is more than just a story about warehouses—it’s about the city becoming a hub for advanced manufacturing and supply chain resilience. For investors, this marks a shift from traditional logistics demand to users that need specialized facilities with higher power capacity, water access, and in some cases highly technical buildouts. Properties that can offer these features are well-positioned to earn higher rents and secure longer-term tenants compared with standard distribution space. 

Of course, growth on this scale comes with different assumptions. With decision timelines stretching to nearly a year, investors need to plan for longer lease-up periods and higher upfront costs in the form of tenant improvements. That said, once manufacturing tenants commit, they tend to stay. Heavy investment in equipment and operations makes them less likely to move, which can lead to lower turnover and more stable income streams.

Pricing dynamics are also shifting. While broader U.S. industrial markets are still absorbing new supply, Phoenix stands out as a market where manufacturing demand can offset vacancy risk. This supports a case for stronger rent growth and potentially tighter cap rates in submarkets tied to high-tech and production uses. Still, investors should remain mindful of sector risks—semiconductors and consumer goods can be cyclical, and regional challenges like water supply or utility costs could create headwinds.

Big picture, Phoenix is emerging as the “plant” side of a national ports-to-plants supply chain, pairing West Coast trade routes with inland production hubs. For investors, the lesson is clear: industrial real estate is no longer just about moving boxes, it’s about powering America’s next wave of manufacturing. Well-located, infrastructure-ready assets in Phoenix are likely to remain in demand and resilient in the years ahead.

Source: U.S. Industrial Market shows resilience amid evolving tenant strategies

If you’re curious about how our approach could fit into your portfolio, visit our website or schedule a call to connect with our team. We’d love to talk through what we’re seeing and where we’re going next.

For accredited investors seeking long-term, tax-efficient growth, commercial real estate offers a uniquely powerful advantage: the tax code. Through a combination of strategic depreciation, income shielding, and capital gains deferral, commercial real estate provides benefits rarely matched by other asset classes. At Hanson Capital, we help our investors unlock these advantages through carefully structured industrial real estate and private credit offerings. Here are the top 10 tax benefits of commercial real estate investing—and why they matter now more than ever.

1. Depreciation Deductions

Commercial properties are depreciated over 39 years, allowing investors to reduce taxable income through annual deductions. This non-cash expense is one of the most powerful long-term benefits of owning income-generating real estate.

2. Bonus Depreciation & Section 179 Expensing

In July 2025, the One Big Beautiful Bill Act (OBBBA) reinstated 100% bonus depreciation for qualifying assets placed in service after January 19, 2025. This means investors can deduct the entire cost of eligible improvements—such as HVAC systems or roofing—in the same year the work is completed. The OBBBA also enhanced Section 179 expensing, further boosting the ability to capture upfront tax savings on certain property improvements.

3. Cost Segregation Studies

Cost segregation allows you to break a property into components with shorter useful lives (5, 7, or 15 years). This accelerates depreciation and can produce significant upfront tax deductions—which can lead to savings of 20–40% of the purchase price in the first couple years.  We use cost segregation studies on most acquisitions to maximize efficiency. For example, on a hypothetical $10 million property, this approach could generate $2–4 million in first-year tax deductions.

4. 1031 Like-Kind Exchanges

Investors can defer capital gains taxes by reinvesting proceeds from selling one property into another qualifying property. By using a qualified intermediary and meeting IRS deadlines (identify within 45 days, close within 180), 1031 exchanges enable portfolio growth while deferring tax obligations.  Another staple of the Hanson Capital process is finding the subsequent investments and providing investors options to roll investment and gains forward deferring taxes legally as long as they like.

5. Opportunity Zone Incentives

By investing gains into Qualified Opportunity Funds within 180 days of sale, investors may defer capital gains and, if held for 10 years, potentially eliminating tax on gains from the new investment. These opportunities encourage long-term capital allocation to underserved communities while offering a compelling tax advantage.  

6. Pass‑Through Income Deduction (QBI – Section 199A)

Investors holding commercial property through pass-through entities (LLCs, partnerships, S-corps) may qualify for a 20% deduction on qualified business income. This applies even to passive rental income in many cases, substantially reducing overall tax liability for high-net-worth individuals.

7. Interest Expense Deduction

New tax rules as of 2025 allow interest expense deductions to be calculated using EBITDA instead of EBIT. This seemingly small change can significantly increase the deductible amount for leveraged investors, improving post-tax cash flow.

8. Energy Efficiency Incentives (Section 179D)

If your commercial building meets certain energy efficiency thresholds, you may qualify for deductions up to $1.80 per square foot. This incentive supports sustainability while enhancing after-tax returns.  This is another assessment we run, always finding the most efficient way to invest.

9. Stepped-Up Basis for Heirs

When commercial real estate is inherited, the cost basis is stepped up to market value as of the date of death. This eliminates capital gains taxes on appreciation that occurred during the decedent’s lifetime, making it a powerful tool for generational wealth planning.

10. Deductible Operating Expenses

From property management fees to insurance and travel related to the investment, many operating costs are fully deductible against rental income—further enhancing net income and tax efficiency.

What This Means for Investors

These benefits aren’t just theoretical—they can be pivotal in shaping your investment strategy:

• Improved Cash Flow: Accelerated depreciation and interest deductions allow for higher after-tax income, especially in the early years of ownership.
  
• Portfolio Growth: Tax deferral strategies like 1031 exchanges enable continued reinvestment without eroding returns.
  
• Long-Term Tax Planning: Estate planning tools like the stepped-up basis help preserve and pass on wealth efficiently.
  
• Custom Structuring: Investors using LLCs or partnerships can leverage pass-through deductions and flexible asset management.

Whether you’re investing individually, through a fund, or via a private credit vehicle, these strategies can significantly enhance total returns and reduce effective tax rates.

Important Considerations

As with all tax strategies, it’s essential to understand the rules and consult with qualified professionals. Here are a few key points to keep in mind:

• Depreciation Recapture: When a property is sold, previously claimed depreciation may be subject to tax unless deferred through a 1031 exchange.
  
• Documentation Requirements: Cost segregation studies should be conducted by qualified firms to ensure compliance with IRS guidelines.
  
• Investment Fit: Not all properties offer equal tax benefits—age, improvements, and use all factor into eligibility.
  
• Legislative Updates: Tax policy is dynamic and fluid. Staying informed is essential.
  
• Professional Guidance: Working with CPAs, tax advisors, and real estate counsel is critical to executing these strategies effectively and legally.

Final Thoughts

Tax efficiency is one of the most compelling reasons high-net-worth investors choose commercial real estate. These advantages not only enhance income and returns—but also provide tools for compounding wealth, preserving capital, and executing legacy planning strategies.

At Hanson Capital, we combine institutional experience with a boutique approach to deliver tax-advantaged, yield-driven opportunities in commercial real estate and private credit. With a 100+ year collective track record within our executive team and a stable network of accredited investors, our mission is to help you build lasting wealth through smart, strategic investments.

 

Ready to take advantage of today’s most powerful real estate tax strategies?
Contact us to learn how Hanson Capital can help you invest with confidence—and tax efficiency.

 

If you’re curious about how our approach could fit into your portfolio, visit our website or schedule a call to connect with our team. We’d love to talk through what we’re seeing and where we’re going next.

 

Important Disclosure & Legal Notice

The information contained herein is provided for educational purposes only and does not constitute tax, legal, or investment advice. Hanson Capital is not a law firm, tax advisor, or accounting firm, and no portion of this material should be interpreted as a guarantee of tax outcomes or investment performance.  Prospective investors should consult their own independent tax, legal, and financial advisors before making any investment decision.

Tax strategies, including but not limited to depreciation, bonus depreciation, cost segregation, 1031 exchanges, Opportunity Zone investments, and pass-through deductions, are highly dependent on individual circumstances and are subject to change under current or future legislation. Past or hypothetical examples, such as potential depreciation write-offs, are illustrative only and do not represent actual or guaranteed results.

This material is not an offer to sell or a solicitation to buy securities. Investments in Hanson Capital funds are offered only to accredited investors through official offering documents, including a Private Placement Memorandum and Subscription Agreement, which describe risks, fees, and potential conflicts of interest in detail. Investing in private real estate involves risk of loss, illiquidity, and lack of guaranteed returns.

By Chris Hanson, Founder, Hanson Capital

When it comes to investing in real estate, details matter—especially during the due diligence phase. At Hanson Capital, we follow an 83-step checklist every time we put a deal under contract. Why? Because missing even a single critical detail can turn a promising investment into a costly lesson.

What Due Diligence Really Means

Due diligence isn’t just a line item in the transaction process. It’s a rigorous, repeatable workflow that we’ve refined over 20 years and across six states, dozens of property types, and more than two decades of acquisitions experience. Every asset we acquire goes through the same comprehensive vetting process.

Real Numbers, Real Selectivity

In Q2 of 2025 alone:

• Sent over 5,800 deal flow emails to brokers
• Made 113 deal flow calls
• Received 2,146 investment opportunities
• Fully underwrote 101 of those investment opportunities
• Wrote 2 offers
• And closed on just 1 property

This shows how selective we are. Of the 2,146 deals received, only 4.7% met our initial investment criteria and were fully underwritten.  Of those deals that were fully underwritten, less than 2.0% met our minimum return thresholds, which equates to .09% of all deals received.  This underscores the importance of knowing exactly what you’re buying—and why.

The Phases of Our Due Diligence Process

Each step in our due diligence process is logged and tracked in Asana, our task management platform, and broken into five distinct phases:

1. Investment Committee (9 Steps)

Deals that meet our 15% IRR minimum threshold are brought before our investment committee. Every Wednesday, we review up to 10 potential acquisitions and only advance the best.

2. Contract Drafting (16 Steps)

This phase includes everything from negotiating tenant improvement (TI) bids with asset management to gathering real quotes that move us from projections to real-world numbers before we’ve even closed.

3. Opening Escrow (5 Steps)

Straightforward but essential: signed contract, title delivery, and earnest money deposit.

4. Due Diligence (26 Steps)

This is the core of the process and includes:

• Environmental inspections
  
• Surveys
  
• Legal reviews
  
• Vendor walk-throughs
  
• Confirming ingress/egress requirements
  
• Title work and ALTA surveys

These steps are not necessarily linear, but every single one must be completed before we move forward.

5. Closing Escrow (30 Steps)

We secure financing, finalize equity commitments, and prepare the handoff to our asset management team—all while ensuring compliance across legal, investment, and operations.

Why This Process Matters

If even one component of our checklist is skipped, the financial risk can be enormous. In fact, we’ve seen it happen.

Recently, we learned that a neighboring parcel to our Buckeye, AZ site had been sold to a manufacturing group that failed to confirm their access rights. The result? They effectively bought landlocked acreage—what I would call “an island.” Had they used a checklist like ours, this multimillion-dollar misstep could’ve been avoided.

A System That Builds Confidence

This 83-step due diligence process isn’t just about risk management—it’s about confidence. Confidence for our team, for our lenders, and most importantly, for our investors. Because when we deploy capital, we do it knowing that every box has been checked and we are doing everything we can to minimize risk.

Ready to Invest with Confidence?

At Hanson Capital, we don’t leave real estate success to chance. Our disciplined approach is built for long-term performance, not short-term speculation.

If you’re curious about how our approach could fit into your portfolio, visit our website or schedule a call to connect with our team. We’d love to talk through what we’re seeing and where we’re going next.