U.S. Foreclosure Activity Increases in Q3 2025, live like a rockstar

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Office distress deepens as demand fractures; conversions and AI leases emerge as wildcards link

• The government shutdown delayed key economic data, adding uncertainty to CRE forecasts while office demand continues to splinter between winners (AI-driven tech hubs) and laggards in older urban cores.

• Defaults and valuation pressures in office assets are rising, prompting cities to weigh zoning and tax breaks to accelerate office-to-residential conversions, a potential lifeline that still faces policy bottlenecks.

• Office volatility is rippling across sectors: retail corridors near active office clusters may recover, business-travel hotels could see a bump, and multifamily inventory may shift where conversions gain traction.

My take: The CRE market is quietly redrawing its fault lines, offices are now both the biggest risk and the biggest catalyst. Investors who spot conversion-ready assets early could ride the next urban rebound while others wait for distress pricing to bottom out.

AI reshapes life sciences real estate link

• The U.S. life sciences market has hit oversupply with 61 million sq. ft. of lab space available, and 18.7 million sq. ft. expected to be repurposed by 2030. JLL projects vacancy won’t normalize until the end of the decade.

• Global pharma firms have already pledged $475 billion in U.S. manufacturing and R&D this year, accounting for one-third of all midsize and large R&D leases, even as venture-backed leasing stalls.

• AI-native biotechs now make up one-sixth of all VC biotech deals but lease roughly one-third less space than traditional tenants, reshaping lab demand toward smaller, automation-heavy footprints.

My take: AI is hollowing out the lab market faster than demand can rebalance, the next real winners won’t be the landlords holding space, but the ones converting it for AI-native tenants or alternative uses before 2030.

U.S. Foreclosure Activity Increases in Q3 2025 link

• 101,513 U.S. properties faced foreclosure filings in Q3 2025, up 17% YoY and the highest quarterly total since early 2022. Foreclosure starts rose 16% year-over-year, led by Texas (9,736), Florida (8,909), and California (7,862).

• Bank repossessions (REOs) jumped 33% YoY, signaling lenders are moving faster to clear distressed inventory. The average time to foreclose fell to 608 days, down 25% from last year.

• Florida dominates distress metrics, with one in every 814 homes in foreclosure, nearly double the national average. Lakeland, FL, and Columbia, SC now rank among the worst metros for foreclosure rates nationwide.

My take: Distress is quietly creeping back into the market, especially in Sun Belt states that overheated during the boom. For investors, this could mark the early phase of a new wave of REO and note-sale opportunities before prices catch up to stress.

More homes hit the market, but no one’s biting link

• Supply is up and demand is soft: new listings rose 2.3% YoY (biggest jump in ~4 months) while pending sales fell 1.3% (worst in 5 months). Homes are taking 48 days to go under contract, the longest September since 2019, as months of supply edges to 4.4.

• Costs aren’t helping: the weekly 30-yr rate ticked to 6.34% from 6.26% while the median sale price climbed 2.1% YoY to $389,350. Result: fewer bidding wars (23.2% over-ask share vs 26% last year) and a softer sale-to-list at 98.4%.

• Where to hunt: condos show a 72% seller-to-buyer imbalance nationwide, and builders are dangling buydowns and incentives. Regionally, price growth is led by Detroit (+11.6%) and Cleveland (+9.7%) while Dallas (-2.8%) and Austin (-1.9%) slip.

Sun Belt rent slide accelerates as new deliveries hit link

• September rent burden fell to 23.4% of income from 24.9% a year ago as rents edged down across many metros, especially in the South and West. The dip is partly seasonal but paired with income gains.

• By unit: 1BR rents -2.3% to $1,582, 2BR -2.2% to $1,885, studios -1% to $1,426. Even top-cost markets saw declines—Los Angeles (-1.4 ppt), New York (-0.9 ppt), Boston (-0.7 ppt), San Diego (-3.4 ppt).

• Affordability standouts: Austin ($1,411; 16.5% of income), Oklahoma City ($1,007; 16.9%), Raleigh ($1,476; 18%), Columbus ($1,217; 18.1%), Minneapolis ($1,511; 18.7%). New supply is pressuring rents in Jacksonville, San Diego, Miami, Denver, Austin, and Phoenix.

Tool of the day: Qbiq

An AI-powered platform that automates real estate layout planning by generating customized floor plans and 3D virtual tours in less than 24 hours, enhancing efficiency for landlords, brokers, and architects.

AI Turns Industrial Space Into “Smart Footage” link

REBusinessOnline reports AI adoption in logistics properties has cut order-picking errors by 50%, boosted efficiency 15%, and slashed downtime 73%, as tenants demand warehouses built for robotics, predictive maintenance, and real-time analytics.

Realmo Launches AI Assistant for Instant Property Matchmaking link

Boston-based Realmo debuted an AI search assistant that lets users describe ideal spaces in plain English then scans 9 million listings to return curated, analytics-rich options, signaling a shift toward fully conversational CRE discovery.

Agentic AI Becomes Mortgage Lending’s Next Frontier link

HousingWire reports lenders are moving beyond simple automation, using “agentic AI” to interpret documents, resolve conditions, and manage entire loan workflows, cutting origination costs and redefining what digital transformation means in mortgage.

CRE Leaders Say AI Must Be “Baked In,” Not Bolted On link

At CREW Network’s 2025 convention, execs from LightBox, Cushman & Wakefield, and Amazon said AI now handles repetitive lease tasks and data entry but warned true efficiency only comes when AI is fully integrated into core CRE workflows, not treated as an add-on.

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Vidit

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