Wednesday, January 28, 2026

That's why

Real estate offers rich investors superior, tax-advantaged wealth preservation through leverage, tangible asset control, and consistent cash flow, creating a robust hedge against inflation that the stock market cannot match. Unlike volatile stocks, property allows for 1031 exchanges to defer capital gains and provides steady, long-term appreciation. [1, 2, 3, 4, 5]  
Here is how to structure the conversation: 
1. The Leverage Multiplier (The "OPM" Argument) 

• The Pitch: "Stock market investments usually require 100% of the cash up front. Real estate allows you to use 20-25% of your money (leverage) to control 100% of an asset's appreciation". 
• Example: If a $1M property goes up 5%, you made $50k. If you only put $200k down, that $50k gain on a $200k investment is a 25% return, not just 5%. [7, 8, 9, 10]  

2. Tax Shielding and Wealth Preservation 

• The Pitch: "Stocks are taxed heavily on dividends and capital gains. Real estate offers depreciation (a non-cash expense that lowers taxable income), mortgage interest deductions, and the ability to use 1031 exchanges to defer taxes entirely when trading up". 
• The Angle: It's not just what you make, it's what you keep. [4, 5, 11, 12]  

3. Tangible Stability vs. Volatility 

• The Pitch: "You can't live in a stock certificate. Real estate is a physical, income-producing asset that acts as a hedge against inflation—rents rise when inflation rises". 
• The Angle: It provides consistent cash flow (income) rather than relying solely on capital appreciation. [1, 2, 3, 13, 14]  

4. The "90% of Millionaires" Fact 

• The Pitch: "Historically, 90% of millionaires own real estate. It is the preferred method for long-term wealth preservation and wealth transfer to heirs". [1, 15, 16, 17, 18]  

Summary Table of Advantages 

| Feature [1, 5, 7, 13, 19] | Real Estate | Stock Market |
| --- | --- | --- |
| Leverage | High (5:1 or 4:1) | Low/Margin risks |
| Tax Benefits | High (Depreciation, 1031) | Low (Capital gains) |
| Volatility | Low (Tangible Asset) | High |
| Income | Consistent Cash Flow | Dividends (Variable) |

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Henry McClure  
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Deals

Multifamily cap rates in the U.S. generally averaged between 5.7% and 6.1% as of late 2024 to early 2025, reflecting a period of relative stability after previous increases. While top-tier Class A assets often trade around 5%, Class B properties typically range from 5.5% to 7%, with higher cap rates found in riskier, non-prime markets. [1, 2, 3, 4]  
Key Takeaways on Nationwide Multifamily Cap Rates: 

• Average Range: The nationwide average generally hovers around 5.7%–5.9% for many multifamily deals. 
• Market Segmentation: Class A properties often trade at lower cap rates (~4.74%–5%), while Class B/C assets often fall between 5% and 7%+. 
• Recent Trends: Cap rates have shown stability recently, though some reports indicate slight compression (down 7 basis points in early 2025) while others suggest a slight uptick from 2024 levels. 
• Regional Variation: Major city centers often see lower cap rates (4%–6%), while secondary and tertiary markets frequently see higher rates. [1, 2, 4, 5, 6, 7, 8]  

Factors Influencing Rates: 

• Interest Rates: As borrowing costs rise, cap rates generally increase (investors demand higher returns). 
• Location: Assets in primary markets generally command lower cap rates than those in secondary or tertiary markets. 
• Property Class: Class A (new, prime location) offers lower, safer returns, while Class C (older, value-add) carries higher risk and higher potential cap rates. [4, 5, 9, 10]  

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Henry McClure  
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Topeka

The "hot" project on South Topeka Boulevard is the Sunflower Crossing development, a new retail and service hub located at the intersection of SW Topeka Boulevard and Kansas Avenue. Developed by BHI Development Inc., this project includes a new QuikTrip, retail boxes, and restaurant space. [1, 2, 3]  
Key Details on Sunflower Crossing: 

• Location: The northwest quadrant of Topeka Boulevard and Kansas Avenue. 
• Components: Featuring a 6,300-square-foot QuikTrip (expected opening Fall 2026), a 3,500-square-foot retail box, and a 6,500-square-foot restaurant/retail space. 
• Significance: It serves as a major, high-traffic "gateway" redevelopment, often referred to as a key area of first impression for visitors entering from the south. 
• Development Type: The site is a Community Improvement District (CID) with added 1% sales tax to fund improvements. [1, 3, 4, 5]  

Other Nearby Activity: 

• 30th & Topeka Blvd: A separate $15M+ redevelopment is planned by Baddis Development Company for the 3200 block, including a Dutch Bros Coffee, which secured a permit in late 2025. 
• White Lakes Area: The former White Lakes Mall area at 3600 SW Topeka Blvd is also being eyed for continued TIF district redevelopment. [5, 6, 7, 8]  

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Henry McClure  
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Topeka Kansas

Commercial real estate on Topeka Boulevard in Topeka, Kansas, features a mix of industrial, retail, and redevelopment opportunities ranging from North Topeka to the South Topeka industrial corridor. Key listings include a $3.5M redevelopment site (3500-3600 SW Topeka Blvd), a 1,834 NW Topeka Blvd retail/apartment building, and industrial spaces near Forbes Field, such as 5630 SW Topeka Blvd. [1, 2, 3, 4, 5]  
Highlighted Listings & Areas 

• South Topeka Blvd (Industrial/Commercial): 

 • 5602-5630 SW Topeka Blvd: Industrial park space suitable for warehousing or service, located near I-470 and Forbes Field. 
 • 3732 SW Topeka Blvd: Listed for industrial use at $\$500,000$ to $\$1.4M$. 
 • 3706 SW Topeka Blvd: Office condos for sale or lease in Capital City Bank Plaza. 
 • 3251 SW Topeka Blvd: Retail/fast-food development site. 
 • 1717 SW Topeka Blvd: Potential auction listing (63,765 SF). 

• North Topeka Blvd (Retail/Rehab): 

 • 1834 NW Topeka Blvd: A 4,596 sqft mixed-use property with retail, tavern space, and apartments. 
 • 1928 NW Topeka Blvd: 1.87 acres of land available. 

• Central/Downtown Topeka Blvd: 

 • 711 SW Topeka Blvd: 0.26-acre asphalt lot near the State Capitol. 
 • 700 SW Topeka Blvd: Retail space (2,749 SF). [1, 2, 3, 5, 6, 7, 8, 9, 10]  

Market DriversProperties on Topeka Boulevard benefit from high visibility, with traffic counts reaching over 18,000 cars per day in some areas. The corridor connects key areas of the city, offering high accessibility to I-70, I-470, and US 75. [1, 2, 11]  

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Henry McClure  
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Sales tax

A vote on sales tax is paramount. 

It will fail.

You're not responsible with the money we give you now. You're not responsible with the current sales tax.

Henry McClure  
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Money 💰

The **best value** for large real estate investments in 2026 depends on your goals—whether prioritizing stable cash flow, long-term appreciation, inflation hedging, or growth tied to structural trends—but current market outlooks point to several high-conviction areas offering strong risk-adjusted returns for substantial capital (e.g., millions+ in direct deals, funds, or partnerships).

Large-scale investors (institutional, high-net-worth, or private equity) are favoring sectors with durable demand, limited new supply in key submarkets, and favorable resets in valuations after recent cycles. Here's a breakdown of the top opportunities based on 2026 forecasts:

### 1. **Data Centers (Top Growth Play)**
   Driven by massive AI infrastructure demand, this sector stands out as one of the strongest structural opportunities. Billions are pouring into data center development globally, with pre-leased pipelines in major markets and high barriers to entry (power, zoning, cooling). Experts highlight it as a "clear bright spot" with explosive capital needs, though challenges like grid capacity and local pushback exist. For large investors, this offers high yields and appreciation potential through direct development, joint ventures, or specialized funds.

### 2. **Multifamily / Residential (Especially Build-to-Rent and Workforce Housing)**
   The U.S. faces a persistent housing shortage (millions of units needed), supporting stable demand and rent growth. Operational sectors like multifamily, senior living, and affordable/workforce housing provide inflation-linked income and resilience. Markets with supply constraints (e.g., Northeast/Midwest) or population-driven growth (e.g., Sunbelt pockets) offer value. Large capital can deploy via institutional build-to-rent developments, syndications, or REITs focused on value-add.

### 3. **Industrial / Logistics (With Caution on Oversupply)**
   A long-time winner, but 2026 sees some markets peaking in vacancy due to prior overbuilding. Still, e-commerce and supply chain needs sustain demand in prime locations. Value lies in selective submarkets with strong absorption forecasts. Large investments here often target modern, high-bay facilities or mixed-use industrial schemes.

### 4. **Healthcare / Medical Offices and Operational Real Estate**
   Demographic tailwinds (aging population) drive steady, recession-resistant demand for medical outpatient, senior care, and supported living. These offer stable, often inflation-linked leases and lower volatility than traditional offices. Attractive for large portfolios seeking dependable income.

### 5. **REITs and Public Markets (For Liquidity and Diversification)**
   For large allocations without direct management hassles, publicly traded REITs in undervalued sectors (e.g., data centers, apartments, net lease) provide exposure. Many REITs trade below fair value estimates, with potential for outperformance as rates stabilize. This is a scalable way to access themes like AI-driven growth or housing shortages.

### Key Markets for Large Investments
- **U.S. Standouts**: Dallas/Fort Worth (perennial top market), Midwest cities like Cleveland (high cash flow yields), Detroit (industrial opportunities), and tech hubs like Northern California (renewed prospects).
- **Global Options**: Dubai (high yields, investor-friendly policies, luxury/mid-tier growth), and select emerging spots (e.g., Lisbon, Miami) for diversification.

### Overall Considerations for Value
- **2026 Outlook**: Commercial real estate investment is projected to rise significantly (e.g., ~16% to $562B in the U.S.), with recovering transaction activity, easier debt access, and reset pricing creating entry points. Focus on income-generating assets over pure speculation, as higher-for-longer rates favor cash-flow stability.
- **Risks**: Sector-specific headwinds (e.g., office oversupply lingering, power constraints in data centers) and macro factors (trade policies, labor shortages).
- **Strategy Tip**: Direct ownership or private funds suit large capital for control and tax benefits (depreciation, etc.), while REITs offer liquidity. Diversify across 2–3 sectors to balance growth and income.

For personalized advice, consult a financial advisor or real estate specialist, as "best value" varies by risk tolerance, timeline, and location. Markets evolve quickly—what stands out most to you from these trends?

Henry McClure  
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