The Last Time This Happened Was 2007 | Logan Freeman on the 18.6-Year Cycle

THE SELF STORAGE REPORT — EPISODE TRANSCRIPT Episode: The Last Time This Happened Was 2007 | Logan Freeman on the 18.6-Year Cycle Guest: Logan Freeman — Managing Broker, Midwest Commercial Real Estate Advisors ("the KC CRE guy"); publisher of a monthly CRE heat map Host: Chris Berg — Business Development Director, Abernathey Development Recorded: July 2026 (premiered August 4, 2026) Video: https://www.youtube.com/watch?v=LmfexQ8sILg Key topics: The 30-year Treasury hitting its highest level since 2007 after Fed Chair Kevin Warsh held rates; the 18.6-year real estate cycle per Phillip J. Anderson, Fred Harrison and Akhil Patel; David Ricardo's law of economic rent and why land value derives from scarcity and location rather than owner effort; the cycle's five phases and why Logan believes we are in the winner's curse / mania phase heading toward contraction; the 2007 peak as the template; data-center land and power driving second-order price increases in industrial, multifamily and single-family land; the St. Louis Fed estimate that AI investment accounted for roughly 40% of US GDP growth through much of 2025, and whether stripping it out would already mean recession; public homebuilders (KB Home, Lennar, D.R. Horton, Pulte, Toll Brothers) peaking around late 2024 and the 17-to-19-month lag that pointed at February–April 2026; why AI capex may have delayed that; controlling infrastructure rather than building speculative data centers — 15-year service-level agreements with hyperscalers who don't want to own their buildings; deploying GPU nodes in existing buildings including self-storage, selling inference compute to decentralized marketplaces; blockchain-verified property ledgers compressing 90–120 day due diligence to 30 days and compressing cap rates; utility interconnects, substation capacity, transformer upgrades and zoning (M1-5 in Kansas City); Logan's five-signal monthly heat map — VNQ vs. SPY relative strength, BBB corporate credit spreads, the 10-year Treasury trend, the unemployment three-month trend, and the Fed's SLOOS bank lending survey; the first-half 2026 scores month by month; the enhanced supplementary leverage ratio being relaxed and banks becoming a new buyer of Treasuries; how Logan uses AI for deep research, site selection and capturing retiring employees' knowledge; a 150 DC fast-charger deployment in Kansas City modeled in 15 minutes Note: Speaker labels and timestamps are from the source recording transcript — attribution is as recorded, not reconstructed. Light cleanup of transcription errors only; wording preserved. Timestamps removed, and single-word backchannel interjections that split a speaker's sentence ("Yeah.", "Mm.") were dropped so sentences read continuously. All substantive speech retained. ————————————————————————————— Chris Berg: So Fed Chair Kevin Warsh kept rates the same yesterday, and then all of a sudden, guess what? The 30-year hit its highest level since 2007. Everybody remember 2007? Like, what does that mean exactly for you as an investor, especially as a capital allocator? We're gonna get into this today with a very special guest. We're gonna do it in the context of what's called the 18.6-year real estate cycle. If you're not familiar with that, you will be after today. This gentleman's one of the few gentlemen I've met that's really done a deep dive into this 18.6-year real estate cycle, that maybe many of you have heard about. So it's gonna be a powerful conversation if you're an investor, a capital allocator. So welcome to the Self-Storage Report. I'm Chris Berg, business development with Abernathey Development. I want to invite you — we just released this, so if you can go check this out, it's called selfstoragereport.com. Again, selfstoragereport.com. I think of it sort of like CNBC meets Wall Street Journal for the self-storage industry. You can have some fun there. And I want to introduce our guest today so we can get into this conversation. He's also got a really powerful CRE heat map that he's now releasing every single month based on data, not just headlines. He's known as the KC CRE guy — we have some fun with that — also the managing broker of Midwest Commercial Real Estate Advisors, Logan Freeman. Logan, welcome to the show. It's great to have you, my friend. Logan Freeman: Yeah, great to speak with you and the audience here today, Chris. Lots going on in commercial real estate and the capital markets, the economy more broadly. And sort of difficult to kind of work through the different ideas that a lot of different people have and the data points. So, you know, that's why we have stuck to a framework for the last few years, one being the 18.6-year real estate cycle. But also, if I'm looking backwards, it's very difficult to understand — and how the guys over at PSE really talk about remembering the future. So, you know, every month I try to pull data points and put them into reports. And that's exactly what we're gonna discuss today in the context of the 18.6-year real estate cycle. And maybe it will help some individuals start to build their own frameworks on what they should be tracking and thinking about from a capital allocation standpoint. Chris Berg: Thank you for saying that, man, because I shared the story with you before we went on air. But so this is the book, Phil Anderson. If you've been with us on the Self Storage Report now for a while, I actually had a chance to interview Phil, so you can go back in the archives and see that. But he's the author of this book. And I want to share with everybody, like, for the past three years or so, I've been digging into this thesis and really trying to break it. And I have not been able to. We'll see if Logan can today. But I think, Logan, I wanna start here, and it'll kind of speak to your background — but, you know, you look like a really young guy. Why should people listen to you today in regards to an 18.6-year cycle? Logan Freeman: Yeah. Well, just like me listening to you, Chris, interview Phil Anderson as I read The Secret Life of Real Estate and Banking — I always say maybe you shouldn't listen to people, right? But at least it gets you thinking about different points of view, and maybe you should go research what they have done. And so, you know, the last ten years I have been allocating real estate, or capital into real estate. I've been selling real estate, buying real estate across the Midwest, and to the tune of around $500 million of real estate up to this point. And that equates to close to 300 different transactions. And so what I have seen is a lot of different, what I'll say, ups and downs, peaks and valleys in commercial real estate for the last 10 years. It's been sort of difficult to navigate what's coming next. And, you know, maybe you shouldn't listen to me, but at the end of the day, you should at least think about the things that you and I talk about today and then go research them for yourself. But I have gotten a lot of deals across the finish line. I'm personally invested in a lot of those real estate transactions. And I get to speak to real estate entrepreneurs and investors that have been doing this for longer than I've been alive. And I think I do a decent job of kind of aggregating that information and anecdotally putting it together into market reports, but also my own thesis, and I share that publicly. And I think people have found that to be valuable. You know, almost 40,000 people on LinkedIn and over five or six million impressions this year alone, or the last 12 months. So I think that that is resonating with people. I am very open about that thesis, the transparency around it. And I try to back it up with data points. So it's not really me that you're trusting. It's really the data that we are presenting, and the frameworks — historically, do they make sense? And I think every person really should, and every investor should, go through that process, that journey for themselves. So that's what I would say to that question. And, you know, yeah, I'm young, but I think I've read now 750 books. I've dove very, very deep into different real estate cycles and frameworks, mostly just because I want to be better at my job as an investor and as a developer and as a broker. Chris Berg: Very, very well said. So what's been really surprising to me, again, because I've been trying to break this thesis and it's been, at least up to this point, pretty darn accurate — so I'm surprised at how many people aren't aware of the cycle. And so how would you quickly summarize, if I asked you, hey, so what is the 18.6-year real estate cycle and why should I care? What would you say? Logan Freeman: Yeah. Well, I think that historically commercial real estate operates within a cycle, whether it be 18.6 years, 17, or 20 — regardless, it operates in a cycle. And there is plenty of data to go back and support that. But we alternate between periods of growth, correction, and recovery, right? And so I think that if you believe that — which Ray Dalio does, Howard Marks does, they've all written books about these different cycles. They may call them the debt crisis, or the debt cycle, or the long-term debt cycle, the short-term debt cycle. But what Fred Harrison and Akhil Patel and Phil Anderson have done have really taken this idea of Ricardo's law of economic rent and really understood how this impacts land values, right? So, you know, David Ricardo came up with this in the early 19th century. And it just explains how the value of land is derived from its scarcity and productive potential rather than the effort or capital that you put into it. So in essence, I would describe economic rent as the income earned by land or other natural resources based on its location and desirability rather than active improvement by the owner. So it's tied to that scarcity. And because land is a finite resource, unlike labor or manufactured goods, that can be expanded. So just a quick example, I guess, would be prime real estate in a central business district. It's gonna generate significantly higher rent than a property on the outskirts of a city simply because of its location and its access to resources — a big one right now, infrastructure — or the population. And so the 18.6-year real estate cycle is very simple to understand. There's a first expansion phase that typically lasts around seven years. Then there's a mid-cycle slowdown of two to three years. The second expansion phase, which is four to five years. Then we have a winner's curse, one to 18 months, and then we have the contraction period. And if you look back in history, you can kind of see all those different things. Another way put, you hear about this is, well, there's a recession, then there's a recovery, then there's an expansion, then there's a peak, then there's a correction, and then there's a recession. So that framework is probably what more people are apt to understand or have seen — those circular diagrams of that. And it's always about, well, where are we at currently, right? And that's the question that many investors are always trying to figure out. But unless you are tracking these data and understanding very, what I'll say, complex different things that are happening, how they impact — and technology being a major one now — it's very difficult to really put your thumb on where we are in the real estate cycle. So you know, that's how I'd explain it. But David Ricardo's law of economic rent is my basis, my thesis of all of the investing that we do now. Chris Berg: Curious, and don't want to go down this pathway today, but we'll do it another time — but have you read Progress and Poverty by Henry George? Logan Freeman: I know of the book. I haven't read it yet, but I point back to that book quite often. Chris Berg: Yeah, it's fascinating when you look at the way he suggests to tax land. So another day we will get in that conversation. But you actually asked yourself a great question — that's what I want to get into today. So where do you think we are right now in the cycle? And I guess I want to ask in the context of this: I hand you a hundred million dollars right now. How are you deploying that capital based on where we're at in the cycle, and why? Logan Freeman: Yeah, well, I think that if you think about the real estate cycle as a whole, it's been distorted, and it's been distorted in a big way. However, I'm a firm believer that we're right between that expansion and peak, right? And maybe even getting closer to the peak and moving towards a correction. So what at least Phil Anderson and Akhil would call this would be the winner's curse, or the mania phase. And what happens here is asset prices peak, driven by speculative frenzy and optimism. Okay, well, what's going on in our real estate markets right now? What about the stock markets? There's a lot of speculative frenzy and optimism around artificial intelligence. So we start to see oversupply in certain asset classes. Rising interest rates also begin to reveal vulnerabilities. And so if we connect that back to David Ricardo's law of economic rent, landowners are demanding unsustainable rents, further detaching the land values from its productive capacity. Okay, so if you think about that, we've seen land prices — specifically around data-center land and land that has power — at an all-time high. But what is that doing from a second-order effect? It's driving up all of the industrial-zoned land, because now we need advanced manufacturing warehouses. We need industrial outdoor storage. And if you are located next to where these developments are going on, we have also seen multifamily developments popping up, single-family home developments popping up, right around these booms of these developments. So I think we're really firmly in the winner's curse. And if you'll just allow me to, I'd love to give a historical example of the 2007 winner's curse so everybody can kind of point back, right? So the 2007 real estate peak before the GFC, I think, perfectly illustrates Ricardo's theory and the cycle in action. So there was speculative frenzy. Land values skyrocketed as easy credit and overconfidence fueled speculative investments. You know, there was overpricing. Landowners demanded excessive rents — economic rents — leading to a misalignment with productive uses. And then there was a correction, right? The subsequent crash reset land values in a big way. I've talked to so many investors that got in in 2008, 2009, and 2010. But that exposed the inefficiencies of speculative behavior. So I think you have to bifurcate and almost detach the idea that AI is just generally speculative in general. No — the financial instruments in the capital markets that get speculative nature and investment behavior around artificial intelligence is exactly what drives these speculative booms that we've started to see. So I think that we're currently in, or very close to exiting, this winner's curse phase, entering the early stages of a contraction. Now, that's very contrarian to what you're gonna see, right? But Ricardo's principles highlight the speculative overpricing that often defines sort of this phase. So I think that when you start to see developers face higher costs, we have oversupply in some areas — which we've already had in multifamily, right? We've already seen on the single-family home side. You know, investors begin to recalibrate expectations, focusing more on that productive potential and sustainable reserves. So I think that we're firmly in this phase of the winner's curse, and something that I think has prolonged this is absolutely the idea of the depth of the stock market, with what is driving the GDP growth — and I'm happy to get into that as well. But I'll stop there, explaining the winner's curse and kind of where we're at. Chris Berg: So let me share something with you and then you can speak to this for our audience. But you know, you brought up interest rates, right? So I said at the top of the show — let's do more of a five-year, I should do an all. Hopefully I can get this to work. But if you go back to roughly 2007, you can see, I mean, 30-years now at a level that we haven't seen since 2007, since you brought it up. We've been doing the show now for a while, talking about the 18.6-year real estate cycle. I said roughly a year ago, hey, pay attention to the middle-to-end of 2026. That's when you're gonna start to see land prices start to go down. I don't know if you listened to the homebuilders' earnings calls, but recently that's what they said — is, hey, we're starting to see land prices tick down just a smidge, not a lot, but a smidge. But the other thing I want you to speak to as well is, if you look at the 2007–2008 situation of the GFC, the homebuilder stock prices hit their ATHs — all-time highs — roughly two years before the stock market started to do what it did and went down dramatically, right? So I bring that up because if you look at KB Homes, it had its ATH in roughly September 17th of 2024. Lennar, roughly September 2024. I mean, I could go on down the list here, right? But all of these homebuilders had their all-time high in that September, end of September, early October 2024, put just roughly two years out. What say you, my friend? Logan Freeman: Yeah. Well, the question I've been wrestling with lately is: if you stripped out the AI build-out from the economy, would we already be in a recession? And, you know, I think the answer is maybe, but maybe not. We'll see. Well, I'll kind of give you a framework to think about on this. I mean, we'd definitely be more — we'd be likely much closer than the headline numbers suggest. And I think the AI build-out is carrying more weight than most people realize. AI is not just ChatGPT. It's data centers, it's power infrastructure, transmission upgrades. We have semiconductor fabrication, servers, GPUs, software, research and development, right? And the Federal Reserve and the St. Louis Fed estimate that these investments accounted for roughly 40% of US GDP growth during much of 2025. Think about that. I mean, it's not 40% of GDP, but 40% of the growth. So without AI, the economy still grows, but instead of growing around 2.5%, maybe we're closer to 1.5%, which is a very different economy. And I think this is what explains why the economy feels weird. Consumers say things are slowing. Commercial real estate transaction volume is still below normal. Manufacturing has softened. Regional banks are still remaining somewhat cautious. Yet we have GDP that's positive. Employment has remained resilient. The stock market continues to make highs. And so how can all these things be true? Because one enormous investment cycle is offsetting weakness elsewhere. And so then I start asking myself, well, why does this matter to commercial real estate? I think the AI build-out isn't just helping technology companies, it's creating that second-order effect in demand for industrial land, for power, for substations, natural gas, fiber, water, construction labor, engineering firms, concrete, steel, electrical contractors, right? I mean, this is an infrastructure super cycle like we have never seen before. But I think the bigger question is, when you think about GDP, it measures change, not size. So the question isn't will AI spending stop? I think the question is, will AI spending continue to accelerate, right? Because if spending simply levels off, then its contribution to GDP begins shrinking, even though billions are still being invested. And I think that's an important distinction. But back to your point, after I've got off my soapbox there — the Property Share Economics framework, right? So Akhil and Phil, they have long argued that public homebuilders tend to peak before the broader economy. So that's an interesting observation that you just went through. D.R. Horton, Lennar, Pulte, Toll Brothers — they all generally peaked around late 2024. So historically, PSE would suggest that roughly a 17-to-19-month lag before broader market weakness. And that pointed towards February to April of 2026. Well, did it happen? Well, not really. I mean, not at least yet. The broader market continued making highs. And I think it's because AI changed the timing. AI became the massive source of earnings growth, capex, employment, infrastructure investment. In other words, one cycle may have delayed another. So what I'm watching instead, and I'm asking, is what happens when AI capital spending stops accelerating? And I think that's a much more important question, right? So the commercial real estate implications of that is, if AI investment remains strong — so you think about industrial, power, energy, land, infrastructure — if those continue to outperform, then that's going to be a good thing. But if AI spending slows, then you'll likely see pressure first in equipment manufacturers, semiconductor suppliers, construction. I mean, we don't have to get into this today, but what's going on in South Korea's stock market right now, right? I mean, absolutely blew up because there were two companies that focus on semiconductors that didn't get the orders that they needed to — or they actually got the orders. It was hearsay that they weren't going to get the orders that they did. It wasn't even facts, right? So I think the leading indicators that I'm watching aren't really CPI today. They are the public homebuilders, the REIT performance, regional banks, CMBS delinquencies, the data-center announcements — because there's a lot of pushback on that right now — utility interconnection queues. So like, you go and listen to the earnings calls of public homebuilders; I go review the public utilities that I work with here in Kansas City in the metro area, right? So it's just a little bit of a different game. So I think my takeaway is simple. The economy's not weak, but it isn't as broad-based as the headline numbers imply. One extraordinary investment super cycle that we're going through, the AI build-out, is carrying an outsized share of growth. And so I don't think that means that a recession is necessarily inevitable, but it does mean that we should be watching not whether AI spending is large, but whether it continues to accelerate. Chris Berg: So here's what I want to get at with you, because — like, I don't know if you've ever done StrengthsFinder, but my number one strength is strategy. I think it's a big reason why I had such an affinity playing quarterback, because you're always trying to move the chessboard and figure out where things were going. I say all that because, like I mentioned before — I think maybe this was offline — but, you know, I sold some assets pretty early in the year, and I probably shouldn't have, because I was like, this thing's starting to tip, right? So I think I see the pattern, so maybe sometimes I see or act too early. So that's what I want to get at with you. It's like, I hand you a hundred million dollars based on how you see the field right now — and we'll use football analogies — based on how you see the field right now. Like, are you throwing Hail Marys? Are you running the ball? Or like, what's your deployment strategy, your capital allocation strategy in July of 2026, and why? Logan Freeman: Yeah. Well, I think that I always say that the trend is your friend. And what is going to ring true when we move from winner's curse to a peak to a correction? Well, if technological advances are as advanced as they continue to say they are — railroad, oil, gas, you know, these types of things. Rockefeller said in 1870, if you control the infrastructure, you're going to control the economy on top of that. And he was talking about oil at the time. And I think that if you are to look at commercial real estate, and you are a fund and you have that amount of capital to deploy, one of the smartest things that you can do is you can control the infrastructure. So what is everything going to need in two, three, four, five years? Well, Sam Altman of OpenAI in 2024 said something very interesting. He said that compute is going to be the currency of the future. So, okay, well, if that's the case, then the investors that own the infrastructure that supply the compute power — that's where the opportunity is. Well, how do you play in that space? Because if you're going to go build a 50-megawatt or a 100-megawatt data center, you need billions of dollars, right? But there is the opportunity to own the public infrastructure, right? Or the infrastructure component that serves these things. And so I was on some calls this week earlier, just talking to these investment groups that have a very interesting strategy that I very much align with. Instead of going and building a speculative data center, they work with the hyperscalers that do not want to own their data centers. They just need the compute power. And they figure out with a developer how the developer can build a shell for them, and they control the service-level agreements with the natural gas, water, and the power. And they sign 15-year agreements with the hyperscale data center company. That is an extremely smart strategy. Because now, anyone that needs to use that building — you've taken your risk from owning a million-square-foot building. But guess what you do own? You own the 15-year lease agreement to serve that building for what it needs to be a successful real estate project. So I'm seeing that as one really great trend to get focused on. Second, people are calling me saying, hey, I've got a building, what should I do with it? It's vacant, I got 25,000, 35,000 square feet. If you understand utility interconnects, substation capacity, and have the opportunity to get power allocated to your property, and you work on building the infrastructure there, a couple things are going to happen. This is not just for industrial properties, mind you. I envision a world in three to five years where, just like we chat with a large language model right now, if your property is connected — and I mean by connected, you have nodes, you have the ability to have power at your property, and you're deploying GPUs in your property, similar to your service closet that has all your fiber connects. Now you have some GPU nodes in there, you're generating tokens. You can either sell those tokens back to a decentralized marketplace like Hydra Host or io.net so you can generate more revenue, or you can use those tokens for your own use on your portfolio asset management. But the world that I envision is you are able to pull up a specific chat with a property at 123 Main Street, and you can say, what's the power utilization? Pull the camera feeds. Who's working on what units? How many tours happened at the property today? What's the floor load ratio right now? Right? You're gonna get all these data points in real time. Then, mind you, blockchain is going to verify the ledgers of these properties. So, Chris, when you guys go and you're evaluating new assets, typically 90, 120 days of due diligence just to understand the operating expense ratios, the utility bills, the actual bank statements, all of this due diligence. Well, the property owners that work on getting their properties connected today and have a verifiable ledger with receipts — a couple things will happen. Capital markets will look at these verified properties and say, I can loan on that much faster. And investors will say, I can allocate capital to that faster, because I can do my due diligence in 30 days. It's going to be a lot cheaper. And it's verifiable. So you're gonna get a compressed cap rate on those real estate deals. So the other component that I would say, if you're an owner of real estate right now, maybe the capital allocation strategy isn't trying to buy more real estate. It is thinking about how to get my real estate portfolio more connected going into the future, so that I can trade this real estate with, on the blockchain, tokenization, and figuring that component out. And I can manage my assets better. That's where I'm spending a lot of my resources, my time, my energy, my capital, as well as my mental capital — figuring out on my own portfolio how to position it that way, how to work with property owners to do the same, and then how to control infrastructure going into the next wave. Chris Berg: I didn't know where you were going there, but I like where you ended up, my friend. 'Cause it was like, yes. Because what I'm hearing you say is, hey, let's put some money into what we currently have to improve the NOI. Because I think what's coming is — it's, hey, like right now, if you've got cash, kinda like Warren Buffett, he's just sitting there, he's waiting for the right pitch to hit. So let's get into anything else you wanna add, but then I do wanna get into your heat map that you put out just recently, so you can share this with people. You kind of tell me how you wanna roll through this, but here's what you've done — five out of ten, if you want to explain that, and we'll just go through it slide by slide here. Logan Freeman: Absolutely. Yeah, so every month I pull five data points. Not 20, not a Bloomberg terminal full of noise, but five signals. And those five signals tell me, with a reasonable degree of confidence, what regime the commercial real estate market is actually in. So not what the headlines say, not what a broker's pitch deck says, but what the actual data says. And I think that this exists because, for myself, commercial real estate investors make bad decisions for one reason above all others: they react to headlines instead of frameworks. And so the headline in early 2026 was distress is climbing, CMBS delinquencies at cycle highs, recession risk elevated. But the framework said recovery is already forming underneath that noise. The data proved that the framework was right. And that's why we built this. So I think that two things can be true at the same time. The commercial real estate market — specific asset classes — can be in an active recovery while distress is still rising. And if you understand the 18.6-year real estate cycle, that's not a contradiction. That is really sequencing. And so if you understand that sequencing, you know when to move and when you want to wait, right? And so I think that we've already covered the 18.6-year real estate cycle, and we've overlaid this infrastructure super cycle component to this. But maybe I'll talk about the five signals, what each one tracks and why. Okay. So the VNQ versus the SPY — it's the REIT relative strength. I mean, this is my sequencing signal. Public markets reprice risk every single day. Private real estate reprices pretty dang slow. And then debt distress reprices last. So when REITs are outperforming the broader stock market, it means that institutional capital is moving back into real estate before the all-clear is obvious. And so that's the definition of early expansion positioning, right? And so in March of this year, the VNQ outperformed the SPY by 7.11 percentage points. Today it's at 5.22 percentage points. So it's still a pretty — go ahead. Chris Berg: So for people, Logan — just for people that aren't familiar with VNQ, explain what that is. Logan Freeman: Yeah. So you've got, you know, the REITs have a VNQ. So it's just like the S&P 500, right? And so you're gonna look at, okay, well, what's that bucket of REITs and how are they pricing and how are they performing? So real estate investment trusts — if you want sort of real estate allocation, you can go buy shares of a real estate investment trust, popularized by Sam Zell and a little bit before him back in the day. REITs are interesting because they can only pay distributions, right? And so you can go do some research on the REITs, but it's just looking at the real estate investment trusts that own real estate — where are they at compared to the S&P 500? So that's kind of the difference between those. And I just look at that relative strength on a regular basis. Chris Berg: That's great. Thank you. Logan Freeman: Okay. So the second one being the BBB corporate credit spreads, right? I mean, this is kind of the oxygen gauge. It's credit, the fuel for all commercial real estate. You know, they measure how much premium the bond market is charging for investment-grade corporate debt above the risk-free treasury rate. So below 150 basis points means that credit is open. And above 250 and widening means the system is under stress. You know, right now I think we're at around 96 basis points, right? That's near cycle tights. So that means that lenders still have appetite, capital is available, and the cost of debt is not the primary constraint. But when this number starts moving towards 150 and beyond, that's your early warning that the credit window is closing. So if you overlay that with the 18.6-year real estate cycle — the winner's curse, or the mania phase — money is still available. There is liquidity in the market, right? Signal three is pretty self-explanatory, right? It's the 10-year treasury direction. I watch the trend, not the level. A sharp collapse in the 10-year means the bond market is pricing recession before GDP data confirms it. So that could be your early recession warning. But a gradual rise means the expansion is intact but getting expensive. Right now — I didn't check it today, but it was around 4.63%. You know, we've broken back above that 4.60 threshold that we've identified as the key deal-math ceiling, right? So every point above 4.5% is either equity pressure or it's a seller-concession conversation. So that's the signal that we're watching most closely for the second half of 2026. All right. So in regards to signal number four, we just have the unemployment rate. It's a three-month trend. I mean, recessions are job events. They're not rate events typically, right? But rates have the same impact on jobs in a lot of different ways. But the absolute level matters less than the direction. A half-point rise in unemployment in a short window spikes recession probability really fast. We had a scare in February when payrolls printed negative 92,000, right? That was the only negative print of the year, driven by the federal workforce reductions. I think that's pretty well resolved. Today payrolls are stalling at plus 57,000. So it's not necessarily a contraction, but a deceleration that needs to be monitored. So two consecutive months at that level would change my posture meaningfully. So we're always tracking the unemployment rate as well. The last one, I think, is the bank lending standards. So that's the Fed SLOOS. And that's, I think, the one that's most underrated by most everyone in the room. So the Senior Loan Officer Opinion Survey is the Federal Reserve asking banks directly: are you opening or closing the credit window for commercial real estate? Right. So rapid tightening in construction lending is your freeze-risk signal. Gradual easing is the fuel for the next expansion phase. So right now we have bifurcation. We have large banks easing — but there's a whole thing with the federal supplementary leverage requirements. I forget, the eSLRs, the enhanced supplementary leverage ratio. So there's a whole different component on that right now. But community and regional banks are kind of tightening. So for Kansas City, that's what we focus on. That bifurcation is the binding constraint. I mean, most of our value-add and construction deals run on regional bank paper, not JP Morgan. And so I think that's a really important thing to monitor. So those are the five different indicators that we are tracking on a regular basis, that we've done for the last six months, to try to give people an indication of kind of where we're at in regards to the commercial real estate market. And I think the first half of 2026 scores trends — you know, January was a five out of 10. And mind you, you don't want to be high on this score, right? So January is five out of 10. It was always mixed and we were watching. February, we jumped up high, right? Caution, elevated risk — six out of 10. Then what happened in March of 2026? We jumped all the way back down to expansion and repair. So the payroll shock was resolved. Rates pulled back to 4.23. REIT outperformance surged. So March and April were pretty good — expansion and repair. May, we started to creep back up. What happened around May? Well, the Strait of Hormuz happened right around this area, right? So the 10-year treasury rose to 4.59%. REIT outperformance evaporated. Two signals really deteriorated simultaneously in May. And in June, we dropped back down to four. So we were improving in June. In July, we're back up at five out of ten, because rates moved back above 4.6%, payrolls stalled, and the REIT outperformance widened. So we're still right in that mixed-and-watch kind of component, which I think explains directly what we talked about with the AI infrastructure super cycle, overlaying that with the 18.6-year real estate cycle as well. So the first half of 2026 has been defined by volatility in interest rates and labor data. Three times this year, the heat map swung by two or more points month over month, highlighting why we focus on these trends, not on the data point. So the market is still at a mixed-or-watch regime as we enter into the second half of the year. And I think everybody's eyes are on the Strait of Hormuz, oil prices, and geopolitical risk — which they should be. Chris Berg: Back to the banking standards and Phil Anderson. I don't know if you've heard his — I don't know if I would call it a thesis, because I think he's factually checked it — but he says every single time we get into the winner's curse, just before we have those four years down, is you've got — and I don't want to get into politics here, but his point is you've got a Republican administration that starts to wipe away banking regulations. And if you see what's been happening, banking regulations are being either wiped away and/or greatly expanded for banks to put more money out there. What's your thoughts on that? Logan Freeman: Yeah. Well, I think that one thing I track is the enhanced supplementary leverage ratio. Okay. So this basically talks with banks to say, okay, we're gonna treat your 10-year treasuries and your treasury bills as risk assets. So with the capital that you have, you're gonna get actually penalized for holding those risk assets, which is a treasury bond. Now that has been reformatted — which means that the Federal Reserve now has a new buyer of their bonds, which is going to be banks, because they're not being penalized for holding those anymore. So when Federal Reserve Chairman Warsh comes out and says, we're not purchasing our own bonds, right? But guess who is? The banks are. And so now they have way more opportunity to lend more money. So I think it flows right into what Phil Anderson has been talking about. We see legislative change to allow for less standards in regards to lending. And that was put in in regards to banks in 2009, 2010. And we've only seen a couple times where that eSLR has been removed. COVID was one, then they came back, and now they're being removed again. So 100% agree with that framework. Chris Berg: Fascinating, man. Anything else you want to touch on here on your fantastic overview and heat map that we haven't talked about yet? Logan Freeman: I think that looking forward, there's five things that I would be doing. Number one, prioritizing your cash flow. So making sure that if you can drive revenue at your properties, today's income matters more than tomorrow's assumptions. Protect your downside. We have to stress-test every acquisition against higher interest rates and slower growth. We're being very selective, right? We're investing in these relationships. So I'm meeting with bankers — what's on your books that's not performing right now? How can I help? Right. And then think beyond this cycle, right? The goal isn't to win just this quarter. It's to own assets that outperform over the next decade. And so even in the self-storage world, I've started to see some really smart operators look at their portfolios, see how much power that they can get to their properties, and take five, ten, fifteen of their units and deploy GPU nodes in them, generating inference compute that they can sell back. Fantastic idea — should definitely be thinking about that, especially if you're a property owner right now. Chris Berg: So how would someone go about doing that? Logan Freeman: Well, I think that I have written some pieces on site selection and the questions that you need to ask the utility company. So happy to send that to you, Chris, so you can link to it. But there are consultants out there that can support this. One of the biggest components that we are starting to see right now is, if your property is located next to a large natural gas pipeline, generating your own behind-the-meter power allows you to get to speed a token much faster. The other thing I will say is zoning. Understanding zoning right now is so important. So the municipalities that you're dealing with — a lot of them do not have a classification for using your property as a telecom property, or a communications property, or a data center, right? They have ordinances. A lot of municipalities have ordinances against large greenfield data centers. But if you're an existing property owner, if you have good zoning — manufacturing, M1-5 is what we look for here in Kansas City. In certain general commercial districts, it's allowed. You need to do a zoning review, then you need to figure out with your utility company, your economic development council people, on how to go about the process of filling out applications to figure out how much power is in the area. And then there's transformer and substation upgrades that have to be done. How long is that going to take? Well, if it's a three-, five-year process, don't just wipe that away. That is an opportunity — because we're starting to see Lennar and PulteGroup partner up and put small inference data centers on these houses. We're starting to see them move into multifamily properties, self-storage properties. Oh my gosh, Tesla has now figured out how to build — and they put a patent on the Megapack. So they have seven gigawatts of power at their Tesla superchargers globally. So now they've got a patent where they can drop a box on their Tesla supercharger sites. And for example, when the chargers are not being utilized, they use that power that they have to generate inference compute power. So many opportunities in the future for commercial real estate if you are thinking about a long-term perspective and understanding the infrastructure side of it. Chris Berg: So good. Two final questions for you. I want to be respectful of your time, man. Great, great content. I really, really appreciate it. Second to last one is, so we've talked all about data centers and AI. How are you implementing AI right now in your business? Logan Freeman: Yes. Well, it's in every single one of our workflows. And you know what used to take me — our team — weeks to get done, we are able to — and I'll say this. We are able to take a large amount of data and we are able to create inferences through that data that we would never have been able to do on a computer. So for example, we'll take disaggregated information such as rental comps and sales comps, as well as brochures and listings that are live now, and we'll put all of this data into our AI that we are training, right? And we are building a knowledge base. Think about this. Okay, I've been in the industry for 10 years. But if that guy or that gal that's in your corporation, in your company, has been in the industry for 40 years, 30 years, they're getting ready to retire. You better figure out how to get their knowledge out of their head into AI. So I'm not saying that you should just be building all of these tools and resources, but if you've got senior leadership that's moving on, there are ways now to take that information from your company, from their experience, operationalize that, and then overlay that with new hires. So now think about this. I've got all that data, I've got inferences, and then I layer on 25 years of experience with my own AI. That's how we're getting to broker opinion of values, investment decisions, site selection, underwriting models so much faster. A prime example of this is we are representing a company that's going to be deploying 150 DC fast chargers in Kansas City. We did this exact process. We went and did site selection. We took into account the kilowatt hours that they would be using. We had to build out a 10-year revenue-share model for the property owners, and we had to show them their IRR — not really IRR, but their valuation of what this is going to do to the property. Found out that over 10 years, we're probably adding close to $400,000 to $500,000 worth of value to these property owners. That would have taken me weeks to get done. I got that done in a matter of 15 minutes. The other component is — so that's the main one, I would say — but the other components are, sure, it really does help us create marketing graphics and offering memorandums and brochures. But I love to build custom maps with AI. So I'll take the research that I've done for those site selections, I'll figure out where the fast chargers are in Kansas City, and then I have AI build an interactive map that does a gap analysis and puts it on a map, and I show that to clients. And they said, how did you do this? I said, well, it only took me four or five minutes. And we're winning business that way as well. So I think that taking that data, creating clarity and inferences from it, is number one. And then getting the knowledge out of the people who have the experience, operationalizing that, and overlaying that on top of the data is the next wave of where AI goes. Chris Berg: I said two questions and maybe more than that, so I apologize. So I guess, what's been the single greatest use of AI that's surprised you the most? Where it's provided the most value, and you're like, wow, I didn't think I was gonna be able to do this, but it did it and it's been incredible. Logan Freeman: Deep research. You know, I don't use Google anymore to do my research. So I will say to my AI, I need you to do deep research on this property address, pull permits, understand planning and zoning commission meeting minutes — and the dossiers that I'm getting back on a property would take weeks of intelligence gathering previously. I'll find out that, hey, this property actually has these outstanding obligations, or it went for a rezoning and was failed in March of 2022, and it sends me the exact meeting minutes and I figure out why. So the deep research component has absolutely expanded my knowledge base, but I'm able to get a dossier on a property, on an area, much faster than I was previously, and the outputs are just absolutely fantastic. Chris Berg: That's fantastic. All right, sir, if people want to reach out to you, get a hold of you, how can they go by doing that? Logan Freeman: Yeah, find me on LinkedIn. I post all this stuff on the heat maps on a monthly basis, on my newsletter. I'm on LinkedIn every single day. It's how Chris and I originally got introduced — me listening to him on Phil Anderson, saying, man, that guy can interview somebody really well. So Logan Freeman, the Kansas City Commercial Real Estate guy on LinkedIn — that's where you can find me, or www.mwcreadvisors.com. Chris Berg: Great stuff. Logan Freeman, really appreciate the insights. We want to do this again. Again, you can check him out — just go to LinkedIn. He's got a great following there, puts out really, really great content to keep you abreast about, I would say, as a capital allocator, investor, what you should be doing and how to sort of plan ahead, to see — what did you call it today? Remembering the future. So it gives you a great opportunity to beat the cycles and be one step ahead of the curve. So I'm Chris Berg, and I want to invite you to go check out selfstoragereport.com. Selfstoragereport.com. It's brand new. Brand new, we just launched the thing. So again, think Wall Street Journal meets CNBC if you want to stay on top of what's happening within the self-storage industry. We're going to end it there in a rhyme. We'll see you back here next time on the Self Storage Report. — END OF TRANSCRIPT —