Welcome to the Deep Dive. It is Friday, January 30th to 26th, and we’ve got a pretty substantial stack of research to get through today. We do all provided by the team at Eureka Business Group. And I have to say, if you are just scanning the national headlines this week, the signal to noise ratio is it’s terrible though.

Absolutely. It feels like the entire retail sector is just collapsing. If you only look at those big marquee names, it definitely looks that way from, say. 30,000 feet. But when you actually dig into the data, especially the local data for Dallas-Fort Worth that Eureka sent over, the story changes completely.

We are looking at a classic two speed market. That is the framework we need to explore today. This whole idea of two speeds, because on one hand you’ve got this national narrative of contraction. Big brands are buckling. And then you have the Texas reality, which is it’s operating on entirely different fundamentals.

We really need to parse why sacks and Allbirds are closing doors while developers in Texas are breaking ground on massive projects. Yeah. And we are just talking about retail. We need to connect that to the whole y’all street financial boom. The what, $25 billion data center bet out West. And that massive wall of debt coming due this year.

Because for you as an investor, the question isn’t just. Is the market good or bad? The question is, where is the capital flowing? Let’s start with the the bad news, or at least the news that’s driving all the fear. The biggest headline this week has to be SACS Global for sure. They file for bankruptcy and the number everyone sees is 62.

62 store closures. That sounds like a total disaster for the luxury market. It sounds like one, but you have to look at which stores are actually closing. This is very specific restructuring. Okay. SACS is shutting down the SACS off F fifth locations. Yeah, the discount stores and the last few remnants of Neiman Marcus last call.

So this isn’t a failure. The luxury can consumer, it’s the off price experiment. It’s an admission that their off price experiment. Just failed. So they are cutting the discount rack to save the main brand. They have to, diluting a luxury brand with discount outlets. It works for a while to drive revenue, but eventually, it just arose the brand equity of the full price stores.

So they’re pivoting back entirely back to the ultra wealthy consumer. They’re betting that the high net worth shopper is resilient. While the aspirational discount chopper is tapped out, but for the landlords who are holding those AFA fifth leases, this strategy shift doesn’t offer much comfort. It offers zero comfort.

In fact, it’s already a legal battleground. Simon Property Group, one of the largest mall owners in the world, is fighting sacks over, I think a hundred million dollars in rejected leases. Wow. And this highlights a critical risk for investors, even if the parent company is a giant, if the specific concept, in this case, the discount arm doesn’t work, that lease gets rejected in bankruptcy.

We saw a similar story play out with Allbirds this week. For a few years they were the poster child for the whole direct to consumer revolution. They really were. Now they’re closing all their US full price stores, all of them by the end of February. This is the DTC reality check we have all been expecting.

Allbirds is realizing that running a physical store portfolio is incredibly expensive. Just having brand heat or popular sneaker, it doesn’t guarantee you know how to manage retail overhead. So they’re shifting resources to wholesale and e-commerce. Essentially they are admitting they’re a product company, not a real estate company, which is a distinction a lot of brands lost sight of during that low interest rate era.

Exactly. A store is a variable cost. If it doesn’t perform on a p and l basis, it has to go. And we saw this with FAT brands too. The parent company of Fat Burger, they filed chapter 11 in Texas. Yeah, that’s the restaurant side of the coin where these leveraged models just get crushed when consumer spending shifts even slightly.

So if I’m an investor listening to this and I see Sacks, Allbirds, restaurant chains all filing for bankruptcy, my first instinct is to just stay away from retail. That’s the logical reaction. But then we look at the vacancy data Eureka provided, and it just completely contradicts the panic. That is the paradox.

While those commodity retailers are struggling, the overall national retail vacancy rate is near historic lows, and the reason is simple. We stopped building in 2025. The US only started construction on 43 million square feet of retail. That is the lowest number on record, so it’s a supply shock. We aren’t building new space, so the existing space is just full.

Correct. We have basically zero supply growth, so even if demand is flat or growing specifically in grocery and services, the tenants that are expanding. Have nowhere to go. They’re literally fighting for space. The transaction data backs that up. We saw a Sprouts anchored center sell for what?

$30 million? 30 million. And a power center went for over 51 million. So capital is still moving. Capital is flighty, but it’s rational. Investors are fleeing what you could call brand risk like Allbirds, and they’re running toward traffic duration, meaning if you own a center with a Sprouts, people have to come there every week.

You aren’t reliant on whether a specific sneaker is cool this month. You’re selling food. You’re selling food. That is why we say the market is bifurcated. If you’re selling an experience or a necessity, you are commanding a premium. If you are selling commodity goods, you can get on Amazon. You are in the danger zone.

Let’s shift gears to where that premium market is most visible. The research keeps pointing to Texas and specifically Dallas Fort Worth. We hear this term, y’all street thrown around a lot. Yeah. Is this just marketing fluff or is there a real structural change happening in the financial sector there?

Oh, it is absolutely a structural change. The data is staggering between 2018 and 2024. North Texas landed over a hundred corporate headquarters at a hundred, but what’s unique about this current wave is the type of tenant. We’re seeing the Texas Stock Exchange in Nasdaq, Texas, establishing a real foothold DFW is effectively becoming the second largest financial services market in the country.

Does having a regional stock exchange actually change the real estate dynamics though, or is it just a few floors in a skyscraper? It changes the valuation of the real estate because of the lease terms. The report from Gensler noted a crucial detail. What’s that? These incoming financial firms are signing leases for 10 to 12 years.

The old norm for office leases was what? Five to seven? That’s a huge jump in commitment. It’s massive. Yeah. When a major financial institution signs a 12 year lease, they’re planting a flag for an investor. That lease acts like a bond. It makes the building significantly more valuable because that cashflow is guaranteed for over a decade.

It also signals that these high income earners, the traders, the bankers, the analysts, they’re all putting down roots, and those people need places to live and shop, which brings us right back to retail. The briefing mentions Southlake as a prime example of this trickle down effect. Southlake is the perfect case study for that retail plus mixed use strategy.

There’s a new project called Shivers Farm coming online, and it’s grocery anchored. It’s grocery anchored, though they haven’t disclosed the specialty grocery yet, but it pairs 111,000 square feet of retail with office space and single family lots. So they aren’t just building a strip mall next to a subdivision.

They’re actually integrating them. They have to. In an affluent suburb like Southlake, you can’t just drop a concrete box anymore. You have to build a destination. And we are seeing this Texas model of retail following residential growth everywhere. Like where else. Look at Manville Town Center down near Houston.

Lows is opening. It’s HEB anchored or the massive retail park planned in Katy. It seems like the strategy is pretty simple. Follow the rooftops. It is, but the growth is pushing further out than it used to. Did you see the note about Seguin? I did. 600,000 square feet of retail was approved, and Seguin is not exactly a major metropolis.

It isn’t, but look at where it sits. It’s right between San Antonio and Austin. As those two cities merge into this mega region, the infrastructure nodes like the I 10 corridor, they become gold mines. So it’s a long-term play. It’s a play on growth optionality. Investors are buying land in places like Sgu because they know that sprawl is just inevitable.

So while retail is chasing rooftops, there’s a different land use trend happening in DFW for office space. We have read, I don’t know, a hundred stories about converting empty offices into apartments, right? The research suggests DFW is taking a different path. Office to resi. Conversion is incredibly difficult.

The plumbing doesn’t line up. The floor plates are too deep. It costs a fortune. So DFW developers are being pragmatic. They’re looking at these obsolete office parks and saying the building is worthless, but the land. The land is in a prime location, so they’re just scraping them. They’re scraping them to build.

Industrial Foundry commercial has 12 of these conversion projects nationally, and half of them are in DFW. So they’re tearing down white collar offices to build blue collar warehouses. Exactly. It seems like a strange pivot for a city trying to be the next financial hub, right? It does, but not if you look at the absorption numbers.

DSW has been the strongest industrial market in the US for seven years straight. In 2025 alone, they absorbed 25 million square feet of industrial space. That’s incredible. The demand for logistics and last mile delivery is just overpowering the demand for 1980s office space. Simple as that. Speaking of industrial demand, there is a new player that kind of dwarfs standard logistics.

We need to talk about the Frontier Project, the $25 billion data center. That number is just hard to wrap your head around. Vantage Data Centers is building a campus out in Shackleford County that is about 120 miles west of DFW. Why does a project that far out matter for the Dallas market? It’s the gravitational pole, a project that size.

We’re talking 1.4 gigawatts of power. It’s an ecosystem unto itself. Okay. Requires immense infrastructure. Power substations, fiber optic lines, specialized construction crews, cooling technology vendors. Yeah. Most of that expertise and support service flows right through the DFW Metroplex. So even if the servers are in elene.

The checks are being cut and the services are being manned from Dallas, but this industrial boom isn’t without its friction. The briefing highlighted a story out of Hutchins that I think every investor really needs to hear. The Point South Logistics Center, it illustrates the risk of highest and best use clashing with local politics.

It’s a real cautionary tale. This was a massive warehouse originally designed for Amazon. Amazon walked away and the building was purchased by ICE, immigration and Customs Enforcement to be used as a detention facility. I can imagine the local government had a strong reaction to that. The Mayor of Hutchins was furious.

He’s on record saying We have warehouses for storage, not for holding people. And this illustrates zoning risk and reputational risk in commercial real estate, right? You might have a valid lease, you might have a tenant with federal funding, but if the municipality decides your use case is toxic to the community, your life as a landlord gets very difficult.

It’s a stark reminder that real estate is never just about the building, it’s about the community it sits in. The relationships you have with that community. Okay, let’s zoom out to the macro view. We’ve talked about retail restructuring the Texas boom, the industrial shift, but all of this sits on top of the cost of capital.

It’s January 30th, 2026. What is the money doing? The money is waiting. And it is getting expensive. The Federal Reserve held rates steady this week. The market was hoping for a cut, but the 10 year treasury actually rose. It’s hovering around 4.25%, so the higher for longer environment is solidified. It is the new baseline for commercial real estate.

This stability is it’s a double-edged sword. On one hand, you can underwrite a deal because rates aren’t gonna spike to 8% tomorrow. But on the other hand, financing remains costly, which effectively filters the buyer pool drastically. If you need 80% leverage to make a deal pencil out. You are out of the game.

The math simply doesn’t work. This market favors the cash rich buyer or the operator with deep relationships who can secure debt terms, others can’t. This is where a firm like Eureka Business Group has an edge exactly knowing how to structure the capital stack when money isn’t free and the pressure is just mounting for current owners, we are facing a massive wall of maturing debt this year.

The maturity wall, it is the defining story of 2026. We are looking at roughly $930 billion in commercial real estate debt maturing this year, 930 billion. That’s more than triple the volume of late 2025. That is nearly a trillion dollars of loans that need to be paid off or refinanced. And just consider when those loans were originated.

Many are from 2021 or early 2022. Peak valuations, zero interest rates, right? Valuations were at all time. Highs rates were near zero. Now those loans are coming due in a world where the asset might be worth 20% less and the interest rate to refinance is double. So there’s a gap. The bank won’t lend the full amount needed to pay off the old loan.

We call that a cash and refinance. Yeah. The owner has to write a check to the banks just to keep the building, and if they don’t have the cash, they hand back. The keys extend and pretend is over. It’s ending. Bank, OZK. Other lenders, they’re actively reducing exposure. Regulators are forcing a cleanup. This sounds like a crisis for owners, but for a buyer, this has to be the opportunity we’ve been waiting for.

It is the best buying window in a decade, but you have to be surgical. There will be distress, particularly in office and unrenovated assets, right? But remember the two speed theme we started with? While someone is handing back the keys to an empty office tower in Houston, someone else is in a bidding war for a grocery center in Southlake.

The distress is not uniform. That distinction is so vital. If you just read the national headlines about a CRE debt crisis, you might think everything is on sale and you would be wrong. Real estate is hyper-local, a bankruptcy in Ohio. Does not dictate rents in Frisco, Texas. You need to understand the microdynamics.

Is the asset distressed because of a bad capital structure that’s fixable, or is it distressed because it’s in a bad location, which is fatal? Identifying that difference is the primary challenge for 2026. You cannot just be an allocator of capital anymore. You have to be an operator. You have to know how to fix the asset, lease the space, manage the expenses, all of it.

We have covered a lot of ground today. From the rationalization of national luxury brands to the booming industrial corridors of North Texas, it is clear that 2026 is going to be a volatile active year for sure. The paralysis of 2024 and 2025 is definitely thawing. Transactions are starting to happen and the market is finding its new floor.

Before we sign off, I wanna leave you with a thought that struck me while we were discussing y’all street and the data centers. In retail, we have always been obsessed with the anchor tenant. We used to ask, does this mall have a sax? Does it have a Macy’s? And those anchors are fading away. They are.

But looking at Southlake or the plans in Sagu, maybe we need to redefine what an anchor even is. If you have an office building full of traders on 12 year leases or a data center bringing in highly paid engineers, the jaw is the new anchor. Maybe that’s a profound shift. The department store isn’t the draw anymore.

The paycheck is you build where the income is, not just where the brand name is. Something for you to consider as you evaluate your portfolio this quarter. A huge thank you to Eureka Business Group for helping us curate this briefing. If you are trying to navigate this two speed market, you need a guide who knows the local terrain.

For the deep dive, I’m signing off Is next step.