I took a meeting last month with a member at Kith Ivy, Ronnie Fieg’s members-only padel and wellness club in the West Village. The initiation fee is $36,000, and then annual dues run another $7,000. The rooftop has three enclosed padel courts designed by Wilson with New York’s first Erewhon outpost on the ground floor. The spa is a partnership with Giorgio Armani, Café Mogador runs the restaurant, and then there’s a Kith retail shop, a gym, cold plunge pools, a hammam, and IV therapy rooms.

It was, objectively, a great place to take a meeting. And that sentence is the entire thesis of this letter.

The private members club market in the United States hit $5.39 billion in 2025, and club applications have increased 42 percent since 2021. New York has added more members clubs in the past three years than in the prior two decades.

But most of these clubs (Zero Bond, Aman, San Vicente, Casa Cipriani) are built primarily around food, beverage, and social programming. And F&B-driven members clubs are a brutal business with thin margins and tough to sustain differentiation. Once the opening buzz dies down, a club that offers dinner, drinks, and a nice room needs to give members a reason to come back three times a week, not three times a year. And most can’t.

Racquet sports solve that problem. And the participation numbers are no longer a niche trend.

• Tennis reached 27.3 million U.S. players in 2025, up 54 percent since 2019

• Pickleball hit 24.3 million, up 171 percent in three years, with the average player age dropping from 41 to 35

• Padel surpassed one million U.S. players in 2026 (up 250 percent since 2022), and more than 70 percent of new sports facilities built in 2024 included padel courts

And that’s just the mainstream layer. Squash, platform tennis, and the esoteric end of the spectrum (court tennis, rackets) round out a category where a single club can offer five or six sports under one roof.

None of this is new, of course.

The DNA of the American private club was athletic first and social second. The New York Athletic Club was founded in 1868. The Racquet and Tennis Club, purpose-built around court tennis and rackets, has occupied its McKim, Mead & White building on Park Avenue since 1918. The University Club, the Union League, the Harvard Club: racquet sports were the center of the club experience for a century.

Somewhere in the mid-twentieth century, the model shifted. The dining room became more important than the court. Soho House, Zero Bond, and the 2010s wave of social clubs were built almost entirely around F&B and curation, with fitness as an afterthought.

The racquet club renaissance is a return to the original model, updated for a generation that wants activity, wellness, and social connection in one membership.

And the economics favor it. Courts are cheap to build relative to the revenue they generate; a padel court runs $75,000 to $150,000, a fraction of a high-end restaurant buildout. The infrastructure drives repeat visits: a member who plays twice a week visits 100 times a year, versus 12 for a member who comes to dinner once a month.

Each visit is an opportunity for F&B, retail, and wellness spend. Courts don’t take up much real estate (three padel courts fit on a rooftop; squash courts stack vertically), which makes the model work in urban footprints where square footage is expensive.

And racquet sports are inherently social. Every game requires at least two people. Padel requires four. Nobody needs a programmed “mixer” when they’re already playing doubles with a potential client three times a week.

Kith Ivy is the most visible expression of the new model. Fieg understood that the padel courts are not the amenity; they’re the anchor. Everything else (the Erewhon tonic bar, the Armani spa, the restaurant, the retail shop) monetizes the foot traffic the courts generate.

• The $36,000 initiation fee is the membership; then

• The F&B, wellness, and retail revenue is the margin.

A new racquet club in South Florida sold its first 100 memberships in weeks with zero marketing spend and nearly 1,000 people on the interest list before opening. Life Time, which operates 115 clubs with 40 more planned, is adding racquet courts to every new location.

The risk, of course, is oversupply. When participation numbers grow this fast and capital follows, every secondary market will get three padel clubs before it needs one. And courts alone are not a moat. Courts plus hospitality-grade food, wellness, and brand might be. The operators who build generic court facilities without the club experience will struggle to justify premium memberships; the ones who understand that the court is the anchor and hospitality is the margin will build something durable.

The Gilded Age clubs understood this. People want a reason to show up. A court gives them one—and everything else follows from that.

Two friends of mine recently raised $20 million for a multifamily development deal. In this market, which—if you’ve tried to raise for ground-up multifamily recently—you know is about as fun as a root canal with no anesthesia.

They didn’t use a placement agent or tap large institutional capital. And they certainly didn’t rely on mass email blasts to a thousand investors.

I asked them what worked, and the answer was so obvious it was almost embarrassing.

They went deeper on relationships they already had.

They went to dinners, remembered kids’ names, texted articles that had nothing to do with the deal, congratulated people on things that weren’t fundraises, showed up at events and didn’t pitch, and followed up when they didn’t need anything.

They did the actual work of building relationships that no one seems to prioritize anymore.

Probably because most GPs I talk to treat capital raising like a top-of-funnel problem…

• Build a bigger list,

• Blast it,

• If someone doesn’t commit in 60 days, mark them as dead and move on.

The entire capital raising process today is optimized for volume, which is a polite way of saying most capital raising strategies have just become email marketing with a higher minimum check size.

Meanwhile, there are probably 200 people sitting in your CRM right now who already know you, already trust you, and already understand your strategy. Half of them said “not right now” on your last deal — which you interpreted as “not interested.” It almost certainly meant “not right now.” People have a lot going on… their kid is applying to college; they’re closing on a house; they just started a new role; etc. Your $5 million capital call was not top of mind that particular Tuesday in March.

The problem is that maintaining 200 relationships at any real depth is a full-time job, and capital raising already sits on the most senior, most time-constrained person at the firm. So the quarterly update goes out, three people reply, and the rest slowly forget you exist. Not because the relationship soured, but because nobody watered it.

This is where AI gets interesting — and I don’t mean using it to write faster cold emails to bigger lists. That’s just spam with better grammar and a LinkedIn thought leader telling you it’s “scale.”

The real unlock is using AI to watch the people you already know and surface moments worth acting on.

Your investors are not just rows in a CRM. They’re people generating signals constantly across every public channel they touch — LinkedIn, Instagram, Facebook, their firm’s website, Google News, SEC filings.

• An investor’s firm just closed a new fund

• Someone you pitched last year just got promoted to head of real assets at a family office

• A contact just posted vacation photos from Nashville, where you happen to have a project under construction

👆 These are the opening lines of real conversations. And they produce outreach that actually deepens a relationship — not “just checking in” or “wanted to circle back,” which are both shorthand for “I have nothing specific to say but my CRM told me to email you.”

The relationship building workflows we’re building with a few groups right now looks like this.

1. You take your existing investor universe — everyone who’s ever taken a call — and build signal monitors across their public channels.

2. AI watches all of it, continuously, and surfaces relevant moments as signals.

3. AI drafts the follow-up — specific, short note tied to that signal, written in the GP’s voice and calibrated to the relationship.

4. The GP reviews it, tweaks it if needed, and hits send.

Thirty seconds instead of thirty minutes, which means it actually happens instead of aging on a to-do list.

The playbook looks more like what a great consumer brand does than what a traditional capital markets team does. The best DTC companies track customer behavior across every touchpoint and reach out at exactly the right moment with exactly the right message.

Investors are consumers too. They have social media accounts and life events and interests that extend well beyond their allocation mandate. The information is all public. Almost nobody in real estate is systematically using it.

The line between thoughtful and creepy is the senior person’s judgment (which is why the human stays in the loop). AI surfaces the signal; then the GP decides whether to act on it. That human filter is what keeps it personal instead of algorithmic, and it’s why this only works when the workflow is built around how a specific person actually operates, not jammed into some off-the-shelf sequence.

My friends who raised that $20 million didn’t use any of this technology. They did it the old-fashioned way — remembering details, checking in on people, showing up. It works because it’s genuine. What we’re building is the infrastructure to do that at scale without losing the part that made it work in the first place.

The biggest opportunity in capital raising right now isn’t finding new investors. It’s going deeper with the ones who already know your name.

I had coffee last month with a marina operator I’ll call “James”. He runs twelve marinas across the Northeast — roughly 4,000 slips, a fuel operation, a handful of dry storage facilities, and a boat service business he bolted on two years ago. Total AUM is somewhere around $180 million.

James doesn’t have a fund and has never raised institutional capital. His investor base is a patchwork of family offices, a few HNW individuals he met through a friend’s friend, and his own balance sheet. He operates every asset himself — dealing with the Army Corps of Engineers when a dock permit stalls, negotiating fuel margins with distributors, fielding a call at 6 AM when a storm rips a dock off its pilings in Fort Lauderdale.

He’s also generating a net yield his investors can’t find anywhere else.

His portfolio averages north of a 9% cash-on-cash return, in an asset class where Blackstone paid $5.65 billion for Safe Harbor Marinas and Bain Capital is rolling up slips on the East Coast at compressed cap rates. James beats them on yield because he

• Stays small,

• Operates with intensity, and

• Knows every slip in his portfolio by name.

He doesn’t need to hit a $5 billion fund target. He needs to find the next off-market marina on the Gulf Coast before a consolidator does.

James is an archetype. And he’s everywhere.

The operator nobody is writing about

There are hundreds of operators like James building portfolios in asset classes that didn’t have names ten years ago — outdoor hospitality, cold storage, small bay industrial, surf parks, branded residential, RV parks, industrial outdoor storage. They run somewhere between $50 million and $300 million in AUM. Small teams, five to twenty people. Operationally obsessive in a way that would be unrecognizable to someone managing a stabilized Class A multifamily portfolio.

What makes them different from the last generation of real estate entrepreneurs is how they got here. James didn’t start by raising a fund and then going looking for marinas. He started by operating one marina and learning the business from the inside. The portfolio grew because he got good at operations, not because he got good at pitching LPs.

Most institutional real estate businesses are built the other way around — the capital comes first, the operating capability gets figured out later.

And it’s the reason James can generate the returns he does. His returns aren’t good despite his small scale… they’re good because of it.

He sources off-market. He operates with a cost structure that a 200-marina platform can’t touch. He makes decisions in hours that a corporate operator routes through three committees over six weeks. The moment you institutionalize the portfolio — add the IR team, the fund admin, the quarterly reporting — you add cost, slow down decision-making, and compress the very returns that made the investment attractive in the first place.

And the operational complexity of his asset class is what protects all of this. Marinas aren’t apartments. You can’t underwrite them on a rent roll and a cap rate. There’s a fuel business, a service business, a slip rental business, a dry storage business, and a retail operation — all running simultaneously on the same waterfront property, all subject to weather, permitting, environmental regulation, and seasonal demand. That complexity keeps the passive capital out. It rewards the people who actually understand the business — and it punishes the ones who don’t.

James also isn’t just buying buildings. He’s built a marina operating company with proprietary vendor relationships, fuel purchasing agreements, dock maintenance protocols, and a reputation on the Gulf Coast that makes every new acquisition easier than the last one. The operating company has value that exists apart from the real estate.

The capital problem

The infrastructure of real estate capital markets was not built for someone like James.

Placement agents won’t touch a $30 million raise — the economics don’t work for them. They need $200 million-plus to justify the effort. The conference circuit is designed for institutional sponsors with glossy pitch decks and five-person IR teams. The LP databases filter by AUM, track record length, and fund size, and James gets screened out of all three.

The capital that would actually be a good fit — family offices, HNW individuals, small RIAs — can’t find him. There’s no directory of marina operators generating 9% cash yields. There’s no placement agent connecting a family office in Dallas with a twelve-marina portfolio in Naples, Florida. These matches happen, when they happen at all, through personal networks and luck.

So you end up with a market that’s broken in both directions. Operators with strong businesses and real yields can’t raise. Investors with the right appetite and time horizon are stuck choosing between institutional funds that are too big and too expensive, or direct deals they stumbled into with no infrastructure around them.

Private wealth and the $50M Operator

Family offices now put somewhere between 45% and 55% of their portfolios into alternatives, up from about 30% a decade ago. They’re making opportunistic bets on real estate while a lot of institutional capital sits on the sidelines. And they’re far more willing to explore asset classes that pension funds won’t look at — because the check sizes are too small, the sectors are too weird, or the operators are too early.

The $50M Operator is, in a lot of ways, exactly what this capital is looking for.

A family office can write a $2 million check into James’s next marina acquisition. That check is meaningful for him and irrelevant for a $500 million fund. Family office capital doesn’t need quarterly liquidity or a J-curve narrative for an investment committee. It can back an operator for a decade and compound alongside the business, which is what James actually needs — not a three-year hold with an IRR bogey.

And the yield spread is enormous. Institutional real estate in 2026 is generating mid-single digits. James is north of 9%, and operators in other niche asset classes are doing similar numbers. That spread exists specifically because these operators haven’t scaled past the point where their operational edge gets diluted by corporate overhead. The premium is the boutique.

A family office that backs five or six of these operators across marinas, outdoor hospitality, cold storage, and small bay industrial has built a portfolio of high-yielding, uncorrelated real estate exposure that no institutional fund in the market can replicate.

I think this is where private wealth real estate investing is heading. Not blind pool funds. Not REITs. Curated exposure to the operators generating real alpha in the most operationally complex corners of the market.

What could go wrong

When you invest with a $50M Operator, you’re betting on a person. If James gets hit by a bus, the portfolio has a problem that a Blackstone-owned platform would not. That key-person risk is real, and institutional investors have spent decades engineering it out of their portfolios for a reason.

There’s also the growth trap. At some point, James needs a real back office — a CFO, a head of IR, a fund administrator. Those hires cost money and add complexity, and they start to erode the characteristics that made the business attractive. The operators who navigate this well will be the ones who professionalize their infrastructure without professionalizing their operations — who build the back office without losing the 6 AM phone call.

And then there’s the problem of actually finding these people. The $50M Operator is, almost by definition, invisible. No PR team. No PERE conference presence. No database listing. You find them through niche media, operator communities, word of mouth, and the kind of ground-level market intelligence that most investors don’t have and aren’t set up to get.

The investable middle

I wrote a few months ago about the K-shaped economy hollowing out the middle of real estate — the $300 hotel room, the Class B office, the aspirational-luxury condo. The middle is dying in those categories because it lost its reason to exist.

But there’s another middle in real estate that’s doing the opposite. The $50M Operator occupies a middle between institutional platforms and individual deal sponsors, and that middle is thriving precisely because it’s hard. The operational complexity, the small scale, the niche asset classes — these aren’t bugs. They’re the reason the returns are there.

For most of these operators, staying between $50 million and $300 million in AUM isn’t a phase. It’s the strategy. The boutique is the alpha. The yield premium disappears the moment you try to scale past the operator’s edge.

The operators are already here, building real businesses in asset classes the rest of the market is still trying to name. The capital is looking for them. The infrastructure to connect the two is what’s missing — and what’s being built right now, one marina at a time.

Four years ago, I launched a real estate investment banking boutique. The thesis was simple: there are hundreds of innovative real estate operating companies building in niche asset classes—data centers, outdoor hospitality, senior living, cold storage—and most of them are too small or too unconventional for the big banks to care about. Someone should help them raise capital.

The business model was the same one every capital raiser runs:

• Get a client;

• Use their deal as bait to get meetings with investors;

• Learn what those investors want;

• Use that knowledge to get the next client;

• Repeat.

The product, really, was a Rolodex—and the only way to build it was through a steady stream of dinners, conferences, and cold emails.

It worked, slowly.

And five years in, I can look back at a series of assumptions I held on day one that turned out to be wrong — or at least incomplete. Each time I updated one of those assumptions, we ended up building something new.

What started as a traditional advisory business has become something I didn’t plan for and am still figuring out: a platform that combines media, data, AI, and live events to connect real estate operators with capital.

I want to walk through what I got wrong, what we built as a result, and where it’s going.

“Capital raising is a relationship business.”

This is the thing everyone says. And it’s true—but it’s an incomplete truth that leads to a bad strategy.

Yes, an investor is more likely to take a call from someone they know and trust. But the traditional version of “relationship-driven capital raising” means a senior person manually working a network of a few hundred contacts, built over decades, maintained through dinners and conferences. The knowledge about what those investors want lives in that person’s head. When they leave, the Rolodex leaves with them.

I spent my first two years doing exactly this: flying to conferences; hosting dinners; and getting introduced to one LP at a time. And it struck me that the bottleneck wasn’t the quality of our deals or the caliber of the operators we worked with. The bottleneck was that I could only build relationships at the speed of one human being’s calendar.

The assumption I should have started with: capital raising is a trust business, and relationships are just one way to build trust. Content is another.

That realization led us to start using Thesis Driven—a media company my partner Brad Hargreaves had already built into one of the most-read real estate publications in the country—as a capital markets tool.

We started writing about the asset classes and themes our operators were building in.

We published deep dives on niche sectors, interviewed operators on camera.

We hosted virtual events where investors could hear directly from founders.

The investors came to us. Not because we pitched them, but because they’d been reading us for months and already trusted the perspective. Media turned out to be the best investor acquisition channel in real estate—and almost nobody is using it that way.

“Data is a back-office function.”

When we started taking investor meetings—dozens, then hundreds—I kept a spreadsheet:

• what asset classes each investor liked…

• check sizes…

• preferred structures…

• geographic focus…

• notes from every call.

It was useful but messy. And I realized pretty quickly that the intelligence we were collecting was more valuable than I’d understood. Every investor conversation was a data point: what’s getting allocated to, what’s out of favor, where the capital is flowing. Individually, each call is just a call. In aggregate, it’s a live map of private real estate capital markets.

So we built a platform to capture and structure all of it. Every investor conversation gets logged. Mandates, preferences, deal history, and relationship maps are all tracked. We now have structured intelligence on thousands of institutional investors, family offices, and RIAs — not scraped from the internet, but gathered from real conversations over years.

What I got wrong was thinking of this as an internal tool. The data layer turned out to be the connective tissue of the entire business—the thing that makes every other piece work better. It powers our advisory engagements, informs our media coverage, and increasingly, it’s a product in its own right for operators who want to understand the investor landscape before they start raising in CapitalStack.

“AI will just make outreach faster.”

When AI tools started getting good enough to draft real prose, the obvious application was email. Build a list, generate personalized outreach, send at scale. And that’s what most people in capital raising are doing with AI right now — producing faster, more efficient spam.

I almost made this mistake.

The instinct is to take the most tedious part of the job (writing 200 investor emails) and automate it. But automating a bad process just produces bad output faster.

The real unlock wasn’t speed; it was matching.

We’ve now brought in a machine learning engineer to build workflows that sit on top of our investor dataset. The system doesn’t just draft emails—it starts upstream.

• Which investors in our universe have a mandate that fits this deal?

• Which ones have done something similar in the last 18 months?

• Who in our network has a warm path to the decision-maker?

• How should the pitch be framed differently for a pension fund allocator versus a family office principal?

By the time a message gets written, the AI has already done the work that used to take a senior person days: prospect research, relationship mapping, pitch calibration.

The senior leader stays in control of the message and the relationship, but the grunt work (the thing that made in-house investor outreach impractical for most operators) disappears.

Done right, AI doesn’t make outreach faster. It makes outreach smarter—and keeps the senior leader in the driver’s seat. Done wrong, it’s just a more efficient way to erode the trust you spent years building. The difference is whether you start with data and judgment or start with a template and a send button.

“You can do all of this from behind a screen.”

This is the one I keep relearning.

Media scales… data compounds… AI workflows collapse manual labor…. but, none of it replaces what happens when you put an operator and an investor in the same room.

So we’re building out a live events program—starting with a Capital Markets Summit this summer—designed to do exactly that. Not a generic industry conference with 2,000 people and a trade show floor, but a curated room where the operators we work with meet the investors we’ve identified as genuine fits, with enough shared context that the conversations skip the preamble and get to substance.

The events are the part of the business that doesn’t scale. But they’re where trust gets built in a way that no email, article, or dataset can replicate. And they’re the reason the rest of the stack exists — everything else is designed to make that room as productive as possible.

The stack

When I zoom out, what we’ve built is four layers that feed each other:

Media creates the top of the funnel—operators and investors find us through the writing, the events, and the research. It builds trust at scale in a way that cold outreach never will.

Data captures the intelligence from every conversation and structures it into a living map of who’s investing in what, at what size, and through what structures.

AI workflows sit on top of the data and collapse the manual work of investor discovery, matching, and outreach.

Live events bring it all together in a room, with context, where real relationships start.

Each layer makes the others more valuable.

• The media drives the conversations that feed the data →

• The data powers the AI workflows →

• The AI workflows make the events more targeted →

• The events generate the relationships that become the next round of intelligence.

I certainly didn’t plan this. Five years ago, I thought I was building an advisory business with a Rolodex.

What we’re actually building is an ecosystem designed to connect the operators innovating across the built world with the capital to do it—using tools that didn’t exist when we started.

What’s next

We’re still early. The AI workflows are in pilot; the events program is just getting started; and the data platform is good but not where it needs to be. I share all of this not because we’ve figured it out, but because I think the model is right—and I want to build it in the open.

If you’re an operator raising capital in a niche or innovative corner of real estate, or an investor trying to find them, this is what we’re working on.

We’re grateful to everyone who’s been part of the journey so far—the operators who trusted us early, the investors who took our calls, and the readers who’ve been following along. You’ve shaped every part of this more than you know.

More to come,

I just got back from a surf trip to Nicaragua. The trip starts the way most of these trips start: landing somewhere that doesn’t feel like a vacation destination (in this case, Managua Airport); navigating what feels like an illegal rental car experience; and driving through farms where dogs and cows wander onto the highway. I sat stalled for thirty minutes behind a funeral, a casket in the bed of a pickup truck, with a village walking behind it.

By the time the coast appears, the airport feels like another country. There are no resorts, just beaches and cliffs, locals surfing the same breaks they’ve surfed for generations, beachfront bars with dollar beers, and bonfires at night. Each morning I took a boat in the dark to a break nobody’s named on a map, with a few people nobody knew the day before, and surfed for five hours. Came back, ate lunch, surfed again. In bed by 8 PM with a tuna burger, four Toña beers, and the deep, animal exhaustion of a body that did something all day.

The next morning, it happens again.

These trips - whether hunting, fishing, surfing, backcountry skiing - share a set of ingredients that no luxury hotel can replicate:

• Shared physical pursuit that’s adventurous and sometimes (slightly) dangerous,

• Remote location that takes real effort to reach,

• Forced disconnection by geography rather than virtue,

• Immersion in a local economy that is set in nature, and

• A small, self-selected group of people who become close (because the format forces it).

They also share something else. They’re almost impossible to find online. The best spots have minimal internet presence with sparse lodging and a local service infrastructure - where nothing is branded. Most of them get booked through a friend who heard about them from someone they met on a previous trip.

They cost a fraction of what most “luxury” travel costs. And the wealthier my friends get, the more they prefer them to anything a Four Seasons could offer.

The Missing Brand

A few operators have tried to institutionalize this.

• Eleven Experience, founded by former Blackstone real estate executive Chad Pike, runs roughly a dozen properties globally focused on heli-skiing, surfing, fishing, and other adventure pursuits, with week-long programs north of $10K per night

• Venator is positioning itself as a high-end branded experience for affluent hunters

• Explora pioneered the luxury adventure lodge model in Patagonia more than two decades ago

• Singita built one of the most respected luxury brands in the world by mastering the African safari

Each is a niche within a niche, and the aggregate market remains fragmented. The dominant adventure travel brand, the “Aman” or “Six Senses” of extreme outdoor experiences, doesn’t exist.

It should, in theory.

The adventure travel industry is worth over $700 billion globally. HNW and UHNW populations are growing faster than at any point in modern history. And the most thoughtful wealthy travelers are quietly bored of the conventional luxury product; the six-star resort has become a commodity. The Maldives overwater bungalow is fungible across thirty different brands. A truly memorable experience requires something more than a butler and a tasting menu.

The demand is there, and so is the capital. What’s missing is the brand.

What the Right Brand Might Look Like

A small portfolio of owned or partner properties in the world’s best spots for specific sports:

• Experiences built around the experience infrastructure: surf breaks in Indonesia, Nicaragua, and the Mentawais; heli-ski terrain in British Columbia, Alaska, and Japan; fishing in Argentina, Iceland, and Kamchatka

• A guide network hired locally and paid well, because the people who make these trips great are local operators, not corporate transplants

• A community model rather than a hotel model, built around repeat guests and a shared culture of seriousness about the sport

• Lodging that’s elevated but not sterile: a beautifully built hunting lodge or surf camp, not a Four Seasons dropped onto a remote coastline

• A digital experience that’s intentionally minimal, because the value of the brand is what happens once the phone goes away.

The economics could work: ultra-low-volume, high-margin, deeply differentiated. The brand becomes a status object… not because it’s expensive but because it’s hard to access and the experience is genuine.

The Counterargument

But there’s a real argument that this whole thesis is wrong.

The thing that makes these trips great is precisely the absence of brand: the lack of polish, the local guide who isn’t on a corporate org chart, the dollar beer at the unmarked bar, the fact that nobody is monetizing the experience beyond a fair price for honest labor. The moment a luxury brand wraps itself around all of this, something essential gets lost. The community of serious surfers gets replaced by people who heard the brand was cool, the local guides get squeezed out, and the bonfire becomes a “fireside experience” for Instagram.

Maybe these trips are great precisely because they refuse to scale. The scarcity, the cheapness, and the lack of monetization are core the amenity. They keep the people who don’t really want to be there from showing up and preserve the culture that makes the trip worth taking.

If someone does build the great adventure travel brand, the hardest part won’t be raising capital or finding properties. It will be designing a business that grows just enough to sustain itself, and then refuses to grow any more.

That’s probably not a venture-backable business. But it might be the only version of this category worth building.

Elon Musk wants to put a million data centers in space.

Three months ago, SpaceX filed with the FCC for permission to launch up to one million satellites into orbit. Not for internet access (Starlink handles that)—for computing. These are solar-powered orbital data centers that process AI workloads in space, where energy is unlimited and cooling is free.

Around the same time, Musk proposed merging SpaceX with xAI in a deal valuing the combined entity at roughly $1.25 trillion. Then he outlined plans to build a a factory on the Moon to manufacture AI satellites and launch them into orbit using an electromagnetic catapult, leveraging the Moon’s one-sixth gravity and zero atmosphere to fling hardware into space at a fraction of the cost of a rocket.

He calls the vision a “sentient sun.”

I read all of this and realized I didn’t actually understand data centers well enough to know whether it was genius or insane. So I went down the rabbit hole.

What a data center actually is

Every text you send, show you stream, and question you ask Claude happens inside a building somewhere. A data center is essentially a warehouse full of servers that store, process, and transmit data. It’s to the internet what a power plant is to your light switch.

There are more than 10,000 data centers in the United States, ranging from edge facilities the size of a shipping container to hyperscale campuses covering millions of square feet at $1B+ per build. The tenants: Microsoft, Google, Amazon, Meta, Apple, Oracle, plus enterprise customers like banks, hospitals, and AI startups that lease smaller blocks from colocation providers.

The real estate model

At their core, data centers are a real estate business. Developers acquire land, build a facility, and lease to tenants on 10-to-20 year triple-net contracts. The economics look more like industrial net lease than office or retail.

The critical variable is power, not necessarily location. A hyperscale facility needs 100 to 300 MW, enough to run a small city. Securing that power from the local utility, often years in advance, is the single most important step. This is why data centers cluster in Northern Virginia (the data center capital of the world), Dallas, Phoenix, and Chicago, and increasingly in smaller markets where cheap power remains available.

The cocktail party insight: training vs. inference

AI models need to be trained, feeding trillions of data points into GPU clusters in a massively energy-intensive process. That’s what the current buildout is primarily serving.

Then there’s inference—every time you or I actually use the model. Every AI response, image generated, and voice assistant answer uses less power per query, but the volume is astronomical and growing exponentially.

Training is building the factory, and inference is running it 24/7. Some believe advances in model efficiency and chip design will dramatically reduce inference energy costs over time—which would reshape the infrastructure buildout. Others argue the sheer volume of queries will outpace any efficiency gains. Either way, the long-term investment thesis is focused on inference because that’s where the recurring, always-on demand lives.

How to invest

Four access points:

• Public REITs: Equinix and Digital Realty are the dominant publicly traded data center REITs. Equinix operates 260+ facilities across 70+ metros globally. The challenge: they’ve already priced in a lot of the AI tailwind.

• Private infrastructure funds: Brookfield, KKR, and Blackstone have raised massive funds to build and acquire data centers. Institutional scale, long time horizons, large minimums.

• Niche operators: This is where it gets interesting for the Buy Box audience. Companies like Karis — featured at our recent Niche Industrial Pitch Night — acquire powered land and data center sites with 500+ MW of committed capacity across 2,800 entitled acres. The play: source the land and the power before the hyperscalers arrive.

• Adjacencies: Power generation (especially renewables), cooling technology, fiber networks, and the construction firms building these facilities.

Why does Musk want to put data centers in orbit? Two words: power and cooling.

On Earth, data centers are hitting a hard wall; they consume more electricity than many countries, utilities can’t keep up with demand, and new power generation takes a decade to permit and build. Water for cooling is increasingly scarce. Every new hyperscale facility is a fight with local utilities, regulators, and communities.

In space, the sun never stops shining, solar panels generate energy 24 hours a day with no weather interruptions and the vacuum of space provides natural cooling without water or chillers.

Is it feasible? SpaceX itself warned investors last week that the plan “may never become commercially viable.” The technical hurdles — latency, maintenance, data transmission, and the physics of putting a million objects in orbit — are enormous.

But here’s what I take away as an investor: even if orbital data centers are a decade away or never arrive, the fact that the most ambitious company on the planet is trying to solve this problem from space tells you everything about how severe the terrestrial constraints have become.

I get 10+ emails a week from college students asking for an internship. They all start with a paragraph about how much they admire our company (a company they clearly know nothing about, see above), followed by a PDF resume with a polite request to “learn from the best.”

Every one was written by ChatGPT (I can tell because they all use “moreover”)

As far as I can tell, the goal is to get an internship that pads a resume that gets them a soul-sucking real estate IB analyst seat that they’ll leave in two years. It’s the most expensive, least efficient path to a real estate career I can imagine. And I know, because I basically did a version of it.

Here’s how I got into real estate.

I was dating someone in college whose dad was a developer. I watched him build things and get paid a lot of money for it. That was the spark.

So what did I do with that spark? Absolutely nothing strategic.

I didn’t study real estate or learn to model. I didn’t read a zoning code. I basically just told people “I want to work in real estate” and waited for nepotism to run its course.

My friend’s dad got me a summer internship in brokerage and I got a full-time job off the back of it. I hated it. So I went to law school. I hated that too. Then I finally realized what I should have figured out on day one: I just needed to start putting small deals together myself.

It took me seven years and about $200k in law school debt to arrive at a conclusion I could have reached at 20 with a laptop and some initiative.

If I were 20 years old today—with access to Claude, the internet, and social media—here’s what I’d do instead of blasting cold emails or relying on nepotism.

Step 1: Build a curriculum with AI

Open Claude and design an independent study covering four things:

1. which real estate asset classes are most likely to be impacted by AI over the next decade;

2. the core development skills (financial modeling, zoning analysis, lease structuring, construction budgeting) and how to learn each one using AI-enabled tools;

3. how real estate capital markets actually work—who the LPs are, how funds are structured, how deals get financed; and

4. hands-on case studies where I underwrite real local projects, build business plans, and pressure-test assumptions.

I wouldn’t wait for a professor to assign this. I’d build it myself, then walk it into the office of the most entrepreneurial professor in my business school and say: “I built this. Will you sponsor it as an independent study and help me find a local developer to apprentice with?”

Step 2: Find a 4-plex

While doing the independent study, I’d find a small multifamily property… probably a 4-plex, a duplex, something achievable… and underwrite it. Then run the model, walk the property, talk to the city about zoning, get a broker’s opinion of value, and build a real business plan—not a classroom exercise.

The goal wouldn’t be to “get an A”… but actually do the deal.

Step 3: Document everything on social media

From day one, I’d post about what I’m learning… not necessarily polished thought leadership… just honest, raw documentation of a 20-year-old trying to figure out real estate in real time. Every week I’d share what I read, modeled, got wrong and what surprised me.

This would do two things.

First, it would build an audience of people who are rooting for me—from other students to real estate executives (I’d watch this all day long) to investors who find my curiosity and transparency compelling.

Second, it would create a founder-led brand before I’d even done my first deal. By the time I’m ready to buy that 4-plex, people already know me.

Step 4: Crowdfund the 4-plex

(This is the part that would have been impossible in 2007 and is entirely possible in 2026) I’d have spent months building an audience; documenting my learning publicly; and have built a real business plan on a real property. Now I would go to that audience and raise the few hundred thousand dollars to close the deal.

Step 5: Decide what’s next

By the end of 24 months, I’d have something that almost no 22-year-old in real estate has: a real deal, a real track record (even if it’s small), a public body of work that demonstrates how I think, and an audience that’s been following my journey from the beginning.

I could join an existing platform with credibility, or keep doing small deals and build my own portfolio.

Personally, I’d probably go try to take down a mobile home park.

There’s a simple test for whether a real estate investment will make you money: try describing it at a dinner party. If people’s eyes glaze over, you’re probably onto something. If they lean in and ask follow-up questions, you’re probably overpaying.

If I were building a real estate portfolio from scratch today, I’d have one goal: maximum risk-adjusted return with minimum downside. The result would be the most boring portfolio you’ve ever seen. Not a single trophy tower, luxury condo, or boutique hotel—just five unglamorous asset classes that everybody should own.

Here’s the ranking, from 5 to 1.

#5: Express Car Washes

Nobody has ever walked into a cocktail party and said “let me tell you about my car wash portfolio,” which is why the economics are so good.

Express car washes run on a subscription model—$25–$40/month for unlimited washes—creating recurring revenue that looks more like SaaS than real estate. Labor is minimal, throughput is high (150+ cars per hour), and gross margins regularly exceed 80%.

Private equity has been consolidating this sector aggressively (Mister Car Wash, Driven Brands, Whistle Express), while the fragmented independent landscape is enormous.

Best markets are Sun Belt suburbs with high car ownership and weather that doesn’t shut you down five months a year.

#4: RV Parks & Campgrounds

The budget end of outdoor hospitality (not glamping) has the economics of self-storage with the demand tailwinds of the experiential economy, and almost nobody is underwriting it.

There are roughly 27,000 campgrounds in the U.S., and the vast majority are family-owned and operationally unsophisticated. That’s exactly what self-storage looked like before Public Storage and Extra Space rolled up the market.

You own the land, tenants bring their own assets, capex is minimal, and occupancy in well-located parks runs 85–95%. Mom-and-pop parks trade at 7-9 caps and can be repositioned to 5-6 caps through professional management.

Outdoor recreation demand is structural, supply is constrained (try permitting a new RV park near a national park), and the consolidation runway is massive.

#3: Manufactured Housing Communities

Say “trailer park” among your friends and watch the room recoil. Say “manufactured housing community” to an institutional investor and watch them write a check.

That disconnect = opportunity.

You own the land, residents own their homes. Capex for the landlord is nearly zero. Residents pay $300-$700/month in lot rent and almost never leave because relocating a manufactured home costs $5,000 to $10,000.

Turnover is under 5% annually, compared to 50%+ in conventional apartments.

Manufactured housing is the largest source of unsubsidized affordable housing in America, serving a growing demographic that has nowhere else to go. And supply is permanently constrained: most municipalities have made it effectively impossible to permit a new community.

Sam Zell figured this out decades ago. The private market is still catching up.

#2: Small-Bay Industrial / Flex

This is the asset class I’m most excited about right now.

Small-bay industrial is the 1,500-5,000 square foot flex/warehouse unit leased to contractors, tradespeople, and small businesses: The HVAC company that needs a bay for trucks and parts, or the electrician who needs a shop with a roll-up door.

These tenants are the backbone of every local economy, and nobody is building for them.

New industrial development has overwhelmingly focused on big-box logistics: 200,000+ SF distribution centers. Small-bay has been ignored, which means supply is frozen while demand grows.

Rents are climbing 8-12% annually with virtually no new competition. Vacancy in well-located facilities is often below 3%. And the operational complexity is a real moat: you’re managing 30-50 tenants instead of one, which keeps institutional capital out and prices low for operators who can handle it.

#1: Self-Storage

The king of boring.

Self-storage has quietly outperformed every major real estate asset class over the past 25 years, and the opportunity is still enormous.

Stabilized facilities run at 90%+ occupancy with 70-80% operating margins, minimal capex, and recession-resistant demand. Customers stay an average of 14 months despite intending to stay for three: once your stuff is in a unit, inertia takes over.

There are roughly 60,000 facilities in the U.S. and the top six operators control only about 20% of the market. The remaining 80% is independently owned, often by families running a facility without a website, dynamic pricing, or professional management.

This is the single largest consolidation opportunity in commercial real estate. The operators we work with are proving that niche positioning within self-storage generates outsized returns. Many deliver a +30% revenue increase in year one by simply professionalizing operations that hadn’t been touched in decades.

Self-storage is the best boring real estate investment and may also be the best risk-adjusted investment in all of real estate.

So if you’re looking at this list and thinking “none of these are exciting,” that’s the point.

My friend Nadine Choe—who writes brilliantly about luxury hospitality in her newsletter The Stanza—said recently: 'Aspirational luxury will be the hardest hit segment in the cycle ahead.'

She wasn’t talking about Aman. Or Motel 6.

She was talking about the middle—the hotels, restaurants, and experiences that are too expensive for the masses and not exclusive enough for the people who don’t care about price. The $300-a-night hotel room at The W or a Thompson hotel. The $35 entrée at the "elevated" restaurant with Edison bulbs. These are in the kill zone.

The more I sat with it, the more I realized she wasn’t just describing hospitality. She was describing a structural shift that’s reshaping the entire built world.

The K-shaped economy (which we’ve written about before in the context of land, lifestyle towns, and who’s buying what) isn’t just an income distribution chart anymore… it’s an investment framework. And the framework says this: the middle is hollowing out across every real estate asset class. If you’re building, buying, or operating anything that targets the aspirational middle, you’re standing on the thinnest ice in the market.

Let me walk through what this looks like sector by sector.

Hospitality: The luxury end is booming. Aman can’t build resorts fast enough. Billionaires are paying Jeff Klein $1M a year for membership to San Vicente. At the other end, budget-flagged hotels—your Tru by Hiltons, your extended stays—are posting strong occupancy because they serve a need, not an aspiration. In between? The upper-midscale and “lifestyle” segments are the ones sweating. RevPAR growth is stalling. New supply is getting harder to finance. Soho House, which built its entire brand in the aspirational middle, is fighting for survival.

Residential: Build-to-rent communities targeting the broad middle class—workforce housing, suburban rentals, affordable senior living — are seeing record institutional capital inflows because the demand is structural and enormous. Ultra-luxury residential in supply-constrained markets (Aspen, Nantucket, Jackson Hole) is trading at record prices because the buyer pool is expanding faster than anyone expected. But the aspirational middle—the $600K-$900K new construction single-family home in a mid-tier suburb—is where builders are getting crushed. Rates have priced out the move-up buyer. The product sits.

Retail: Dollar General opens 1,000+ stores a year. Hermès makes you spend $10,000 on scarves and jewelry just to get a 'leather appointment' (which is just a chance to be offered a handbag). Both are thriving. The retailers dying? The mid-tier department stores, like J. Crew and Pottery Barn, who sell “affordable luxury” and rely on a consumer who is stretching to afford something slightly above their station. That consumer is gone—squeezed by inflation, debt, and a labor market that rewards the top and automates the middle.

Office: Trophy towers in top CBDs are leasing. Companies want to bring people back, and they’re willing to pay for the best space to do it. At the other end, flex and coworking operators serving small businesses and freelancers are growing. Class B and C office—the “good enough” middle—is where vacancy rates are catastrophic and conversions (oftentimes to industrial, which no one would have believed 15 years ago) are the only viable path.

F&B: The $12 lunch and the $500 tasting menu are both working. The $45 entrée at the “elevated” restaurant with the reclaimed wood and the Edison bulbs? That’s the concept closing every month in every city I visit.

The pattern is the same everywhere:

• The top is thriving because the ultra-wealthy are wealthier than ever and price-insensitive.

• The bottom is thriving because necessity-driven demand doesn’t disappear.

• The middle is collapsing because the consumer it was built for—the aspirational upper-middle class that stretched for nice things—is being economically squeezed out of existence.

For real estate investors and operators, the implication is uncomfortable but clear: you need to pick a side.

If you’re building for the masses, build for the masses… efficiency; cost per unit; and scale all matter. Don’t add the rooftop pool and the concierge package to a workforce housing project and call it “attainable luxury.” Just build good housing that people can afford.

If you’re building for the 1%, build for the 1%… create scarcity, experience and brand… these are the skills that will matter in these categories. The Harlan Estate model—tiny production, extreme quality, generational time horizon—works at the top because it refuses to dilute.

Nadine was spot on about hospitality. But the observation applies to every corner of the built world. The K-shaped economy isn’t a temporary dislocation but a new structure… and a framework for investing. And the built environment is going to conform to it whether we like it or not.

Build for the masses or build for the 1%. The $300 hotel room is a warning, not a strategy.

In the fall of 2007—about three weeks into my first grown-up job in New York City real estate—I decided I was done. I wanted to become a “wine farmer” in California.

Three weeks. I hadn’t even figured out the printer.

To understand this decision, you need to understand who I was at 22. I had a new million-dollar business idea every week and zero working knowledge of any of them.

• A burger “dealer” concept (upscale burgers, drug-kingpin branding);

• A man cave design firm;

• A running app for mapping public restrooms on your route;

I was basically a walking ADHD startup incubator sitting in a Midtown cubicle with a Jos. A. Bank suit and no actual skills.

But the vineyard idea felt different. I could see myself in it… driving around Napa in a pickup truck, inspecting grapes, talking about “terroir”, drinking lots of great wine and knowing how to talk about it, and calling it work.

So I bought The House of Mondavi, read it cover to cover, and networked my way to the dean of UC Davis—the best oenology and viticulture program in the country. He was generous and kind and opened every door.

I remember walking down Park Avenue in my Brooks Brothers blue button-down, calling my dad to tell him I was leaving New York and moving to California to study winemaking.

He paused. And then destroyed my dreams in forty-five seconds.

The gist: I had absolutely no idea what this career path looked like… “go make a lot of money doing something else, and then go buy a vineyard.”

Always ruining everything with his good advice…

I’m not there yet. But I was back in Napa last week, and the pull hit me all over again.

Walking into Yountville every morning for coffee felt like walking through a movie set:

• Fifty degrees, sun pouring in, mist rising off the valley floor

• Hot air balloons getting filled up behind the post office

• A $25 cappuccino that feels worth it

• The best English muffin in America from Mini Model Bakery (I’m calling a NYC English muffin trend for Fall of ‘26)

Then I visited Promontory—one of Bill Harlan’s estates on Pritchard Hill—and learned the story of his 200-year business plan.

In 1984, Harlan, a real estate developer and professional poker player, bought 40 acres of forested hillside in Oakville that had never grown a single grape. His goal: build an American first growth to rival Château Lafite. Since then he’s built:

• Harlan Estate - $1,000+ a bottle, ~1,800 cases/year, a waitlist to buy

• BOND - five wines from five vineyards, the “grands crus of California”

• Napa Valley Reserve - ~500 members, $140K+ initiation fee, members make their own wine on-site

• Promontory - land he first spotted in the 1980s but couldn’t acquire until 2008. He waited twenty years.

In 2021, he handed the keys to his son Will (when your plan is 200 years, succession is the backbone of the strategy).

Sitting there, tasting the wine, hearing the history, I kept thinking about how calming this business approach felt compared to the current frenzy—where every other Twitter/X post is about vibe coding an AI app this weekend and exiting by Q4.

Harlan’s model refuses to rush; and it works because of that refusal.

It also happens to be an extraordinary business.

A premium Napa estate like Promontory is a vertically integrated hospitality company that grows grapes. The wine is the product, but the economic engine is bigger:

• Tasting rooms: $75-$250/person, 50-150 visitors/day at top estates

• DTC wine clubs: $500-$5,000+/year, auto-shipped, recurring

• Private events and dinners: $10K-$50K per booking

• Full retail wine sales: no distributor margin, 70%+ gross margins

Underneath all of that sits appreciating land in one of the most supply-constrained markets in the country—the agricultural preserve prevents new development across most of the Napa Valley floor.

But here’s the thing my dad was right about, even if he didn’t frame it this way: you don’t have to buy 240 acres in Oakville to invest in the California wine ecosystem. There are layers. And some of the best opportunities sit below the trophy level.

Five ways in — from most to least capital-intensive:

1. Buy an existing estate ($10M-$200M+). The Harlan play.. own the land, vines, brand, tasting room, DTC operation—the whole vertical stack. It’s a generational bet, with steep entry, but requires literal decades to build the brand.

2. Buy raw vineyard land and sell grapes ($500K-$5M+). Premium Napa Cab grapes sell for $8,000–$40,000+ per ton on long-term contracts. If you plant the right varietals on the right slopes, you’ve got recurring revenue with agricultural tax benefits and land appreciation. Downside: vines take 3–5 years to produce.

3. Build or acquire a tasting room ($1M-$10M). Some of the best returns in wine country come from the hospitality wrapper. License production to a custom crush facility and focus on the guest experience, events, and wine club.

4. Invest in vineyard-adjacent real estate ($2M-$20M). Restaurants, boutique hotels, event venues in Yountville, St. Helena, Healdsburg. Same demand drivers as the estates, with none of the agricultural complexity. The French Laundry didn’t need to grow grapes to become the most valuable restaurant brand in America.

5. Join a wine fund or fractional platform ($50K-$500K). Fractional vineyard ownership, barrel programs, or wine brand incubation. You get modest returns but it’s accessible entry and the tax benefits (ag exemptions, conservation easements, vine depreciation, etc.) still apply.

Whatever your entry point, the thesis is the same: supply-constrained land, a hospitality engine on top, and a tax wrapper that makes your accountant smile.

Tax credit investing scares many real estate investors. And rightfully so: programs like Low-Income Housing Tax Credits (LIHTC) and New Market Tax Credits involve competitive allocation processes, layers of regulatory compliance, and deal structures that can take years to close.

But as a private investor, I’ve fallen in love with historic tax credits. The program is non-competitive. The universe of eligible buildings — about 95,000 on the National Register of Historic Places — is large enough to offer a steady pipeline of opportunities but fragmented enough that institutional capital ignores it entirely.

I’ve invested in several HTC deals as an LP over the past few years, and the category has become one of my favorite corners of real estate precisely because the checks are small, the buildings are old, and every deal is completely different from the last.

How the Math Works

To see how HTCs work in practice, consider The Foundry in Newburgh, New York, a small city about 90 minutes north of Manhattan. Developer Jake Chai and his partners at Mana Tree Properties acquired the 160,000-square-foot former factory complex out of bankruptcy in 2020. The building is where early ice machines and cold storage equipment were manufactured starting in the 1880s, and it had cycled through several failed residential conversion attempts before Chai’s group picked it up and converted it into 59 residential units.

Chai wrote a detailed case study of The Foundry for Thesis Driven that’s worth reading in full, but the key takeaway is that the deal simply wouldn’t have worked without historic tax credits.

That’s a common story. Rehabilitating a historic building is almost always more expensive than building new — in a market like the Hudson Valley, ground-up Type III construction might run $125–175 per square foot, while a historic rehab can cost $200–300+ per square foot once you account for century-old structural systems, code compliance challenges, and the requirement to preserve the building’s historic character. Without a subsidy, most of these projects simply don’t pencil.

The federal HTC covers 20% of Qualified Rehabilitation Expenditures (QREs), which include most hard and soft costs tied to the renovation — construction, architectural and engineering fees, construction period interest — but exclude land acquisition and new construction. Many states layer on additional credits. New York, for instance, offers a 20% state credit, bumped to 30% for projects under $2.5 million in QREs. Stack a 20% federal credit with a 20–30% state credit, and you’re looking at credits covering 40–50% of a project’s rehab costs.

Here’s what the math looks like on a typical deal:

• Total project costs (excluding land): $28 million

• Qualified Rehabilitation Expenditures: ~90% of project costs, or about $25 million

• Federal credit (20%): $5 million

• State credit (20%): $5 million

• Total credits generated: $10 million

The developer then sells those credits to a tax credit investor — typically a large bank or insurance company looking to offset its own tax liability. Credits sell at a discount, and after structuring and financing costs the developer typically loses about a third of the face value. But the net result is still roughly $6.5 million in effectively free equity injected into the capital stack.

That changes everything about the deal:

• Without HTCs: a construction lender might finance 70% of project costs, leaving roughly $8.4 million in equity needed. On a deal that stabilizes at a modest spread over basis, you might see a levered IRR in the low-to-mid teens — if the deal pencils at all given rehab costs.

• With HTCs: that $6.5 million in credit equity covers most of the gap, reducing the true out-of-pocket equity to under $2 million. The same stabilized asset now throws off levered IRRs in the mid-20s or higher, with a multiple on invested capital that’s dramatically improved.

For a developer, HTCs can turn a project that flat-out doesn’t work into one with compelling risk-adjusted returns. For a passive investor alongside that developer, it means getting into a deal at a meaningfully lower basis than the building’s stabilized value.

Why Institutions Can’t Compete Here

The structural barriers to institutional HTC investing aren’t going away, and they’re worth understanding because they’re the source of the private investor’s advantage.

Every deal is bespoke: there’s no standardized product. Each building has its own history, its own NPS approval requirements, and its own construction surprises: a penthouse floor with trusses poured at the wrong clearance height, a roof that needs full replacement with historically appropriate materials, or a facade restoration that requires sourcing discontinued brick. You can’t model these variables on a spreadsheet and deploy capital programmatically.

The deal sizes compound the problem. Nearly half of all HTC projects in 2021 were under $1 million in total cost, and 18% were under $250,000. A fund manager writing $50–100 million checks has no mechanism to participate in a $3 million rehab of a 19th-century factory, and the diligence overhead doesn’t justify trying. Thirty percent of certified projects in 2021 were in communities fewer than 50,000 people. These are the kind of markets that institutional capital has never figured out how to reach efficiently.

The pipeline is also finite and fragmented. Of the roughly 95,000 buildings on the National Register, about 47,000 have already been developed using HTCs. The remaining 48,000 are scattered across the country, and the most accessible and viable projects were developed earliest. Finding the next good deal requires local knowledge, relationships with municipal governments, and patience — none of which scale.

All of this means the competitive set for any given HTC deal is remarkably small. You’re not bidding against Blackstone or competing with a REIT. You’re working with a local developer who has done two or three of these deals and knows exactly which buildings in their market are viable candidates. For a private investor, that lack of competition is the whole game.

How to Actually Invest in HTC Deals

For passive investors interested in the category, the path starts with finding the right operators.

HTC deals live and die on the team. You want a developer who has completed at least one HTC project, has established relationships with tax credit investors and bridge lenders, and knows their local market’s historic building stock inside and out. Many of the best HTC developers are based in secondary and tertiary markets — places like Newburgh, NY, or small cities across the Hudson Valley, the Rust Belt, and the Southeast where historic buildings are plentiful and acquisition costs remain low.

The credit structure is the next thing to understand. The key question on any HTC deal is whether the developer plans to retain the credits directly or sell them to a tax credit investor. Larger projects generating over $5 million in credits typically sell to institutional buyers — big banks like U.S. Bank that have dedicated teams purchasing credits at a discount to offset their own tax bills. Smaller projects often have the developer retain credits, which is simpler and more cost-efficient but requires the developer to carry sufficient tax liability to use them.

It’s also important to understand how the capital stack works in practice. Tax credit proceeds don’t flow until the building is placed in service and the National Park Service signs off on its Part 3 inspection, which means developers need bridge financing to access the credit value during construction. That bridge loan gets repaid once the building receives its certificate of occupancy and the credits are formally earned. Make sure the capital stack accounts for this timing gap, and that the bridge lender has real HTC experience.

Finally, the best HTC developers know how to layer credits with other incentive programs — LIHTC, Brownfield credits, New Market Tax Credits, PILOTs, and TIF financing — to further reduce the equity basis and improve returns. Stacking programs adds complexity, but it can also make marginal deals highly attractive.

The Investor’s Edge

What I find most compelling about HTC deals as an investment category is that the returns are driven by a structural inefficiency rather than a market bet. You’re not underwriting rent growth or cap rate compression. You’re benefiting from a federal program that effectively subsidizes your equity basis, combined with a competitive landscape that keeps institutional capital on the sidelines.

The underlying assets — historic buildings in communities that need investment — also come with a built-in story that tenants and local governments want to support. These deals often carry goodwill, tax abatements, and community backing that conventional developments simply don’t get.

There are real risks, of course. Construction on old buildings always produces surprises, and the NPS compliance process adds time and complexity to every project. The five-year recapture period means you can’t sell more than a third of your ownership without triggering a clawback of credits, so these are long-duration, illiquid investments that require genuine trust in your operating partner.

But the feature that matters most to me is that the category doesn’t scale. You can’t build a $500 million HTC portfolio without an army of local developers and a high tolerance for complexity, which is exactly why institutional capital stays away. For a private investor writing smaller checks and willing to get into the details of individual deals, it’s one of the few remaining corners of real estate where they hold a genuine, structural advantage over institutions.

-Brad Hargreaves

A 2,150-square-foot glass box is producing some of the best unit economics in real estate.

I played padel for the first time a few years ago. I’m not a racquet sports “purist” (i.e., I don’t scoff at people who play pickleball). But I never really got pickleball. It felt like life-size ping pong… and it was loud.

Padel I got immediately. It has the footwork and feel of tennis, but the glass walls add a layer of angles and strategy that makes every rally feel like a chess match at full sprint.

And it prints money.

For the uninitiated—padel is a glass-enclosed court sport, about a third the size of tennis. Solid paddles instead of racquets. Walls are in play, like squash. Always doubles. It’s the fastest-growing sport in the world: 25 million players globally, number one participation sport in Spain and Argentina, 60+ countries in the international federation, and over 300 courts now open in the U.S.—with hundreds more breaking ground.

The “always doubles” detail is everything. You can’t play alone. Every session requires four people—which means four memberships, four drink orders at the bar after, and four referrals to friends. The viral loop is built into the rules of the game.

The real estate math

This is where it gets interesting. A standard padel court is roughly 2,150 square feet. With buffer space and common areas, figure 3,000–3,500 square feet per court. A typical facility runs 4–8 courts—total footprint of 15,000–30,000 square feet. That’s a dead Bed Bath & Beyond. Or a half-empty suburban strip center; or a warehouse nobody wants.

The conversion economics:

• Build-out cost: ~$150K–$250K per court (glass enclosure, turf, lighting, HVAC, F&B)

• Six-court facility total build-out: $1–$1.5M ($75/sqft), excluding lease

• Compare to: boutique fitness at $300–$500/sqft, restaurants at $400+/sqft

Padel is meaningfully more capital-efficient than almost any comparable use, with minimal operating expenses thanks to a highly efficient staffing model compared to full gyms

The revenue model:

• Court rentals: $60–$120/hour for four players, i.e., $15–$30/person (cheaper than SoulCycle)

• Single court at 10 hrs/day, $80/hr average: ~$290K/year

• Six courts: ~$1.7M in court revenue alone

• Layer in memberships ($150–$300/month), coaching ($80–$150/hr), leagues, F&B, retail, events

• Well-operated six-court facility: $2.5-$4M in annual revenue (with 35% EBITDA margins) on a $1.5M build-out

Those are SaaS-level returns on physical infrastructure.

Why this isn’t pickleball 2.0

The natural comparison is pickleball—but there are real structural differences. Pickleball retrofits onto existing tennis courts, which means it often competes with (and annoys) existing tennis infrastructure. Padel requires purpose-built glass courts, which means dedicated facilities, which means real development—not just painted lines on a public park.

More importantly, padel doesn’t need a star instructor. Unlike SoulCycle or Barry’s, the product is the game itself. No charismatic coach or “experience” to manufacture. The moat is the court, the community, and the location.

The operators moving fastest are Padel Haus (Brooklyn, Miami, Austin) and Hello Padel (multiple markets)—and raising capital faster. And then there are groups like Ballers who are bringing padel in alongside other small court/field concepts tied to F&B and social experiences.

The sleeper angle: residential padel

Every wealthy person who plays once asks the same question: “Can I build one at my house?”

Private courts are already popping up across the Hamptons, Palm Beach, Aspen, and Malibu. An outdoor court runs $75K–$150K fully installed—a rounding error on a $20M property and instantly the centerpiece of every weekend.

Developers are taking note too. Padel courts are showing up in luxury condo amenity packages, replacing tennis courts that sit empty all day with padel courts that run 12 hours on a Saturday… smaller footprint; lower build cost; and dramatically higher usage.

The bottom line

The U.S. padel market is roughly where European padel was in 2015: early, fragmented, and about to go vertical. The operators who lock up the right locations and build real communities will create valuable portfolios ripe for institutional acquisition. And the investors who see a vacant 20,000-square-foot retail box and think “six padel courts and a bar” should be moving now.

Last fall I drove three and a half hours west from New York to visit a friend’s property in the middle of nowhere, Pennsylvania (Washington County, to be exact). If you haven’t been to Washington County, picture: rolling hills, no cell service, a Dollar General every 11 miles, and the kind of quiet that makes you realize how loud your life actually is.

My friend bought 60 wooded acres out there for $150,000. One-five-zero. For that he got a three-bedroom house, a barn, a stocked trout stream, and more land than he can see from any single point on the grounds. His monthly cost to maintain the property? About $100. The taxes are almost a rounding error.

That weekend we rode ATVs, fished the stream, shot guns off the back porch, rebuilt a woodshop in the barn, cleared some trails, drank a lot of Natty Light by a fire, and watched Batman (the Michael Keaton one) on VHS in the living room. It was, without exaggeration, the best weekend of my year.

And somewhere between the trout stream and the sixth Natty Light, a thought formed that I hadn’t been able to shake since: I want to be a prepper.

I realize “prepper” conjures a certain image—bunkers, canned beans, a guy with a manifesto and too many guns. But I’m starting to see the appeal of owning a large piece of land far away from everything. The tinfoil hat crowd might be early, but early isn’t the same as wrong.

Let me explain.

The AI revolution is not coming. It’s here.

And the second-order effects are going to reshape the physical world in ways most people aren’t pricing in.

The K-shaped economy is already accelerating. The top decile is accumulating wealth at a pace we haven’t seen since the Gilded Age, while the middle class is getting hollowed out by automation and AI-driven productivity gains. McKinsey estimates that up to 30% of U.S. working hours could be automated by 2030. Goldman Sachs puts the number of global jobs at risk at 300 million. These aren’t fringe predictions—they’re coming from the same banks underwriting your deals.

What happens when a meaningful percentage of the workforce is displaced in a compressed timeframe? History offers some clues, and none of them are reassuring: social unrest, political instability, and density becoming a liability rather than an asset.

Add to that the rise of humanoid robotics—Tesla’s Optimus, Figure AI, Boston Dynamics—and you start to see a future where cities look and feel fundamentally different: more automated,ess human, and less livable in the ways that matter.

Now ask yourself: where do you want to be?

The ultra-wealthy are already answering that question. And the answer, increasingly, is land.

The land market in the United States is one of the most interesting and misunderstood asset classes in real estate. Here’s what most people don’t realize:

Supply is fixed and shrinking. The U.S. has roughly 1.9 billion acres of land, but only about 40% of that is privately held. The rest is federal, state, or tribal. And the amount of privately held rural land entering the market each year has been declining for decades as institutional holders, timber companies, and conservation trusts absorb the supply.

Meanwhile, the USDA reports that roughly 11 million acres of farmland and ranchland changed hands annually over the past five years—but the buyer pool is shifting dramatically toward institutional capital and ultra-high-net-worth individuals.

Demand is spiking from a new buyer class. The “retreat property” market—rural land purchased for recreational, prepper, or lifestyle purposes—has exploded since 2020. The Land Report, which tracks large-acreage transactions, has documented a surge in family office and HNWI land acquisitions (particularly in the Mountain West, Appalachian corridor, and rural South):

• John Malone is the largest private landowner in the US with over 2.2 million acres

• Ted Turner holds roughly 2 million

• Jeff Bezos owns over 400,000 acres

Meanwhile, Bill Gates is the largest private farmland owner at roughly 270,000 acres.

The tax benefits are extraordinary.

Land ownership unlocks some of the most powerful tax strategies in the real estate playbook.

• Conservation easements allow landowners to permanently restrict development on their property in exchange for a tax deduction often valued at 40–60% of the land’s fair market value.

• Agricultural exemptions can reduce property tax assessments by 80–90% if you run even a modest farming or timber operation.

• 1031 exchanges allow tax-deferred rollovers from other real estate holdings.

• Opportunity Zone designations, where applicable, offer capital gains deferral and potential elimination.

• Timberland, in particular, offers a unique advantage: timber revenue is taxed at long-term capital gains rates rather than ordinary income, and the cost of the timber itself can be depreciated over the cutting cycle.

For a family office looking to park capital in a hard asset with a favorable tax wrapper, rural land is arguably the single best vehicle available.

Now the fun part: what a modern doomsday property actually looks like.

Forget the Cold War bunker aesthetic. The “luxury prepper market” has evolved into something that looks more like a five-star resort buried underground.

Hardened Structures, a Virginia-based firm, builds custom subterranean residences for clients spending $1 million to $10 million+ on their shelters. Vivos xPoint in South Dakota has converted 575 former Army munitions bunkers into the world’s largest private survival community.

A high-end doomsday compound in 2026 typically includes:

• A fortified primary residence—often earth-sheltered or partially underground—with blast-rated doors and ballistic-grade walls

• Below that, a bunker rated to withstand nuclear, biological, and chemical threats, with independent HVAC and NBC air filtration

• Power from a hybrid system—solar array, wind turbines, and a buried diesel or propane generator with 12+ months of fuel storage

• Water sourced from a private well with UV purification, reverse osmosis filtration, and a rainwater collection cistern

• Food production handled through a combination of hydroponic grow rooms, greenhouse structures, root cellars, and long-term freeze-dried storage rated for 25 years

• Communications run on Starlink for internet, with ham radio and satellite phone as backups

Above ground, the best compounds include arable land for farming, timber for building and fuel, a freshwater source (stream, spring, or pond), and enough acreage to create a defensible perimeter—typically 50+ acres minimum.

These properties include shooting ranges, hunting grounds, off-grid workshops, and ATV trail systems. And if you really want to spend some money, you can add medical suites with telemedicine capability, safe rooms with biometric access, faraday cages to protect electronics from EMP, etc.

The total cost? For a turnkey doomsday compound on 50–100 acres in a favorable state—Wyoming, Montana, West Virginia, rural Pennsylvania, the Ozarks—you’re looking at $2 million to $15 million all-in, depending on spec.

That’s a rounding error for the family office crowd.

And unlike a penthouse in Miami or a house in the Hamptons, it’s an asset that appreciates in value precisely when everything else doesn’t.

So who’s building a doomsday real estate investment platform for luxury preppers?

There is a place on East 10th Street where time doesn’t exist.

You walk through a door that hasn’t been renovated since the Clinton administration; descend a staircase that smells like eucalyptus and dryer sheets; and suddenly you’re a 19th-century immigrant getting schvitzed by a 260-degree Russian steam room and a guy named Boris holding oak leaf branches. The Russian & Turkish Baths have been open since 1892. The WiFi doesn’t work. It’s perfect.

I’ve been going for a decade.

Not in a “I discovered cold plunge before Huberman” way—more in a “my friend dragged me there hungover in 2014 and I became a person who goes to a bathhouse” way. Once a month, sometimes more, I’d pay my $45, stuff my phone in a locker that doesn’t lock, and cycle through steam, sauna, cold plunge, repeat. No app. No branded robe. No “intention-setting breathwork session.” Just hot, cold, and the most democratic cross-section of humanity you’ll find in Manhattan: old Russian men, finance bros in mid-existential crisis, downtown artists, supermodels, and the occasional tourist who wandered in looking for a speakeasy.

I love it. And I love it more every year, because every year the world gets louder, more online, more optimized. The bathhouse is none of those things. It’s a millennia-old practice—Romans, Ottomans, Japanese, Scandinavians, Russians—all figured out the same truth: sweating in a room with other people is good for you.

The science backs it up now, too. Regular sauna use is linked to reduced cardiovascular mortality, improved circulation, and lower rates of dementia. Dr. Rhonda Patrick has made a career of explaining why heat stress is basically a free longevity hack. But I didn’t need a podcast to tell me that. I needed Boris.

Wall Street Bath, better known as Spa 88, runs the same playbook downtown. No frills. Russian and Turkish rooms. A cold plunge that makes you question your life choices. Maybe $50. The crowd skews Financial District—traders unwinding, older regulars who’ve been coming since before the building next door was a condo. These places operate on thin margins, modest build-outs, and decades of community loyalty. They’re not businesses you’d pitch to a VC. They’re businesses that just... exist. Stubbornly, beautifully.

So when I tell you that venture-backed bathhouses are now raising money at eye-watering valuations, you’ll understand my complicated feelings.

Enter the New School

Bathhouse, in Williamsburg, opened in a restored 1930s warehouse and immediately became the kind of place that fills your Instagram Explore page.

Bathhouse in Williamsburg

The design is stunning—think Japanese minimalism meets Brooklyn industrial, with hot and cold pools, multiple sauna rooms, a restaurant, and a generally gorgeous vibe. They’ve reportedly raised north of $40 million.

Othership, which started in Toronto, combines sauna sessions with guided breathwork, live DJs, and what they call “transformational experiences.” They’ve raised significant venture capital and have aggressive expansion ambitions across North America.

Lore Bathing Club is the latest entrant, positioning itself as a members-only social wellness club—bathhouse meets Soho House, but without trying to be exclusive (I’m actually most bullish about both this business model & concept).

I get the thesis. I genuinely do. As someone who invests in niche real estate concepts for a living, the demand signals are screaming.

• The sober-curious movement is real—more people want intense, physically engaging social activities that don’t revolve around a bar.

• The loneliness epidemic is real—people want third places that aren’t a coffee shop or a gym.

• The longevity trend is real—sauna, cold plunge, and heat therapy are no longer fringe. And phone-free spaces? In 2026? That’s not a feature, it’s a luxury good.

The business model is attractive—these new concepts are essentially premium experiential fitness meets hospitality.

• Memberships range from $100 to $200+ per month, with day passes running $60-$100.

• Revenue stacks include retail (branded towels, supplements, skincare), F&B, events, and private bookings.

• The build-out costs are significant at $500–$800+ per square foot—plumbing for multiple temperature-controlled water features, commercial-grade HVAC, and high-end finishes,

The unit economics are very compelling at scale, with high throughput and strong membership retention.

But compare that to the old guard. The 10th Street Baths operate on what I’d generously call a “legacy cost structure.” They’ve been in the same space for over a century. The rent, whatever it is, is from another era. The build-out is paid for many times over. They don’t need 2,000 members at $150/month to make the model work. They need regulars who show up, pay at the door, and maybe buy a Platza treatment for an extra $40.

The Question I Keep Circling

Can the new school replicate the thing that actually makes bathhouses special?

Not the sauna. Not the cold plunge. Anyone can install those. It’s the communal authenticity—the randomness of who’s in the room, the lack of curation, the fact that nobody is performing wellness, they’re just... doing it. The 10th Street Baths are not an experience. They’re a place. There’s a difference.

The new bathhouses are undeniably experiences. They’re designed to be. And that’s both their strength and their vulnerability.

The comps that get thrown around in pitch decks are Barry’s, Equinox, SoulCycle.

Those are exercise concepts with clear, repeatable, high-frequency use cases. You go to Barry’s three times a week because the workout changes. A bathhouse session is more or less the same every time. That’s the beauty of it, but it’s a retention challenge when you’re charging a premium. The ancient bathhouse model solved this by being cheap, local, and habitual. The new model needs to solve it with programming, community events, and brand loyalty.

I’m not betting against the category. The macro trends are too strong, the consumer appetite is too real, and some of these operators are incredibly thoughtful about what they’re building. The ones that will survive are the ones that figure out they’re not really in the sauna business—they’re in the community business. And community, as the old-timers on 10th Street could tell you, can’t be fundraised into existence.

It has to be sweated out.

If you want to understand what’s happened to America’s great lifestyle towns over the past twenty years, study two zip codes:

02554 and 81611.

And two names: Steve Karp and Gary Friedman.

Both have been the forces of nature developing & shaping the downtowns of their respective enclaves, but with two very different approaches—and outcomes.

Nantucket and Aspen were once scrappy seasonal outposts. Nantucket was a cobblestoned, hard-to-get-to summer enclave for Boston’s doctors, lawyers and bankers. And Aspen was a funky, “lawless” (also hard-to-get-to) mountain town-playground for ski bums, Hunter S. Thompson, and Hollywood’s rebel crowd.

Now they’re both embedded in the global billionaire migration map. No PJ lineup is more impressive than Aspen Airport’s. And the Nantucket marina’s summer yacht scene is rivaled only by Palm Beach.

But if you visit each back-to-back, the vibes are incredibly different.

Nantucket still feels… quiet.

Yes, the houses trade at $10-50 million. And the yachts have gotten larger. But the island’s visual language hasn’t changed much, with weathered cedar shingles and hand-painted signs. And instead of luxury retail and global restaurant groups, the brands that matter are local: Something Natural, Millie’s, Force Five, 167, Chicken Box, Cisco, Bartlett’s, Straight Wharf, Sandbar…

Aspen, on the other hand, feels like luxury’s open-air trade show.

The streets are lined with the signs of fashion’s biggest names: Moncler, Prada, Brunello, Chanel and Chrome Hearts. Private equity titans walk around in runway-ready ski fits (and never ski) shelling out hundreds of thousands in initiation fees for the private members clubs that are popping up everywhere. And every year another local staple disappears (RIP Boogies, Red Onion, Jimmy’s, Little Annie’s…).

But these outcomes aren’t accidental.

They mirror the two billionaires who most shaped each town’s physical and commercial core, wielding enormous real estate influence in America’s most supply-constrained lifestyle markets—but in entirely different ways.

Karp’s Nantucket—The Invisible Empire

When you walk Nantucket’s harbor, you’re moving through Steve Karp’s $100mm Nantucket balance sheet.

• The White Elephant

• Jared Coffin House

• The Boat Basin

• Large stretches of Straight Wharf and downtown Main Street retail

Much of the island’s high-end lodging and a meaningful share of its commercial storefronts trace back to entities affiliated with Karp’s New England Development.

Over several decades, he’s acquired the operating backbone of the tourist economy: hotels, wharf infrastructure, marina slips, restaurants, and the retail blocks that serve both tourists and locals.

It started in 2005, when Karp-controlled entities acquired dozens of downtown properties in a roughly $55 million portfolio transaction, consolidating a significant share of the commercial core. More recently, acquisitions such as the former harbor-area fuel-tank site expanded his influence over waterfront adjacency.

His methods have been incremental and pretty opaque, acquiring properties through a number of LLCs and surfacing publicly only during permitting or redevelopment hearings.

Equally notable has been his relationship with local authorities and the local community, working toward a common goal to maintain and protect the existing brand that is Nantucket.

This approach has allowed Karp to expand influence without triggering the kind of sustained backlash that often accompanies concentrated ownership, like Friedman.

Friedman’s Aspen—Branding a Mountain Town

If Karp built Nantucket like a portfolio manager, then Gary Friedman approached Aspen like a creative director.

Friedman—the chairman and CEO of RH—has spent the past several years assembling and developing a cluster of hospitality, retail, and residential assets intended to function as a fully integrated RH ecosystem within the town’s urban core.

The centerpiece is a multi-component development announced in 2021, representing roughly $105 million of investment across an RH Gallery, Guesthouse, spa, food-and-beverage venues, and branded residences.

The gallery concept—part retail store and architectural exhibition space—anchors the district, with hospitality and residential uses designed to extend the brand into overnight and experiential formats.

Unlike Karp’s portfolio of existing inns and commercial buildings, Friedman’s Aspen strategy has leaned heavily toward ground-up repositioning and adaptive redevelopment. And progress has unfolded publicly.. with aggressive local response and municipal scrutiny around architectural fit and the broader commercialization of Aspen’s downtown fabric.

Where Karp embedded within an existing operating system, Friedman has attempted to construct a branded overlay—introducing a vertically integrated luxury environment that merges retail, lodging, and residential real estate under a single design and service philosophy.

Which explains why Aspen has lost nearly all its charm.

Lessons for Investing in Lifestyle Towns

The next decade will watch a number of professional investors and operators reshaping the next Nantuckets and Aspens.

For players chasing exposure to lifestyle markets—ski towns, islands, wine regions—Karp and Friedman offer two playbooks.

1. Control the Operating Spine

Karp’s success underscores the durability of owning tourism infrastructure, i.e., hotels, marinas, retail and food & beverage nodes. These assets capture visitor spend regardless of housing cycles and quietly compound pricing power over time.

2. Brand Can Be a Development Strategy

Friedman demonstrates how luxury branding itself can drive real estate value, e.g., embedding RH’s design language into hospitality and residential offerings, he transforms buildings into marketing platforms… but comes at the expense of ruining the existing fabric of the town

3. Social License Is an Underwritten Risk

Both men faced community scrutiny. Karp mitigated it through concessions and discretion; while Friedman through messaging and design diplomacy. In lifestyle towns, approvals are cultural as much as regulatory.

4. Identity Is an Investable Variable

Perhaps the most important takeaway: lifestyle towns generate returns and narratives. Investors shape those narratives—whether intentionally or not.

Karp preserved Nantucket’s mythology. Friedman is rewriting Aspen’s.

It feels like half my friends are now in “micro PE.”

One is buying HVAC companies outside Philly. Another is rolling up roofing crews in the Sunbelt. A third is trying to consolidate “premium pest control” (i.e., pest control with a better website and a podcast).

They’re all chasing the same thing:

• fragmented markets

• Boomer owners ready to retire

• operational messes that a “real operator” can clean up

• a path to a higher exit multiple

I get it. There’s real money in that game.

But there’s a Boomer roll-up hiding in plain sight that’s arguably better on risk-adjusted returns, operational pain, and sexiness as an investment.

It’s ranch land.

Owning a portfolio of ranches with lakes, streams, elk, and a cattle operation that actually throws off cash is, in my opinion, a dramatically more enjoyable sentence to say at dinner than “we’re optimizing technician dispatch and invoicing.”

And if you do it right, it’s also a cleaner investment profile.

You’re starting with a hard asset that benefits from long-term appreciation tailwinds, one that tends to have low correlation to conventional real estate cycles. At the same time, there are multiple value-add levers—ag operations, water, recreation, conservation, even carbon—and way less people-management hell than running fourteen HVAC branches.

Also: nobody at the country club asks you about your HVAC roll-up. They ask you about the ranch.

So I’ve started going down the rabbit hole. I’m not trying to become a ranch operator myself (I can barely keep a houseplant alive), but I am actively tracking the groups that are building real portfolios and the strategies that make this space interesting.

What follows is a simple thesis.

Why ranch land is the Boomer roll-up trade

The headline is: American landowners are aging out.

This is the same demographic driver behind the HVAC/roofing roll-ups—except the underlying asset is land, not a service business whose value disappears the second your manager quits.

A few facts to know:

The U.S. has 600-700 million acres of pasture and rangeland, and the market remains massive yet surprisingly sub-institutional—too fragmented, local, and often too operationally idiosyncratic for large pools of capital. Owners also skew old: a meaningful share of ranches are held by people at or near retirement age, many of them without a clean succession plan.

Meanwhile, there’s steady upward pressure on quality ranch land: demand for cattle production doesn’t disappear, recreational demand keeps growing, and land near growth corridors gets more valuable over time.

The most important point: great operators create alpha here the same way great operators create alpha in “boring” roll-ups:

1. Buy fragmented assets from retiring owners

2. Professionalize operations

3. Layer in multiple revenue streams

4. Build a portfolio that a bigger buyer will pay up for

The ranch version is just… more fun.

And operationally, it can actually be simpler than people assume. Yes, ranching is real work. But compare it to home services:

• HVAC is a daily knife fight for labor, reviews, callbacks, and dispatch efficiency

• Ranch operations are physical and seasonal, with fewer moving parts on the customer side

• The real “platform” is land + systems + management discipline, not a thousand customer relationships and a call center

Ranch roll-ups are closer to real estate + light operating business, which is a sweet spot if you care about durability.

How the pro operators create value

The lazy take is “buy dirt, wait.” But that’s not the play.

The smart roll-up is: buy dirt, improve dirt, monetize dirt in more than one way.

The repeatable value levers typically look like this:

Improve core agricultural economics through rotational grazing and pasture management, investment in water systems and fencing, optimized stocking rates, more disciplined equipment and capex decisions. Throw in more professional herd management and better sale timing.

Add higher-margin recreation yield: hunting leases (deer / elk / waterfowl); fishing access + pond/stream improvements; guided trips + cabins / “dude ranch lite”; often under-monetized by legacy owners.

Monetize conservation and environmental value through easements (which can provide both cash and tax advantages), carbon programs, and habitat improvements that often enhance recreation economics at the same time.

Monetize conservation + environmental value: conservation easements (cash + tax advantages); carbon programs; habitat improvements that also enhance recreation economics.

Portfolio-level advantages: purchasing power + vendor leverage; shared operating playbooks; institutional reporting + governance; stronger lender + buyer credibility.

The key is that a portfolio can become more than the sum of its ranches—and that’s what creates an exit premium.

A simple example value-add deal (back-of-napkin)

Here’s a simplified illustration of how a value-add ranch investment can work for LPs. This is not a promise, just a clean way to think about the mechanics.

Target acquisition

• Buy a 10,000-acre ranch portfolio (roll-up a few properties in one region)

• Purchase price: $25.0M

• Improvement capex over 24 months: $2.5M (water, fencing, roads, modest lodging/cabins, habitat work)

• Total basis: $27.5M

Income plan (stabilized)

• Base income (grazing/cattle leases or ops): ~2.0% yield on basis = $0.55M/yr

• Post-improvement + better management: ~3.0% = $0.83M/yr

• Add hunting/fishing leases + simple lodging: +1.0% = $0.28M/yr

• Stabilized cash yield: ~4.0% on basis = $1.10M/yr

Value creation / exit

• Land appreciation assumption: 4-5% per year (long-term, not heroic)

• Additional uplift from “making it better” (water + access + recreation + ops): +10-15% value step-up by year 5-7

• Exit in year 7 at ~$38-40M gross value (basis + appreciation + value-add)

Simple return profile (illustrative)

• Annual cash distributions: roughly $1.1M/yr stabilized (after ramp)

• Sale proceeds: $38-40M in year 7

• Total value on $27.5M basis: ~1.6-1.8x MOIC over 7 years

• Implied IRR: high single digits to low teens depending on leverage, timing, and whether conservation/carbon monetization is additive

That return profile might not excite your friend who is underwriting an HVAC roll-up at “3x EBITDA going to 8x EBITDA.”

But it will excite anyone who likes hard-asset downside protection, inflation-hedging characteristics, less key-person and labor fragility, and a portfolio you can actually touch, visit, and understand.

Bonus: you can bring your kids to the asset and not feel morally compromised. It’s an investment that easy to explain—and even easier to feel good about owning.

What I’m doing next

I’m treating this like any other emerging “operator + platform” opportunity:

I’m building a map of the serious operators and capital partners in the space. I’m working to understand who has a real repeatable acquisition engine—not just one trophy ranch—and to separate the actual ranch operators from the “we bought land once” tourists. I’m also pressure-testing where returns really come from: operations, appreciation, recreation, or conservation.

I’ll come back soon with a short list of operators and platforms that I think are actually doing it right.

“I’m one of the owners,” you shout over your shoulder to two friends following you through a packed West Village wine bar to your back table. “Sydney Sweeney sat here last night!”

The social flex of being a restaurant “owner” (i.e., writing a check into a friend’s-friend’s new restaurant or bar concept) is great for the ego, but often comes at the price of losing your investment.

Meanwhile, VCs and family offices see the same deals but tend to reach very different outcomes thanks to how they structure their investments.

Over the years, I’ve watched friends write checks ranging from fifty thousand to half a million dollars into hospitality ventures they didn’t structure properly—and lose most of it.

It rarely feels reckless when writing the check. You think you’re backing a passionate operator who’s partnered with “the best up-and-coming chef”… for a concept that’s been sorely missing in a highly-trafficked neighborhood… where they just signed a below-market lease on the perfect space.

On paper, everything works (I’ve never seen a business plan that doesn’t make money). In practice, very little goes according to plan.

After a few months, reality sets in:

• Buildout overruns eat the opening cushion;

• Rent escalates faster than revenue;

• A key manager leaves with half the staff;

• Food costs force changes to the menu and drive out regulars;

• First distributions never materialize.

And before long, investors realize they funded a lifestyle business with venture risk, minimal upside, and no structural protection.

Next time you get a shiny deck for a new hospitality concept, follow the same structural playbook used by VCs and family offices when underwriting high-risk retail ventures:

1. Structure capital to get paid early

Don’t rely solely on common equity appreciation in hospitality deals. The goal is to create cash flow visibility even if expansion never materializes or exit markets soften.

Hospitality is operationally volatile, margins are thin, and timelines to scale can be highly unpredictable—so investors need mechanisms that return capital early, not just upside at the end.

So alongside typical equity splits after investor payback (usually 70/30), build in:

• Preferred returns of 6-10% (this comes out of operating cash flow before investor capital is returned); and/or

• Gross revenue shares of 4-8% (usually capped at ~1.5X invested capital, then burns off or converts to common equity)

How to think about it:

A simple structuring question is to ask yourself: “How much of my capital is at risk after year two?” If the answer is “all of it,” you need to restructure.

By stabilization, some combination of partial payback, pref accrual, or revenue participation should already be underway.

2. Diligence the operator like a portfolio company CEO

You should spend far more time underwriting the people than the concept.

In hospitality, execution risk almost always outweighs concept risk. A strong operator can recover from a mediocre idea; a weak operator can destroy even a great one.

Ask the operator to talk you through their prior openings, historical unit economics, staff turnover, vendor relationships, and how prior investors fared.

Some things you should be listening for:

• EBITDA margins of 15-25% for bars / fast casual, or 8-15% for full service

• Prime costs (food + labor) below 60–65%

• GM tenure of at least 3-5+ years and Chef tenure of at least 2-4+ years

• Annual hourly staff turnover below 80%

• Vendor payment terms on Net 30 vs COD

• Stabilization within 12 months

• Prior investors are reinvesting

If prior investors are not coming back into new locations, treat that as a meaningful signal—and ask why.

3. Underwrite the lease as aggressively as the concept

You should view the lease as one of the most consequential documents in the deal.

In many hospitality ventures, the lease—not the menu, brand, or buildout—is what ultimately determines whether the unit can generate durable margins.

Have the operator walk you through the terms, specifically looking out for:

• Rent relative to projected revenue: 6-8% of gross revenue

• Escalation schedules: 2-3%

• Tenant improvement allowances: 20-40% of total costs

• Guarantee structures: make sure investors aren’t exposed

So if projected annual revenue is $3mm, then:

• Safe rent = $180K-$240K/year

• Stretch rent = ~$300K

• Risky rent = $400K+

Also, try to negotiate approval rights around lease amendments because occupancy cost drift can erode margins faster than most operational missteps.

Occupancy costs are one of the few line items that are both large and difficult to change once the business is open—which is why experienced investors treat lease structure as a primary underwriting variable rather than a secondary legal detail.

4. Negotiate investment into the TopCo

Long-term value in retail ventures rarely sits at the unit level. If the first location works, founders often open second and third units; launch franchise models; license the brand; or sell the platform to a larger hospitality group.

In most successful hospitality concepts, the enterprise value is created by the brand and the system, not the four walls of the first location.

So if you’re investing in Location #1, you should always negotiate exposure to the TopCo, BrandCo, or IP HoldCo that sits above the operating entities.

Practical ways to structure this include:

• Equity in the parent entity that owns the brand and trademarks;

• Pro-rata rights to invest in future locations;

• Royalty participation tied to franchise or licensing revenue;

• Conversion rights if multiple units roll up into a consolidated platform.

A general rule of thumb: 20% of TopCo should be allocated to equity investors in Concept #1, so you should receive your pro rata share of that 20% (e.g., if equity raise is $1mm and you invest $100k, you should own 2% of TopCo).

Without TopCo exposure, investors in the first unit often finance the brand’s proof of concept but capture little of the upside when the platform scales.

5. Build governance, even in minority positions

Even at 10-30% ownership, negotiate protective provisions that allow you to monitor performance and influence decisions that could impair investor economics (and if you don’t have +10% ownership; link arms with other investors).

In smaller hospitality deals, governance can feel informal—but that informality is what creates risk when performance deteriorates or capital needs change.

Typical governance rights include approval over:

• New debt or credit facilities;

• Admission of new partners;

• Major capital expenditures;

• Expansion pacing;

• Lease renegotiations or relocations.

You should also require formal reporting expectations, specifically: monthly financial statements, KPI dashboards, and budget-to-actual reviews.

6. Plan for key-man risk before it materializes

Restaurants and bars are unusually dependent on a small number of individuals whose departure can materially impact performance. Underwrite this concentration risk early rather than reacting to it later.

Investors should protect themselves by putting structural safeguards in place that reduce dependence on any single operator, manager, or even chef. These protections often include:

• Vesting schedules tied to operator equity;

• Employment agreements with defined tenure expectations;

• Non-compete and non-solicit provisions;

• Retention incentives tied to performance milestones.

You should also think through contingency planning before it’s needed. That means determining who could step in operationally, how supplier and staff relationships would be preserved, and what financial reserves or credit capacity are available to absorb any disruption.

7. Define exit pathways at the outset

Many hospitality investments are made with no defined liquidity plan. Investors assume distributions will materialize or that someone will eventually buy the business, but those outcomes are far from guaranteed.

Professional retail investors approach hospitality the same way they approach early consumer brands. They map liquidity pathways before committing capital.

Common exit scenarios include:

• Sale to a strategic hospitality operator;

• Franchise recapitalization;

• Roll-up into a multi-unit platform;

• Investor buyback once the business stabilizes.

These scenarios get codified in the operating agreement through:

• Tag-along and drag-along rights;

• Buy-sell provisions;

• Put options after defined holding periods;

• Clear distribution waterfalls upon sale.

Even when the investment originates from a social relationship or local opportunity, institutional investors treat liquidity as a structural component rather than a hopeful outcome.

In practice, the difference between a good investment and one where capital gets trapped is often determined less by operating performance than by whether exit mechanics were defined early and documented clearly.

Full Interview & Investor Materials

From an investment perspective, the deal checks our boxes for a project that is high-yielding, innovative, and has downside protection:

• Deeply discounted acquisition ($12 PSF);

• Secured construction financing;

• Recurring-revenue model with strong pre-opening demand (1,000+ applications and 600+ families vetted, approved and paid initiation fees well ahead of opening);

• Projected ~20%+ unlevered yield on cost; and

• Ability to invest in both the OpCo & PropCo (can capture future upside of the operating business)

But the primary reason we’re investing: Nick and Dawson. We met them almost a decade ago when they were building Common Desk—which they scaled to 23 locations across 13 cities before exiting to WeWork in 2022.

From our front-row seats to that journey, this is what we’ve learned about them:

When venture-backed coworking companies were lighting money on fire, Nick and Dawson were bootstrapping and value-engineering.

Coworking circa 2014 (i.e., the WeWork heyday) attracted billions of venture dollars to fund leases, space build-outs, and on-site operations.

In hindsight, this was incredibly stupid—these coworking brands were hospitality operating companies with thin margins, not 100x SaaS platforms.

While WeWork, Industrious and Convene took the lion’s share of the money and the headlines, Common Desk saw the red flags and stayed 100% bootstrapped, structured hotel-style management agreements instead of leases, and value-engineered every build-out (when WeWork was spending $250 per square foot, Common Desk was spending $80 per square foot and delivering equally beautiful spaces) so that the unit economics of every location were profitable.

This takes an insane amount of skill, man-hours, and discipline/obsession. And in the end, they were the only guys (other than Adam Neumann) who actually made money in this niche category.

They build cult-like followings, because people love them.

In 2017-18, I spent 100+ hours in Common Desk locations and knew every early team member by name (up until they grew beyond 40-ish employees). And every team member believed they were Nick’s best friend—or part of his family.

This insane loyalty—which drove every staff member to go above and beyond their roles and responsibilities, especially in how they delivered hospitality—was what allowed Common Desk to succeed in filling its first locations (with no venture dollars).

This is a critical skillset in any operationally-complex business, and will be critical in family-focused social clubs as well.

Also, per the video clip above, they always took care of their employees before themselves, and I know they’ll do the same with investors.

They’re ruthless in managing construction costs and operating expenses.

While they don’t have traditional construction and development backgrounds, they have decades of experience managing large, complex design projects. And while I’ve met tons of creative hospitality operators who can fill rooms and hit top-line revenue targets, there are very few who are obsessive about their operating margins.

Nick and Dawson have done both of these in an incredibly difficult industry.

News that Soho House went private is like hearing your friends are fixing their marriage by having another kid. It’s nice they’re trying to make it work, but you know it’s just delaying the inevitable—and creating even bigger problems in the process.

For those unfamiliar: Soho House, the 30-year-old international chain of private members’ clubs, went private this past week. It ended its four-year run as a public company.

The TLDR on the deal…

• The transaction was for $2.7B (enterprise value), exiting the public markets at $9 per share (≈ 83% premium to its late-2024 unaffected price, but ~35–40% below its $14 IPO)

• The deal was led by Ron Burkle and his PE firm, Yucaipa, with ~75% of existing ownership rolling over, alongside new capital from Apollo ($850M hybrid debt/equity), MCR Hotels, Ashton Kutcher’s fund, and Goldman Sachs

• The deal almost blew up when MCR failed to fund $200M of its commitment, forcing a last-minute patchwork solution:

  • $50M personally from Tyler Morse (MCR’s CEO)

  • Reduced MCR equity

  • Expanded unsecured debt from Apollo $150M → $220M

  • Additional equity rollovers from insiders

• Post-deal, Soho House carries ~$915M+ of debt across secured bonds and unsecured notes, with maturities pushed to 2029

So, Soho House is now a highly leveraged hospitality company (debt > 5–6× EBITDA by rough estimates) that has never been profitable, entering a period of elevated interest rates and slowing economic growth. Plus it has to compete with an explosion of new social club competition—from higher-end clubs like San Vicente to more-inclusive family-oriented models like Life Time.

Breaking down the challenges ahead

The headwinds don’t disappear just because the stock does.

The same structural problems are still here—and now they’re paired with a lot more leverage and a lot less margin for error.

First, the fundamentals…

Soho House has never really made money. Membership and revenue have grown, yes—but profitability has always stayed just out of reach (adjusted EBITDA has flirted with positive, but the business still relies on external capital to fund growth and keep the lights on).

Going private doesn’t change the cost structure; it still requires expensive leases, heavy staffing, high-touch amenities and thin margins.

So maybe the scrutiny goes away; but the economics don’t.

Then there’s the debt…

Post-transaction, Soho House is carrying north of $900M of debt—roughly 5–6X EBITDA by any reasonable estimate. That’s a lot for a hospitality business, especially one that’s never proven durable cash flow.

Interest expense alone will eat up flexibility, so the “growth capital” now has to compete with debt service, and there’s no public equity market left as a pressure valve. So if they miss the numbers for a year or two, the conversation will quickly shift from “turnaround” to “restructuring.”

The brand is also stretched…

Soho House scaled fast—50 houses, nearly 40 cities—and in the process, the exclusivity that made it special has thinned. Their flagship locations are over-crowded and a less-curated membership base have changed the feel.

At the same time, competition has exploded.

So if SH grows too slowly, then the debt becomes unmanageable; and if it grows too fast, the brand loses what pricing power it still has.

The macro backdrop doesn’t help…

This is a discretionary-spend business heading into slower growth, higher rates, and persistent cost inflation. Food, labor, energy… none of it is getting cheaper.

Members may be affluent, but they’re not immune to pulling back on dinners, drinks, and weekends away. Meanwhile, new houses are still capital-intensive to open, and delays or overruns compound the pressure.

And the ownership structure isn’t clean.

This isn’t a reset with a fresh operator and a new plan. It’s largely the same insiders, now joined by a mix of minority equity holders and a powerful lender who also sits on the cap table. Interests are aligned until they aren’t. If performance slips, the incentives of a credit-heavy partner like Apollo won’t necessarily match the long-term stewardship of a lifestyle brand.

Net-net: going private buys time. That’s it.

It doesn’t solve the leverage, the margins, the brand dilution, or the macro risk.

How to fix the company

Wise words… but Soho House has no choice: they must chase and catch two “rabbits”—debt service coverage & brand equity.

How do you do it? I’m no magician, but I’ll take a crack:

Start by shrinking the business…

Soho House needs to prove that its houses can generate durable cash flow without fresh capital showing up every year. That means getting ruthless about club-level economics—identifying which locations, concepts, or side ventures consistently underperform and either fixing them or shrinking them.

I would:

• Slash the coworking business and sub-brands, e.g., The Ned;

• Renegotiate every house/hotel lease, e.g., extend by 10+ years in return for TI dollars, or walk away (to be clear, I know nothing of their current lease commitments); and

• Try to shift supply-demand in the key major markets like London, LA & NYC by cutting the number of locations while investing heavily in the one(s) that remain

At the same time, focus on ramping EBITDA…

Nearly a billion dollars of debt only works if EBITDA ramps quickly. Excess cash should go toward paying down debt, not opening the next shiny location (see point #1).

If there is expansion, it should be structured with off-balance-sheet financing through JVs or asset-level financing. If that means fewer openings and slower growth, so be it. A slightly smaller, solvent Soho House is better than a sprawling one flirting with a restructuring.

And most importantly, evolve the brand.

Private ownership finally gives Soho House permission to say “No” again.

For starters, I think they need a full-on PR campaign around:

1. “Tighter membership caps, lower onboarding, and less crowding”

2. “Revamped programming, food, and service”

3. “A-listers returning in droves”

This messaging alone is probably enough to bide time for the powers that be by scaring those on the fence (many with their memberships frozen for a year, and about to leave for good, like me) to stick around a little longer in case it actually does improve.

Then they actually need to deliver. Which, in my mind, means:

• Finding and taking a bet on an incredibly talented, young, hungry operator (the next Nick Jones) to reposition London, NYC, and LA houses without the luxury of blowing a bunch of money in the first few years to make it cool; or

• Bringing in a celebrity creative director like the fashion houses are doing (Pharrell at Louis Vuitton, Jaden Smith at Christian Louboutin, etc.)

My 2¢ as an investor

Even if Zendaya, Bella Hadid and Timothee Chalamet combined forces to Make Soho House Great Again, I wouldn’t have touched this deal unless I could co-invest alongside Apollo on the debt piece, which I assume is juicy.

Said differently, I don’t think they can get to EBITDA positivity and become cool again at the same time.

So my best bet: I’d wait until 2029, when the notes come due, buy the debt with a controlling stake at a steep discount, and bring in Jeff Klein.

Hi everyone… and if we haven’t met, great to meet you!

I’m Paul Stanton, partner at Thesis Driven, a leading media, education, and data platform covering the future of the built world. I’m also a partner at PTB, a real estate investment banking boutique.

My partner, Brad Hargreaves, is the founder and editor-in-chief of Thesis Driven, and formerly the founder of Common (largest coliving operator in the US, merged with Habyt in 2023) and General Assembly (acquired by Adecco in 2018 for $400+ million).

At Thesis Driven, we’re great at high-level, impartial analysis of real estate concepts, themes, capital structures and operators.

But we’re not totally impartial journalists: Brad and I are investors ourselves, and we occasionally make personal investments in the concepts and operators we cover.

So we started Buy Box to document our personal journey investing in high-growth real estate ventures.

In 2025, we invested in:

• a 30-unit ski home community in Driggs;

• an off-the-grid campgrounds platform; and

• a small town in the Catskills.

Now, with Buy Box, our investing adventures will be public—sharing the sponsors we’re meeting, asset classes we’re studying, the deal structures we’re negotiating… and the potholes we’re stepping in along the journey. In the coming weeks, we’ll dive deeper into the themes and deals we’re currently circling.

Ep 1. Real estate venture investing—betting on people + projects

Every week, we’ll break down investment structures, deals, operators, themes and markets we think are interesting via short videos.

For this first week, we’re sharing how we think about generating venture-like returns in real estate, with downside protection of real assets.

Over the last 3 years, we’ve gotten a front row seat to how the most sophisticated, private real estate investors in the world—large family offices, hedge funds and entrepreneurial allocators—are funding high growth, early stage platforms targeting 4-10X returns.

It’s a space institutions can’t yet access (not enough track record and/or requires flexible hold periods that don’t meet their rigid mandates), and requires the ability to underwrite both the teams and the projects. And, it’s a lot more fun!

Real estate venture investing is one of the key themes we’ll be pursuing through Buy Box in the months ahead as we share the themes, asset classes and operators we’re researching regularly.