California AB 835 was signed into law in October 2023 and it directs the State Fire Marshal to research and develop recommendations for building standards that would allow “single stair” multifamily buildings above three stories, then report back to the legislature and the California Building Standards Commission.

So this is not yet a statewide code change that suddenly makes single stair buildings legal everywhere tomorrow. It is a state-driven pathway to rewrite a very specific rule that has shaped apartment design for decades.

And that rule is simple: once you go above a small building size, most codes require two enclosed stairways. That requirement drives the floor plate, the building core, the hallway length, the number of units you can fit, and the economics of what is even possible on a narrow or oddly shaped lot.

Any time you touch fire and life safety code, you will get pushback, and some of it will be sincere and valid.

The pro-single-stair argument is that many global cities allow this form safely with modern fire suppression, compartmentalization, smoke control, alarms, and design standards. There is ample research pointing to a strong safety record for small single stair apartment buildings and arguing the U.S. code is out of step with the evidence.

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**Real Estate Espresso Podcast:**
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Welcome to the Real Estate Espresso Podcast, your morning shot of what’s new in the world of real estate investing. I’m your host, Victor Menasce.

On yesterdays show we talked about the employment numbers for the US from payroll processing company ADP. The ADP numbers were a weak but in my view accurate reflection of the state of the labor market in the US Today the Bureau of Labor Statistics published their employment report for January.

I’m here to tell you to skip the headline and in particular pay attention to the part most people skip, the revisions. Because right now, the revisions are the story.

The headline for January 2026 says total nonfarm payroll employment rose by 130,000, and the unemployment rate held at 4.3%.

If you stopped there, you might conclude the labor market is reaccelerating. But here’s the problem. In the same release, the BLS tells us that the entire year of 2025, after benchmark revisions, amounted to only +181,000 jobs on a seasonally adjusted basis. Think about that. One month, January 2026, prints 130,000, which is roughly the same magnitude as the entire net job growth for all of 2025. That should make you skeptical, not euphoric.

------------

**Real Estate Espresso Podcast:**
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LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)
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**Y Street Capital:**
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We regularly look at macro economic data to forecast interest rates. Interest rates affect one of the three main variable associated with any project. Those three variables are construction costs, capital costs and rent. Everything else is a rounding error by comparison.

We are expecting new payroll data from the bureau of labor and statistics later this week. However, those numbers are full of approximations and adjustments. To me, the most reliable data actually comes from private enterprise which is the real time payroll data from ADP. The ADP data is not a survey or a statistical sample. It’s the real data taken from real payroll transactions in the past month. We’re going to start with the employment data and then look at bond yields. We know that the Fed funds rate has dropped 75 basis points in the past year. But the yield on the 10 year treasury has hardly budged in spite of everything that has happened. So let’s start with the payroll info and analyze from there.

The latest ADP National Employment Report, released on February 4, 2026, indicates a significantly cooling U.S. labor market. Private sector employment grew by only 22,000 jobs in January, falling well short of the Dow Jones consensus forecast of 45,000.

If we look by sector, the modest growth was almost entirely propped up by Education and Health Services, which added 74,000 jobs. Without this surge, the overall private sector numbers would have been negative.

Treasury yields generally shifted lower as the market reacted to the signs of a rapidly cooling labor market. This trend was amplified by a "flight to safety" as investors moved out of riskier assets like equities and into the relative security of government bonds.

------

**Real Estate Espresso Podcast:**
Spotify: [The Real Estate Espresso Podcast](https://open.spotify.com/show/3GvtwRmTq4r3es8cbw8jW0?si=c75ea506a6694ef1)
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Website: [www.victorjm.com](http://www.victorjm.com)
LinkedIn: [Victor Menasce](http://www.linkedin.com/in/vmenasce)
YouTube: [The Real Estate Espresso Podcast](http://www.youtube.com/@victorjmenasce6734)
Facebook: [www.facebook.com/realestateespresso](http://www.facebook.com/realestateespresso)
Email: [podcast@victorjm.com](mailto:podcast@victorjm.com)
**Y Street Capital:**
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Instagram: [@ystreetcapital](http://www.instagram.com/ystreetcapital)