Hello Brick Brief readers, 

Today we’re seeing AI fears continue to pressure office REITs and real estate brokerages, Big Tech’s data center buildout boost GDP, and private capital continue to acquire discounted, subscale REITs. 

🤖 AI Fears Pressure Office and Brokerage Stocks
AI fears are driving concerns of permanently lower office demand as companies use generative tools to produce more work with fewer employees, leading investors to anticipate slower white-collar hiring that could reduce future leasing, weaken absorption and pressure rent growth; office REIT SL Green is down more than 15% YTD. Real estate brokerages CBRE, JLL, Cushman & Wakefield and Newmark have also sold off on fears that AI will lower the cost and time required to produce analysis, marketing materials and valuations, leading to increased competition and fee compression across brokerage and appraisal services.

⚡ Big Tech AI Spending Boosts Growth but Raises Hidden Risks
Big Tech firms Alphabet, Amazon, Meta and Microsoft plan to spend about $650B on AI infrastructure in 2026, up from roughly $410B in 2025, a surge that economists estimate could add 100 bps to U.S. GDP growth. Moody’s is warning that data center leases tied to this buildout may mask liabilities because accounting rules can exclude renewal costs or residual-value guarantees, potentially concealing tens of billions in AI-related lease obligations from investor balance sheets.

🏢 Private Capital Targets Discounted Apartment REITs
An Affinius-led investor group agreed to acquire $1.5B multifamily REIT Veris Residential in a $3.4B deal at a 27.5% premium; Veris owns high-end apartment communities concentrated in the Boston and New York City metro areas including Jersey City, Hoboken and Manhattan. Just two weeks ago activist investor Erez Asset Management pushed the REIT to explore a sale, arguing that a transaction could unlock significant value and deliver a 40–70% premium to shareholders.

Trump unveils 15% global tariff, weighs new Section 232 levies – National security probes could hit batteries, grid equipment and industrial inputs after Supreme Court strikes down reciprocal duties (WSJ)

NY Fed core inflation gauge rises to 2.8% in December – Multivariate Core Trend climbed from 2.4% as non-housing services and goods prices picked up, underscoring stickier underlying inflation above the Fed’s 2% target (Reuters)

Fed’s Waller open to March rate pause if jobs stay strong – January payrolls rose 130K, and continued labor resilience could support holding rates steady (Reuters)

AI raises fears of permanently lower office demand as companies use generative tools to produce more work with fewer employees – Investors worry slower white-collar hiring could reduce future leasing, weaken absorption and pressure rent growth, sending office REITs like SL Green down >15% YTD (WSJ)

Broker stocks fall on AI fee risk – Automation of appraisal and mid-market brokerage could compress margins at CBRE, JLL, Cushman & Wakefield and Newmark (WSJ)

The risk being priced in is that AI won’t replace brokers outright, but will lower the cost and time required to produce analysis, marketing materials, and valuations, which will allow competitors to move faster and pressure firms to cut fees, leading to margin compression across brokerage and appraisal services. 

That same argument, however, could be made for many industries – accounting, auditing, or law, just to name a few.

U.S. home buying power jumps $30K YoY to $331,483 – Lower mortgage rates at 6.10% expanded affordability to 40.3% of listings, up from 34.8% a year ago (Zillow)

Mortgage rates fall to 5.99%, lowest since 2022 – Buyer purchasing power rises $33,750 YoY and monthly payment on $423K median home drops to $2,790 (Redfin)

High mortgage rates slashed sales ~40% without triggering price reset – Inventory rose 142% but median list prices still climbed 8.1% as lock-in and delistings kept new supply constrained (Realtor.com)

South leads build-to-rent with 41,700 units underway – Nearly 68,700 BTR units are under construction nationwide, with the Sun Belt accounting for ~55,000 units and Phoenix alone topping 9,000 units in pipeline (RealPage)

U.S. apartment concessions hit 16.6% in January – Usage rose 1 point month over month to highest level since mid-2014, with average discounts at 10.7% and Class C showing deepest usage at 23.1% (RealPage)

Banks hold $7.1B of seriously delinquent multifamily loans – 90+ day delinquencies equal 1.09% of balances; overall bank multifamily delinquency stands at 1.37%, highest since the GFC (Bisnow)

Productivity gains may curb long-term office demand – Economic output in knowledge sectors keeps rising even as job growth slows, signaling a structural decoupling that could weigh on future space needs (CoStar)

Office tenants favor familiar submarkets when relocating – Analysis of 1,359 moves shows companies tend to stay within similar submarket types, though denser downtown locations are gaining appeal among firms crossing boundaries (CoStar)

U.S. office sale prices rise 6.1% in 2025, first annual gain since 2021 – Average pricing hit $182 per SF as Manhattan surpassed $1B in January sales, pointing to early recovery in deal activity (ConnectCRE)

Law firm office leasing hits record 18.8M SF in 2025 – Q4 signings reached 4.3M SF, up 9% QoQ, with renewals outpacing new deals as supply constraints push firms to stay in place (GlobeSt)

Databricks leases 180K SF at PGIM’s 100 Altair Way in Sunnyvale, CA – The deal lifts its total Sunnyvale footprint to 635K SF as AI-driven growth fuels expansion ahead of planned IPO (TheRealDeal)

Gap traffic rises 1.6% YoY in Q4 – Visits showed stronger holiday sensitivity, including a 504% Black Friday spike, highlighting its discretionary and seasonal demand profile (Placerai)

Old Navy traffic climbs 1.2% YoY in Q4 – More consistent month-to-month gains and longer weekday visits position it as Gap Inc.’s steady, value-driven traffic anchor (Placerai)

Big Tech to spend $650B on AI in 2026 – Alphabet, Amazon, Meta and Microsoft plan to lift capex from $410B in 2025, adding 100bps to U.S. GDP growth while increasing bubble, inflation and power-demand risks (Reuters)

Moody’s warns Big Tech data center leases may mask liabilities – Accounting rules can exclude renewal costs or residual value guarantees, potentially concealing tens of billions in AI-related lease obligations (FT)

Amazon to invest $12B in Louisiana data centers – Expansion supports its $200B 2026 AI spending plan, creates 540 jobs and requires new power and water infrastructure (Reuters)

Data center developers struggle to fund early-stage projects despite AI boom – Land costs rose 23% and utilities demand upfront power commitments topping $400M in some cases, pushing firms to recycle assets and tap structured debt for liquidity (Bisnow)

Six Flags grapples with falling attendance and $5.1B debt – Declining guest counts across 41 parks add pressure as the company evaluates its portfolio under new leadership (CoStar)

Six Flags has seen recent activist activity from Travis Kelce and Jana Partners to revive attendance, while activist Land & Buildings has pushed to unlock shareholder value through a monetization of Six Flags’ real estate.

AbbVie to invest $380M in Illinois API facilities – Expansion boosts domestic production of neuroscience and obesity drugs amid 100% tariff on imported branded pharmaceuticals (Reuters)

Affinius Capital-led group to acquire multifamily REIT Veris Residential for $3.4B – Deal reflects 27.5% premium as private equity capital continues targeting discounted apartment REITs in broader take-private wave (Bisnow)

Veris owns high-end apartment communities concentrated in the Boston and New York City metro areas, including Jersey City, Hoboken, and Manhattan.

Just two weeks ago, Reuters reported that activist investor Erez Asset Management pushed the $1.4B listed REIT to explore a sale, arguing that a transaction could unlock significant value and deliver a 40–70% premium to shareholders.

Affinius likely sees attractive long-term fundamentals in supply-constrained Northeast rental markets and is opportunistically acquiring a scaled apartment platform at a public-market discount amid the broader take-private wave. Subscale REITs have continued to trade below their NAV due to limited growth prospects. 

TruAmerica closes $708M workforce housing fund targeting Class B multifamily – Fund II will acquire stabilized assets near major CBDs serving households earning 60–100% of AMI without government subsidies (CommercialObserver)

KPC Group and Lendlease acquire Oceanwide Plaza mixed-use development across from Crypto.com Arena in Los Angeles, CA for $470M through bankruptcy process – The 60% completed project spans three residential towers and 11-floor hotel after prior developers invested $1.2B before stalling in 2018 (Bloomberg)