The Brick Breakdown

Hello Brick Brief readers, 

Thank you for your continued support! Today we’re seeing businesses plan price hikes, retail distress mount, and mixed momentum in the office sector.

📉 Mixed Signals on Inflation
Business leaders expect to raise prices even as growth slows, suggesting inflationary pressure may persist despite a softening economy. Meanwhile, consumer inflation expectations are falling, setting up a disconnect that could delay Fed rate cuts.

🛍️ Retail Reckoning Deepens
Retailers are closing shop at a record pace, with over 5,800 store closures announced so far in 2025 and negative absorption hitting 6.4M SF in Q2. Vacancy climbed to 4.3% as demand concentrates on modern space, leaving outdated malls and shopping centers behind.

🏢 Office Market Sends Mixed Messages
U.S. office sales surged 69% YoY to $40.8B, driven by private investors targeting trophy assets in California and beyond. But despite Manhattan’s strong Q2 leasing, fears of AI-driven white-collar layoffs are clouding the long-term outlook.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.81% (+2 bps) 

10Y Treasury Yield: 4.41% (+2 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 763.56

30-day SOFR Average: 4.34%

Market Pulse & Rate Watch

Businesses plan to raise prices even as demand weakens, signaling persistent inflation risks that could delay Fed rate cuts despite softer consumer expectations

CFOs and business leaders expect weaker demand and rising prices – Surveys show firms plan price hikes despite slowing growth, deepening Fed uncertainty (Reuters)

Inflation expectations fall 0.2 pts to 3.0% – NY Fed survey shows improving household outlook on jobs and credit, but spending growth and wage expectations remain soft (NYFed)

Small business sentiment dips to 98.6 in June – NFIB index slips as firms report excess inventories, weaker sales outlook, and worsening business health despite falling uncertainty (Reuters)

Brick by Brick: Business Price Hikes Keep Fed on Edge Despite Softer Consumer Outlook

New data from the Fed’s CFO Survey, Dun & Bradstreet, and the NFIB shows businesses expect to raise prices in the months ahead, even as revenue growth slows, inventories build, and consumer inflation expectations ease. With tariffs just beginning to take effect, policymakers are watching closely for signs that business-driven price hikes could prolong inflation even in a slowing economy.

• The Fed’s CFO Survey shows firms plan to increase prices regardless of tariff exposure, with some doubling price hike plans from earlier in the year
• Business leaders in Dun & Bradstreet’s global survey expressed long-term concerns about supply chains, slower borrowing, and delayed capex decisions
• NFIB small business optimism ticked down in June as more firms report excess inventories and deteriorating health of their operations
• The Atlanta Fed warns that tariff effects may take a year or more to fully show up in inflation data, as companies slowly pass costs to consumers
• The New York Fed’s June Consumer Expectations Survey shows household inflation expectations ticking down to 3.0% over the next year, even as business sentiment diverges

Takeaway: The Fed is watching closely as firms signal higher prices ahead, even in the face of softer demand and cooling consumer sentiment. For real estate investors, this backdrop may delay rate cuts and keep borrowing costs elevated, as the Fed is likely to wait until the full inflationary impact of tariffs becomes clearer. With businesses expected to pass on costs gradually, the Fed faces a longer wait before it can confidently shift policy.

Policy & Industry Shifts

NYC developers rally behind Adams to block Mamdani – Real estate leaders shift support from Cuomo, citing fears over rent freeze and rising taxes under democratic-socialist nominee (WSJ)

Residential

Housing supply is rising faster than demand, forcing more sellers to cut prices as active listings hit a post-pandemic high

Housing inventory up 28.9% YoY in June – New listings rose 6.2% YoY as active inventory hit post-pandemic high; 20.7% of homes saw price cuts, highest June share since 2016 (Realtor.com)

Douglas Elliman reels from agent exodus and lawsuits – Century-old brokerage lost $140M since 2022 as it ditches party era, faces cultural reckoning, and fends off Compass poaching spree (Bloomberg)

Office

Office sales are surging on trophy asset demand, but rising AI-driven layoff fears are clouding long-term confidence in the sector

U.S. office sales surge 69% YoY to $40.8B – Trophy assets dominate deals as California metros lead gains and private investors drive renewed interest in Class-A space (Bisnow)

AI disruption clouds office outlook – CEO warnings about mass white-collar layoffs add to investor uncertainty, even as long-term CRE impacts remain unclear and uneven across markets (GlobeSt)

Manhattan office leasing hits 6.99M SF in Q2 – Activity up 33% from 5Y average and 34% YoY as availability dips to 17.5% and net absorption tops 2.17M SF (CBRE)

Leasing

Nvidia to lease 100K SF in Austin, TX – Chipmaker plans major expansion at One Uptown in North Austin near Dell HQ, boosting confidence in the local office market (TheRealDeal)

Industrial

US logistics tenants post first net negative absorption in 15 years – Q2 marked more space vacated than leased as trade uncertainty and soft consumer demand slow expansion (CoStar)

Leasing

Beacon Mobility leases 83K SF IOS site in Brooklyn, NY – Turnbridge Equities secured the tenant for 2647 Stillwell Ave, a rare industrially zoned property with fenced, paved yard (CommercialObserver)

Market Mix

Retail

Retail is undergoing a shakeout as store closures surge, demand shifts to modern space, and tariffs and spending pullbacks drive the sector’s first negative absorption since 2020

U.S. store closures surge in 2025 – 5,822 closures announced YTD, up 66% YoY and on pace to hit record 15,000 as bankruptcies and rising costs reshape retail (CoStar)

Retail vacancy rises to 4.3% in Q2 2025 – Malls and shopping centers each saw a 20 bps increase as late-2024 closures hit the market and new supply remains limited (Colliers)

Retail posts 6.4M SF negative net absorption in Q2 – Leasing dropped 5.2% as demand concentrates on modern space, leaving older inventory harder to fill (Colliers)

Retail logs first negative absorption since 2020 – Consumer spending shifts drive store closures and weak demand, while personal care retailers support strip center resilience (GlobeSt)

Tariff fears drive early baby gear purchases – Visits to Babylist’s showroom and Kohl’s Babies”R”Us shops rose in May–June as families pulled forward spending to avoid price hikes (Placer.ai)

Healthcare

Outpatient care set for long-term growth – Aging population, service line expansion, and shift from hospitals to outpatient facilities drive projected 32% orthopedic revenue growth by 2033 (Colliers)

Financings

Loans

Southern Land secures $100M construction loan for 272-unit Las Vegas, NV tower – Bank Hapoalim and Nuveen Green Capital funded the Capella project in Symphony Park with $50M senior debt and $50M C-PACE financing (CommercialObserver)

Codina Partners secures $100M construction loan for 412-unit Sevilla project in Miami, FL – Regions Bank and Ocean Bank fund multifamily development in Downtown Doral (CommercialObserver)

FSA Capital secures $89M loan for Flushing, NY condo project – Financing from Ponce Bank backs 253K SF mixed-use development with 99 condos and commercial space at 133-09 37th Ave (TheRealDeal)

Fortune International and Blue Road secure $73.7M construction loan for 254-unit condo in North Miami Beach, FL – Bank Hapoalim provided financing for the Nexo Residences project (CommercialObserver)

Refinancings

Triten Real Estate and Angelo Gordon secure $150M refi for 29-property IOS portfolio – BMO provided the loan for the sites, which span six states (CommercialObserver)

RL Cold and BGO secure $78.5M refi for 268K SF cold storage facility in Lula, GA – Atlanta-area warehouse is fully leased to CJ Logistics (ConnectCRE)

M&A

Company M&A

Surging AI and data center energy demand is fueling takeover interest in firms like AES, as investors like Brookfield and BlackRock race to secure long-term access to scalable power infrastructure

$9B US-listed renewable energy firm AES explores sale amid takeover interest– Brookfield and BlackRock eye $40B EV power provider as AI-driven demand boosts energy M&A (Bloomberg)

Buildings distributor TopBuild to acquire Progressive Roofing for $810M – PE firm Bow River Capital exits Denver-based roofing firm generating $438M in revenue and $89M in EBITDA (WSJ)

Building & Portfolio M&A

Multifamily

Slate Asset Management to buy 1,600-unit multifamily portfolio for $226.5M – Chicago-based firm acquiring six garden-style properties across Tampa, Atlanta, and Phoenix from ZMR Capital (Bisnow)

Hospitality

Braemar sells Marriott Seattle Waterfront for $145M in Seattle, WA – 369-key hotel trades at $393K per room as Braemar pivots toward luxury portfolio (ConnectCRE)

LVMH sells El Encanto hotel in Santa Barbara, CA for $82.2M – Tinder co-founder Justin Mateen, his brother, and Culver Capital acquire LVMH’s only US hotel at $900K per key (Bloomberg)

Distress Watch

Stonemont CEO faces $664M foreclosure on suburban Chicago office portfolio – CWCapital moves to seize 40 assets including Motorola campus and 19 First Midwest Bank branches after CMBS default (TheRealDeal)

Cardone, Penn-Florida to buy Boca Raton, FL multifamily out of bankruptcy for $235M – JV plans condo conversion of 366-unit 101 Via Mizner, with projected sales topping $400M and Cardone offering crypto-linked shares (TheRealDeal)

GreenBarn, FarmView, and Farallon acquire 405K SF D.C. office via $60.5M credit bid – JV purchased 1625 Eye St. NW at foreclosure auction; property was previously owned by Westbrook and AREP and is over 80% leased (CommercialObserver)

CBL Properties sells $72M in malls to cut debt – Post-bankruptcy mall REIT offloads assets to Walmart and private investors as rising retail demand revives buyer interest (Bisnow)