Hello Brick Brief readers, 

Thank you for your continued support! Today we’re seeing a $3.5B IPO from modular housing startup Boxabl, softening in the US hospitality sector, and continued extreme flight to quality in offices. 

🏢 Office Recovery Finds Its Footing
Flight to quality is continuing to reshape office markets coast to coast, with top-tier assets pulling ahead. Class A office owner Hudson Pacific reported its strongest West Coast leasing since 2019, D.C. trophy space hit record-low vacancy, and LA office investment doubled in H1 2025 on the back of five $100M+ Class A deals.

🛎 US Hospitality Hits a Soft Patch
The U.S. hotel sector softened in Q2 as RevPAR slipped 0.5% and group demand for full-service hotels declined year over year. Marriott beat earnings on international strength but cut its full-year outlook due to weak U.S. travel and broader economic uncertainty.

🏗 Modular Housing Maker Boxabl to Go Public
Boxabl, the modular housing startup behind the $19,999 foldable “Casita” home, will go public in a $3.5B SPAC deal. The listing will fund expanded production and R&D as the company targets affordable, scalable housing solutions in a high-cost, supply-constrained market.

30Y Mortgage: 6.58% (+1 bps)

10Y Treasury Yield: 4.22% (+2 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 763.15 (+0.40%) 

30-day SOFR Average: 4.34%

Weakening job growth in the services sector adds pressure on the Fed to consider rate cuts, especially as hiring slows and employment contracts

US services sector nearly stagnated in July as ISM index dipped to 50.1 – Employment contracted for the fourth time in five months, with hiring slowing and prices paid rising to the highest since October 2022 (Bloomberg)

US trade deficit narrows 16% to $60.2B in June as tariffs cut consumer goods imports – Trade gap with China shrinks 70% over five months, but services sector and employment soften amid rising costs (Reuters)

Investor confidence hits 48-month high – RCM/TIPP Economic Optimism Index climbs to 50.9 in August, breaking a five-month pessimism streak (RealClearMarkets)

Modular housing startup Boxabl is going public through a $3.5B merger with SPAC FG Merger II, a deal that gives the Las Vegas-based company a public market debut despite generating just $3.4M in 2024 revenue.

• Boxabl designs foldable, factory-built modular homes like the 361-square-foot “Casita,” marketed as a fast, affordable housing solution with units starting at $19,999
• The company generated $3.4M in revenue in 2024, up tenfold from $344K in 2023, with just 51 homes delivered last year
• At a $3.5B post-money valuation, the company is trading at a 1,000x trailing revenue, a reflection of investor bets on future demand, not current fundamentals
• The SPAC deal includes the issuance of 350M shares and will list the combined company under the ticker “BXBL” on Nasdaq
• Boxabl has raised over $230M to date through crowdfunding and private rounds and plans to use SPAC proceeds to expand manufacturing and R&D
• The company has delivered 278 homes total across six states and is investing in regulatory approvals and installer networks to scale delivery capacity
• Boxabl has also drawn attention for adopting a bitcoin treasury strategy, using a portion of its balance sheet to purchase cryptocurrency

Takeaway: Boxabl’s public debut is a high-stakes bet on modular housing as a scalable solution to America’s affordability crisis. But with limited operating history and (a very!) extreme valuation multiple, the market will need to see meaningful delivery growth to justify the $3.5B price tag.

US home price growth slows to 1.7% YoY in June – Price increases fall below inflation as affordability improves, with softness concentrated in the Sun Belt and rents outpacing home values (Cotality)

Modular homebuilder Boxabl to go public via $3.5B SPAC merger – Firm will list on Nasdaq to expand production and meet soaring demand (Reuters)

Multifamily fundamentals remain solid as owners prioritize occupancy over rent growth, betting that strong job gains and slowing supply will sustain NOI through 2026 despite localized headwinds like reduced federal employment in D.C

Multifamily leasing momentum holds strong in H1 2025 – Occupancy nears cycle highs as renter inquiries surge 34% YoY, with concessions dropping and little evidence of cost-driven move-outs (CushmanWakefield)

Owners prioritize occupancy over rent growth amid new supply – Most cut or held rents steady in Q2, but robust job growth and declining supply are expected to support fundamentals and NOI through 2026 (CushmanWakefield)

Multifamily demand remains robust in D.C. – Limited vacancy, investor optimism, and regulatory reform drive higher rents and more transactions, even as reduced federal employment tempers gains in some segments (CBRE)

NYC suburb New Rochelle boosted apartment supply 37% over 10 years – Streamlined approvals and incentives kept rents flat as NYC-area rents soared (WSJ)

Extreme flight to quality is reshaping the office market, with top-tier assets driving record leasing in D.C., Hudson Pacific reporting its strongest West Coast activity since 2019, and LA investment surging as capital concentrates in trophy offices

Class A office owner Hudson Pacific Properties sees strongest West Coast leasing since 2019 – Larger tenants drive demand rebound for high-quality space, marking a shift in market momentum (CoStar)

Flight to quality accelerates in D.C. office market – Trophy and top-tier Class A+ space see record-low vacancy and robust demand, while older and undercapitalized buildings struggle with rising vacancies and weak leasing (CBRE)

LA office investment sales doubled to $1.8B in H1 2025 – Brokers say market has hit bottom as Q2 sales surged on five $100M+ deals (Bisnow)

MidOcean Partners signs 27K SF lease at 31 West 52nd Street in Midtown NYC – Paramount Group leases entire 10th floor to investment firm relocating from 245 Park Avenue at $92/SF (CommercialObserver)

Logistics growth slows in July – Warehousing and transportation prices rise as tariffs drive up inventory costs, with smaller distributors bearing the brunt while large firms keep inventories lean (LMI)

Inland Empire industrial vacancy hit a 15-year high at 8.5% in Q2 – Landlords respond to slower leasing and rising vacancies with concessions and flexible terms as standard warehouse rents drop 3.4% YoY (CoStar)

CRE investors shift toward income-stable and opportunistic strategies – 44% of firms changed investment plans due to market volatility, with many targeting new asset classes and regions  (IREI)

Din Tai Fung posts industry-high $27.4M average unit volume – Restaurant’s large format and premium pricing boost mall traffic, evening visits, and dwell times at locations nationwide (Placer.ai)

Hotel performance softened in Q2 as declining occupancy and weaker group demand weighed on RevPAR, raising concerns about the full-year outlook despite continued rate growth

US hotel industry slowed in Q2 2025 as RevPAR fell 0.5% – Occupancy declined 1.4%, putting the full-year outlook at risk compared to last year’s strong results (CoStar)

Group demand for full-service hotels falls YoY in Q2 – Room rates continue to climb, but a softening demand outlook points to slower pricing gains ahead (CoStar)

Fermi America to build $20B Texas complex with 11 GW of nuclear, gas, and solar – Project will power AI data centers as surging demand sparks a U.S. nuclear boom (Reuters)

Marriott beat Q2 earnings on strong international growth but cut its full-year outlook due to soft US travel and economic uncertainty (Reuters)

Rithm Capital to fund $1B in home-improvement loans originated by Upgrade – Move expands Rithm’s bet on consumer credit as home renovation spending cools (Bloomberg)

​​KKR provides $287M permanent loan on Williamsburg multifamily tower in NYC – Douglaston Development and Corebridge Real Estate Investors secure refinancing for 509-unit 1 North Fourth Place (CommercialObserver)

Nuveen provides $105M refinancing for 805 Lea Apartments in downtown Nashville – Key Real Estate Co. secures three-year loan for the 356-unit tower with ground-floor retail and luxury amenities (REBusinessOnline)

Citigroup provides $78M CMBS loan to refinance Better Living’s 204-unit NYC multifamily portfolio – Filler Capital closes the deal in 45 days to beat a pending loan maturity (CommercialObserver)

Brookfield to buy 19.7% of Duke Energy’s Florida utility for $6B – Duke is the latest utility to sell a minority stake to private equity as AI and electrification push power demand higher (Bloomberg)

Insight: This M&A deal aligns with a trend we’re watching closely as hyperscalers fuel a $400B data center buildout in 2025, straining power grids and reshaping long-term energy demand. Big investors like Brookfield are moving fast as private equity snaps up utility stakes to position for the AI-powered energy boom.

WisdomTree to acquire Ceres Partners with $1.85B in U.S. farmland AUM – Acquisition marks WisdomTree’s entry into private real estate and farmland investing (IREI)

Meta to sell $2B in data center land and sites – Move aims to fund $72B in AI infrastructure, with plans to pursue development partnerships after the sale (Bisnow)

Pacific Urban Investors buys Brooklyn multifamily asset for $73M in NYC – Rabsky Group sells 113-unit Garnett condo building with $41.2M loan from Berkeley Point Capital (CommercialObserver)

Rockpoint buys Williamsburg multifamily asset for $66M in NYC – Double U Development sells 45-unit apartment and retail building (CommercialObserver)

Hines CIO projects private wealth will soon comprise 50% of the firm’s business – Prediction highlights the rising influence of individual investors in real estate capital flows (PERE)

Insight: In Monday’s edition, The Brick Brief reported that institutional investors are retreating from real estate, with 63% underallocated in H1 2025 and CalSTRS posting a -3% annual real estate return. So what’s filling the gap? Hines thinks it’s private wealth, and they predict that individuals will soon make up half its capital base. As institutions pull back, private investors are stepping up as a more consistent and increasingly powerful force in real estate capital flows.

VC funding is pouring into AI-driven architecture startups like Spacial, Acelab, Joist, and Cove – Cove alone has raised $37M as investors target inefficiencies in the pre-construction phase (CommercialObserver)

Insight: Proptech firms like Spacial AI and Acelab are taking over the time-consuming paperwork and busy work of architecture, including code checks, material picks, and plan coordination. Architects can now focus more on design and less on red tape.