Hello Brick Brief readers, 

Happy Monday. Recent headlines point to the Fed leaning toward additional 2025 rate cuts amid a weakening job market, Trump preparing a $500B IPO for Fannie Mae and Freddie Mac, and continued momentum in the data center boom.

In other news, fresh July CPI and PPI data this week will show how tariffs are feeding into inflation, giving the Fed clearer direction on whether to focus on price stability or supporting the job market. The results could shape the path for further rate cuts in 2025, a key driver for real estate borrowing costs and investor sentiment.

💵 Fed Balances Dual Mandate Pressures
Fed officials are weighing their dual mandate of maximum employment and price stability, with growing consensus that labor market health now takes precedence. A September rate cut could lower borrowing costs and support real estate demand, but the Fed risks reaccelerating inflation if easing overshoots.

🏠 Fannie-Freddie IPO Tests Mortgage Market Foundations
Trump’s $30B IPO plan for Fannie Mae and Freddie Mac raises questions about whether their government-backed mortgage guarantees will remain in place. Full or partial privatization could push mortgage rates higher by removing federal support, directly affecting home affordability and housing market stability.

⚡ Capital Rush to Data Center Infrastructure
Pimco and Blue Owl are funding $29B of Meta’s $72B 2025 AI data center spend, while Silver Lake’s $400M venture targets new power capacity to ease grid bottlenecks. Surging demand for AI computing is even reshaping electrical equipment markets, with Texas alone expected to need over 100 high-voltage circuit breakers annually for years.

30Y Mortgage: 6.57% (+2 bps)

10Y Treasury Yield: 4.29% (+4 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 752.81 (-0.81%) 

30-day SOFR Average: 4.34%

Weak jobs data is shifting the Fed’s focus toward supporting employment over countering tariff-driven inflation, a tilt that could lower borrowing costs and boost real estate demand if rate cuts proceed

Fed officials turn more dovish – Weak jobs data heightens labor market concerns, boosting odds of a September rate cut despite lingering inflation risks (Reuters)

Fed’s Bowman backs September rate cut – Citing weak jobs data, she supports three cuts in 2025 to move policy toward neutral despite inflation risks (WSJ)

Fed’s Musalem sees risks to both inflation and jobs – Says tariffs could keep prices elevated but slowing growth threatens labor market, calling for a balanced policy approach (Reuters)

The Trump administration is preparing a public offering for the mortgage giants that could raise about $30B and value them at more than $500B combined.

• Plans under discussion would sell 5% to 15% of shares, with the Treasury holding warrants for 80% of common stock and senior preferred shares
• Both firms remain under government conservatorship, and FHFA capital rules require them to hold significant reserves before paying dividends
• Building these reserves could absorb much of the IPO proceeds and near-term earnings, creating tension between capital requirements and delivering returns to taxpayers
• Fannie and Freddie mortgage-backed securities benefit from a government “implicit guarantee” that keeps investor demand strong and mortgage rates lower. If confidence in that backstop erodes, yields could rise and affordability could worsen
• Trump has said the guarantee will remain to keep rates from climbing, but turning it into an explicit guarantee could require legislation and face budget obstacles
• Large holders of agency MBS, including banks, pensions, and foreign central banks, could scale back exposure if they view the guarantee as weaker

Takeaway: This IPO’s success will hinge on how capital requirements, ownership, and the mortgage guarantee are structured. Any hit to investor confidence risks pushing mortgage rates higher, amplifying the affordability strain already gripping the housing market.

The planned $500B+ IPO of Fannie Mae and Freddie Mac could reshape mortgage pricing, with privatization potentially raising rates if government guarantees are reduced and impacting housing affordability nationwide

Trump plans $500B+ IPO for Fannie Mae and Freddie Mac – $30B sale sends shares up ~20%, with future of government control unclear (WSJ)

Ackman proposes merging Fannie Mae and Freddie Mac – Says $500B combined entity would cut mortgage rates, boost synergies, and streamline oversight ahead of planned IPO (Reuters)

Greystar settles DOJ rental market collusion case – Landlord agrees to limit algorithmic pricing and share data in probe of RealPage and other defendants, without admitting wrongdoing (Bloomberg)

Trump ends HUD probes into Chicago zoning control – Move halts federal push to reform “aldermanic prerogative,” a practice critics say fuels segregation and limits affordable housing (TheRealDeal)

Zillow sees CPI shelter inflation cooling – OER projected up 3.4% YoY in 2025 before slowing to 1.9% in 2026, with primary rent growth dropping from 2.7% to 0.6% (Zillow)

Midwest leads US in July home price growth – Cleveland jumped 14.1% YoY while Texas metros saw steepest declines, led by San Antonio’s 5% drop (Homes.com)

US apartment fundamentals stayed stable in July as strong Midwest and Northeast demand offset Sun Belt supply pressures, keeping rents flat at $1,717 and occupancy at 95.5% despite record absorption outpacing new deliveries.

US apartment rent growth unchanged MoM in July – National average stayed at $1,717 as Midwest and Northeast outpaced Sun Belt markets facing supply pressure, led by Austin’s 4.3% annual drop (CoStar)

US apartment occupancy holds at 95.5% in July – Rent growth up 0.2% YoY as record demand offsets falling supply, with Northeast and Midwest leading rates (RealPage)

Multifamily expense growth slows in early 2025 – Market-rate costs up just 1.3% YoY, but high supply keeps rent growth muted at 0.7% (GlobeSt)

US apartment supply declines as demand surges – Developers delivered 536K units in year-ending Q2 while absorption hit a record 794K, marking third straight quarter of demand surplus (RealPage)

CBRE survey shows 72% of employers meet office attendance goals – Hybrid schedules stabilize as prime space vacancy stays under 14% despite 19% national rate (GlobeSt)

Uber explores lease for up to 150K SF of Bellevue, WA office space – Ride-share giant may expand Seattle-area footprint while retaining current 115K SF in downtown Seattle (TheRealDeal)

Tubi leases 31K SF at Kilroy-owned San Francisco, CA office building – Free streamer will relocate HQ from Financial District to SoMa this fall (TheRealDeal)

US rail traffic up 2.9% YoY in early August – Grain surged 25.7% and autos 10.2%, but new tariffs cloud intermodal outlook (FreightWaves)

Savannah port moves 5.7M TEUs in FY2025 – Up 8.6% YoY and second-busiest year on record, boosted by expansion and shifting trade patterns (FreightWaves)

Green Street CPPI slips 0.1% in July – Index shows CRE values 18% below 2022 peak amid stalled sales and persistent bid-ask gap (GlobeSt)

California CRE sees industrial and multifamily momentum – Allen Matkins/UCLA survey reports accelerating growth in these sectors, with regional and asset-type disparities persisting (IREI)

U.S. retail real estate holds steady – Negative absorption from retail bankruptcies offset by lack of new supply and strong demand for quality space, keeping availability stable in Q2 2025 (IREI)

Insight: If bankruptcies are piling up, why isn’t retail falling apart? Closures at Claire’s, Forever 21, Joann, Rite Aid, and Bargain Hunt have pushed absorption into the red, but a shortage of new supply has kept availability in check. It’s a reminder that real estate is a supply and demand game, and when the pipeline is thin and surviving tenants are healthy, landlords can still hold leverage, especially for prime space.

TJX Q2 visits beat expectations – Same-store traffic rose 3.5%-7.4% YoY, led by HomeGoods growth and expansion of Sierra and Homesense into rural markets (Placer.ai)

Hotel brand growth fails to lift RevPAR – CBRE finds that  inflation erased five-year gains, widening gap between top and bottom performers, with upper-midscale segment leading returns (CBRE)

The life sciences market continues to struggle, with San Diego availability hitting a record 29.8% and Boston reaching 29.7% amid funding cuts, weak VC investment, and slowing demand.

Federal mRNA funding cut threatens lab leasing – HHS ends $500M in vaccine support, forcing smaller biotech firms to pivot or risk closure (Bisnow)

San Diego life sciences leasing velocity slows to 347K SF in Q2 – Central market posts 585K SF negative absorption as availability hits a record 29.8% and sublease space tops 1.3M SF (CBRE)

Boston life sciences availability hits record 17M SF in Q2 – Vacant deliveries push market availability to 29.7% as muted VC funding and weak demand signal vacancies have yet to peak (Colliers)

Massive capital is pouring into AI-driven data centers, with $29B for Meta’s Louisiana project and $400M for new power capacity as Texas alone may need 100+ high-voltage circuit breakers annually to meet surging demand

Pimco and Blue Owl lead $29B financing for Meta’s Louisiana data center – Pimco provides $26B debt, Blue Owl $3B equity, funding part of Meta’s $72B AI data center spend in 2025 (Bisnow)

Silver Lake invests $400M in powered land for data centers – JV with Commonwealth secures 3 GW in Texas and Georgia, targeting 6 GW as power replaces GPUs and capital as the industry’s key bottleneck (WSJ)

Data center growth drives surge in high-voltage circuit breaker demand – Power and Data Management says Texas alone may need 100+ breakers annually for next five years to meet AI-driven capacity needs (Bisnow)

SVAG and USA Infrastructure secure $97.5M refi for Dallas, TX luxury condo tower – Loan from University Place Asset Management and Axonic Capital will complete 18-story project (TheRealDeal) 

Architecture giant Corgan acquires Boston design firm Dyer Brown – Acquisition expands data center and workplace design footprint in Northeast (CoStar)

Harbor Associates and Roxborough buy Pasadena Towers office complex in Pasadena, CA for ~$120M – Class A property sold by CBRE Investment Management at less than half its 2016 price (CommercialObserver)

Insight: This is a Class A office that benefits from flight-to-quality, so why did it sell for half its 2016 price? Elevated vacancy and weak absorption across the L.A. office market, paired with costly concessions and higher cap rates, have reset even prime Pasadena assets to valuations that reflect far lower income expectations than during the pre-pandemic peak. Though high-quality assets are still trading, albeit at steep discounts, lower-quality buildings are largely stuck on the sidelines.

K5 Equities acquires two Stamford, CT multifamily complexes for $57M – Daycroft Apartments and Hamilton Gardens total 188 units and were sold by Ahron Rudich’s Empire Realty USA (TheRealDeal)

Sutter’s Place buys Bay 101 casino property in San Jose, CA for $72M – Deal from S.J. Bayshore Development follows $65M financing and prior family legal dispute (TheRealDeal)

Amazon Web Services buys 985 acres in Lamar County, GA for $270M – Land along I-75 slated for potential data center development within Legacy 75 Trade Center (Bisnow)

Cabot Properties buys two fully leased warehouses near Atlanta, GA for $73.3M – Brookfield sells logistics assets occupied by major supply chain providers (CoStar)

HighBrook launches maiden data center fund – Manager seeks capital for dedicated vehicle alongside new US and Europe flagship funds, target raise undisclosed (PERE)