The Brick Breakdown

Hello Brick Brief readers, 

Thanks for your continued support! Today’s highlights include positive May CPI inflation data, major billion-dollar M&A moves in retail, and persistent affordability pressures in housing.

📉 Trade tensions rise despite muted inflation
May CPI came in at 2.4%, easing pressure on the Fed, but Trump’s July 8–9 tariff deadline looms large. Only the UK and China have frameworks in place, and U.S. imports from China plunged 28.5% YoY in May as firms brace for potential 55% total tariff rates.

📦 Retail M&A activity accelerates as investors eye cash flow
Couche-Tard’s planned divestiture of 2,000 U.S. stores follows a $51B bid for 7-Eleven’s parent, while Papa John’s and Bojangles explore billion-dollar sales. Private equity interest is rising as inflation-era demand stability makes food and convenience chains prime buyout targets.

🏠 Affordability pressure reshapes U.S. housing market
 Mortgage rates remain near 7%, and the share of investor purchases hit 13% in 2024 as owner-occupier activity slowed. Luxury homes under $1M have nearly vanished from major metros, reflecting persistent pricing strain on first-time and move-up buyers alike.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.89% (-4 bps)

10Y Treasury Yield: 4.40% (-7 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 773.31 (-0.64%) 

30-day SOFR Average: 4.30%

Market Pulse

Muted May inflation gives the Fed breathing room on rates, but global uncertainty persists as Trump set a July 8–9 deadline for countries to strike trade deals or face steep unilateral tariffs, pressuring economies to secure terms amid fragile pricing dynamics

May inflation stays muted at 2.4% – Consumer prices rose less than expected despite tariff concerns, easing pressure on the Fed and delaying anticipated price hikes (WSJ)

Trump sets July 8–9 tariff deadline – Countries must finalize trade deals or face unilateral rates via letters in coming weeks; extensions possible for those negotiating in good faith, though only the UK and China have frameworks so far (Reuters & Bloomberg)

 Brick Breakdown: May CPI Shows Muted Inflation Despite Tariff Concerns

Inflation remained subdued in May, easing fears that tariff pressure would quickly pass through to consumers. Headline CPI rose just 0.1% month-over-month, with the annual rate ticking up to 2.4%, largely due to shelter and food costs.

• Core CPI rose 0.1% in May and 2.8% YoY, slightly below forecasts. Apparel, vehicles, and airline fares declined, helping offset increases in shelter, medical care, and household goods.
• Shelter rose 0.3% MoM and remains the biggest contributor to inflation, now up 3.9% YoY. Rent and owners’ equivalent rent also rose 0.2% and 0.3%, respectively.
• Energy prices fell 1.0% MoM and are down 3.5% YoY, with gasoline off 12.0% annually. Electricity rose 0.9% in May and is up 4.5% over the year.
• Food prices rose 0.3% MoM and 2.9% YoY. Eggs fell 2.7% in May but are still up 41.5% YoY.
• Inflation for appliances, car parts, and audio equipment edged up, likely reflecting early tariff exposure. Broader effects remain limited as firms like Walmart have said price hikes would begin in late May or later.

Takeaway: The Fed will likely interpret May’s print as a green light to hold rates steady in June, but not a reason to accelerate cuts. With tariff-linked price hikes only starting to enter the system, policymakers will need to wait through the summer to gauge the true impact on inflation from tariffs. Until then, stable core inflation and softening consumer categories buy the Fed time.

Policy & Industry Shifts

NYC landlords hike rents after broker fee ban – FARE Act shifts broker costs to owners, prompting immediate increases of up to $500 on new listings (WSJ)

Chicago may let local officials ban Airbnbs – Proposed ordinance would flip opt-out rules, giving city council members power to block short-term rentals precinct by precinct unless residents object (TheRealDeal)

Residential

Affordability remains a major hurdle for U.S. homebuyers as sub-$1M luxury listings vanish, investor selling surges, and mid-6% mortgage rates persist despite cooling inflation and rising institutional interest in affordable housing

Investors bought 13% of U.S. homes in 2024 – Small investors gained share as overall sales fell, while investor selling hit a record 10.8% of all transactions (Realtor.com)

Luxury homes under $1M vanish in major metros – Only 7 of the top 50 U.S. cities still offer sub-$1M luxury homes, down from 30 in 2020 as price growth surges post-pandemic (Redfin)

Mortgage rates hold steady amid volatility – CPI-driven dip offsets jobs report spike as rates remain near mid-6% range, though affordability still weighs on first-time buyers (Zillow)

Multifamily

Apartment demand stays strong despite headwinds – U.S. vacancy rate peaked in late 2024 and is expected to decline through 2025 as renter demand remains resilient (CoStar)

Regional

NYC’s Hudson Yards to add more affordable housing – Related strikes deal with NYC to boost affordable units to 625 in $12B second phase, reviving stalled Western Rail Yards project (Bisnow)

Office

Office strategies matured in 2024 as most sectors adopted denser layouts with fewer desks per employee, while financial firms led space reductions by cutting collaboration areas 32% amid return-to-office mandates

Hybrid office trends stabilized in 2024 – Most sectors now target 1.5+ employees per desk, with less individual space and more amenity-focused layouts that reflect mature post-pandemic strategies (CBRE)

Financial firms shed collaboration space – Ratio drops 32% in 2024 to 0.39 as firms push in-office mandates and reduce excess square footage (CBRE)

Leasing

Surmount signs 30K sf lease in NYC’s Midtown – Newly merged CRE firm doubles NYC HQ footprint at 1185 Avenue of the Americas with flexible direct deal (CommercialObserver)

Industrial

U.S. importers face early shipping peak as container rates double – Trans-Pacific spot rates top $7,000 per FEU amid pre-tariff rush and June GRIs, with East Coast prices up 60% (FreightWaves)

US-China ocean imports plunged 28.5% YoY in May – 145% China tariffs stalled trade, hitting West Coast ports hardest; revised deal lowers total tariff rate to 55% pending final approval (Reuters)

Market Mix

Hospitality

Live Nation to invest $1B in U.S. venues – Company to build or revamp 18 music sites nationwide, projecting $2.9B in total impact and boosting hospitality demand in secondary markets (Bisnow)

Canadian tourism to U.S. plummets in 2025 – Visitor returns by car fell 38.1% in May amid tariffs and immigration tensions, threatening $2.1B in spending and 140,000 U.S. tourism jobs (CoStar)

Earnings & Real Estate Impact

Oracle's cloud-driven earnings highlight surging AI demand, with data center construction set to accelerate as orders more than double and infrastructure revenue projected to grow over 70% next year

Oracle beat Q4 earnings estimates as cloud infrastructure revenue rose 52% YoY and is projected to grow over 70% next year, with orders expected to more than double as AI demand fuels data center expansion (FT)

Financings

Structured Finance

Crusoe secures $750M from Brookfield – AI data center firm lands credit facility to accelerate U.S. expansion, following $7.1B Lancium project financing with Oracle tenancy (CommercialObserver)

M&A

Company M&A

Private equity and corporate buyers are accelerating retail M&A, with Couche-Tard pursuing a $51B strategic takeover of 7-Eleven’s parent and PE firms circling Papa John’s and Bojangles amid strong consumer demand and consolidation tailwinds

Couche-Tard to divest 2,000 U.S. convenience stores – Circle K parent eyes $51B takeover of 7-Eleven owner Seven & i, aiming to ease antitrust concerns through major U.S. store selloff (Bloomberg)

$1.7B US-listed pizza chain Papa John’s surges on buyout interest – Apollo and Qatari firm Irth Capital reportedly bid to take the pizza chain private at near-market value (Bloomberg)

Fried chicken chain Bojangles explores $1.5B sale – Fast food chain taps bankers amid surging demand and M&A activity in the restaurant sector, tripling its 2019 valuation (WSJ)

Building & Portfolio M&A

Sultan of Brunei eyes $2B deal for NYC’s Pierre Hotel – Southeast Asian monarch in talks to buy luxury Manhattan asset, although co-op board approval poses potential hurdle (TheRealDeal)

Continental Realty Corporation buys CityPlace Doral retail center in Miami, FL for $88M – Firm acquires 235K sf South Florida property from PGIM as its first regional investment, backed by $323M fund (CommercialObserver)

Institutional Fundraising

BH Properties launches Haven Housing platform – LA firm to preserve and renovate aging LIHTC apartments across Western U.S., targeting value-add deals as affordability pressures grow (CoStar)

Sixth Street invests in L+M to boost affordable housing – Deal creates new L+M Cos. structure and supports expansion into NY, TX, CA, and new U.S. markets (Bisnow)

Distress Watch

WeWork profitable one year after bankruptcy – Operator trims 100+ leases and $12B in rent liabilities, now adding U.S. sites with Yardi backing and enterprise focus (Bisnow)

Proptech & Innovation

AppFolio’s new AI tools signal a shift toward fully automated property operations, as managers prioritize efficiency gains and occupancy optimization amid rising cost pressures

AppFolio debuts AI tools to boost property management – New Realm-X Performers automate leasing and maintenance tasks, aiming to improve occupancy and cut admin time by 10 hours weekly (HousingWire)