The Brick Breakdown

Hello Brick Brief readers, 

Thank you for your continued support and thanks for reading! Today we’re tracking rising rate cut bets amid stagflation concerns, surging AI-driven CapEx and M&A, and continued weakness in housing demand.

📉 Rate cut bets rise, but stagflation looms

Weak economic data is reviving hopes for Fed rate cuts, sending Treasury yields and mortgage rates sharply lower as investors price in looser policy ahead. But inflation risks are resurfacing as tariffs raise input costs and the Congressional Budget Office warns of long-term GDP drag, fueling fears of a stagflationary backdrop that complicates policy decisions.

🧠 AI fuels data center spending explosion

Amazon’s $10B North Carolina campus, GlobalFoundries’ $16B chip and R&D expansion, and the $19B Chart Industries–Flowserve merger mark a surge in capital flowing into data infrastructure. Massive investment in compute power, cooling, and advanced systems is turning key U.S. markets into critical hubs for AI-driven growth.

🏘️ Housing demand weak, but signs of relief emerge

The NAR says that home sales have fallen to a 30-year low and purchase mortgage applications continue to slide as high prices and rates near 7% keep buyers on the sidelines. But easing rents in major metros and builder incentives may offer some relief, with NAR projecting a rebound in the second half of 2025 if mortgage rates continue to decline.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.87% (-9 bps)
10Y Treasury Yield: 4.37% (-8 bps)
FTSE NAREIT Index: 769.19 (+0.16%)
30-day SOFR Average: 4.31%

Market Pulse

Weak jobs and services data are pushing Treasury yields lower and boosting rate cut expectations, but tariff-driven inflation is fueling stagflation concerns as economic momentum weakens

NY Fed: Most firms raised prices in May to offset tariffs -- Survey shows widespread pass-through and confusion as businesses navigate volatile import tax landscape (NYFed)

Fed reports economic activity down in half of districts since January -- Tariff-driven cost pressures and planning uncertainty raise inflation risks, with firms expecting faster price increases (Reuters)

Private sector adds just 37K jobs in May -- ADP posts weakest hiring since March 2023 as momentum slows and Trump calls on Fed to cut rates (CNBC) 

U.S. services sector contracts for first time in 11 months -- ISM PMI falls to 49.9 in May as tariffs raise costs, delay planning, and strain supply chains (Reuters)

Congressional Budget Offices says Trump tariffs will lower U.S. economic output -- Import duties expected to raise inflation by 0.4 points and cut GDP while reducing deficits by $2.8T over a decade (Reuters)

Brick by Brick: Surging AI Demand Sparks CapEx Boom and $19B Industrial Merger

AI infrastructure needs are driving one of the largest investment waves in recent memory, with ripple effects across manufacturing, utilities, and energy systems.

• Chart Industries and Flowserve are merging in a $19 billion all-stock deal, creating a powerhouse in cooling and flow control systems used in advanced computing, energy, and industrial applications. The combined company will generate 42 percent of its revenue from aftermarket services, positioning it to meet long-term infrastructure maintenance needs as AI-driven facilities scale.
• Amazon is investing $10 billion into a new North Carolina data center and AI campus, bringing at least 500 new jobs to rural Richmond County. The project will support major upgrades to local utilities, wastewater systems, and fiber optic infrastructure, cementing North Carolina’s role in next-generation compute infrastructure.
• GlobalFoundries increased its total planned investment to $16 billion, with $1 billion allocated to expand chip factories in New York and Vermont and another $3 billion dedicated to research in chip packaging, silicon photonics, and gallium nitride. These technologies are essential for high-efficiency compute and power systems.

Takeaway: The push to meet AI’s compute and energy demands is triggering an investment supercycle across sectors once considered infrastructure adjacent. In the short term, these moves are reshaping local economies and utilities. Over the medium term, they are redirecting industrial M&A, CapEx, and energy procurement strategies toward assets that can support high-density, continuous power and fluid-intensive systems. AI infrastructure is now a primary driver of real asset transformation

Policy & Industry Shifts

DOJ withdraws objection to MLS PIN settlement – Justice Department allows fourth proposed deal to proceed but warns MLS remains exposed to future antitrust scrutiny (RisMedia)

Residential

Home sales and mortgage demand remain weak despite modest rate relief, while falling rents in major metros reflect growing supply and shifting leverage toward renters

Home sales hit 30-year low, says NAR – Chief Economist Lawrence Yun warns of prolonged market slump but forecasts stronger sales in H2 2025 as mortgage rates ease and builders offer buyer incentives (RisMedia)

Asking rents fall in 28 major metros -- U.S. median rent drops 1% YoY to $1,633 as oversupply gives renters leverage; Austin leads with 8.8% decline (Redfin)

Purchase mortgage applications fall 4.4% to 5-week low – MBA index drops despite slight rate relief, as buyers face high prices and rates near 7% (Bloomberg)

Multifamily

Suburban renter boom reshapes housing trends – 203 U.S. suburbs now majority-renter as space, privacy, and remote work drive multifamily and SFR demand beyond city cores (GlobeSt)

Office

Leasing

Cresilon leases 55K SF of life sciences space in Brooklyn, NY – Biotech firm expands U.S. HQ at Industry City to boost manufacturing and R&D operations (CommercialObserver)

Industrial

Surging tariffs and GLP-1 demand are driving $158B in Big Pharma reshoring while rising steel costs push industrial investors toward existing assets over new development

Big Pharma commits $158B to U.S. drug manufacturing – Reshoring, GLP-1 demand, and Trump’s tariff push drive biomanufacturing site race in markets like Houston, North Carolina, and Columbus (Bisnow)

Trump doubles steel tariffs to 50% – Rising costs and policy uncertainty drive investors away from industrial development toward existing assets (Bisnow)

Leasing

Porter Logistics leases 150K SF of cold storage in West Atlanta, GA – Deal at Logistics Pointe expands firm’s footprint to 412K SF in facility owned by Covington Group (REBusinessOnline)

Market Mix

Trump tariffs drive CRE lending shift to private credit -- Market volatility sidelines banks, opening refi and recap opportunities for nonbank lenders amid $957B in 2025 maturities (CommercialObserver)

Data Centers

​​Rising AI demand is fueling a wave of data center CapEx, with firms like GlobalFoundries and Amazon investing billions to scale chip production, cooling, and cloud infrastructure

GlobalFoundries boosts investment plan to $16B -- Expansion targets AI hardware demand with $1B for U.S. fabs and $3B for chip R&D including cooling, packaging, and photonics for data centers (Reuters)

Amazon to invest $10B in NC data and AI campus -- New Richmond County site to create 500 jobs, boost local infrastructure, and expand cloud capacity across the Southeast (AP)

Retail

Dick’s acquires Foot Locker to broaden reach -- Deal merges suburban and urban shopper bases, boosting appeal to key brands like Nike and adidas (Placer.ai)

Financings

Loans

Chicago metro multifamily project lands $66M loan from Acres Capital -- Murphy Development and Harrison Street advance 59-unit luxury build in Winnetka, IL after years of delays (TheRealDeal)

Refinancings

Bridge Industrial secures $78M industrial refi in South Florida – State Farm backs Miami-Dade warehouse complex near Opa-locka airport (TheRealDeal)

Spear Street Capital secures $72.25M refi for Atlanta office tower -- RBC Capital Markets provides 5-year loan on 81% leased Summit Two (ConnectCRE)

HCW Development refinances Caesars Republic Scottsdale hotel in Scottsdale, AZ with $86M loan – 265-key hospitality asset includes penthouse suites, pools, and 20K SF of event space (ReBusinessOnline)

Greystone provides $59M refi for Chicago-area apartments -- Freddie Mac loan supports Bayshore Properties' workforce housing at Terraces of Elk Grove (CommercialObserver)

Barings provides $51M refi for Charlotte, NC adaptive reuse project -- Third & Urban and TPG Angelo Gordon secure loan for three-building Lower Tuck campus, 64% leased at closing (CommercialObserver)

Structured Finance

Third Coast Bank and EJF Capital complete $150M CRE loan securitization -- Asset-backed notes issued on construction and land development loans to reduce risk-weighted exposure (ConnectCRE)

M&A

Company M&A

Chart Industries and Flowserve to merge in $19B all-stock deal -- Combined firm aims to capitalize on rising demand for advanced cooling and fluid systems driven by AI and data center growth (Reuters)

Senators question Rocket’s $1.75B Redfin deal -- Lawmakers cite risk to homebuyers as Rocket moves to combine mortgage, servicing, and brokerage under one platform (Reuters)

Building & Portfolio M&A

PG&E acquires 300 Lakeside Dr. office asset in Oakland, CA for $900M – Utility relocates HQ from San Francisco, citing long-term cost savings as price nears $1,000 per SF, well above regional comps (CoStar)

Brookfield sells LA tower to Uncommon Developers for $210M at 42% discount from 2005 price – 601 S. Figueroa changes hands as downtown availability hits 37.2% and distress weighs on values (Bloomberg)

Barings buys Playa Vista, CA office campus for $150.7M -- Clarion Partners sells 307K SF i|o property in one of LA’s priciest 2025 office trades, with 90% occupancy and major tech tenants (CommercialObserver)

Redwood Dev Co acquires Lennar townhomes in South Florida for $80M – Buyer purchases 223 units from the homebuilder in Florida City and Homestead (TheRealDeal)

Alaska Permanent Fund to sell major office and retail assets – $81B fund plans exit from 299 Park Ave (NYC) and Tysons Corner Center (DC metro) to pivot toward multifamily and industrial (Bisnow)

Institutional Fundraising

Dallas investment firm Forest Way Capital launches with $200M -- Bank OZK alum Dan Thomas to target Sun Belt mixed-use, notes, and preferred equity (TheRealDeal)

Distress Watch

Distressed South Florida multifamily draws $230M bid from Grant Cardone -- Cardone Real Estate targets 366-unit Boca Raton asset owned by Penn-Florida Companies ahead of bankruptcy auction (TheRealDeal)

CP Group and The Ardent Companies acquire 2.2M SF Atlanta, GA office portfolio – Distressed sale of 14-building Piedmont Center closes for $200M at foreclosure auction, down from prior $657M valuation (CoStar)