Hello Brick Brief readers, 

Thank you for your continued support! Today we’re seeing Fed rhetoric point to another rate cut, a $7.1B lumber REIT merger, and AI search redefining real estate leads traffic.

🏦 Rate Cuts and the AI Hiring Pause
The Fed is likely planning another rate cut this month as officials look to ease policy and wind down quantitative tightening. But the real question is whether current labor softness signals economic weakness or a pause as companies reevaluate hiring needs amid expected productivity gains from AI.

🌲 Scale and Integration Reinforce Lumber REITs
Rayonier’s $7.1B merger with PotlatchDeltic creates one of North America’s largest lumber REITs at a time of tariff-driven lumber price volatility. The deal unites vast timber holdings and downstream manufacturing, giving the combined company cost control, pricing leverage, and the vertical integration needed to weather lumber market swings and grab market share.

🏡 AI Search Redefines Real Estate Traffic
In light of the new ChatGPT-Zillow partnership that funnels homebuyer traffic directly to Zillow listings, CoStar launched its AI-powered Smart Search for Homes.com. The product acts as a defensive measure to preserve visibility and user engagement, but it may struggle to compete as ChatGPT’s integration increasingly channels discovery and buyer leads toward Zillow.

30Y Mortgage: 6.31% (-1%) 

10Y Treasury Yield: 4.02% (-5 bps) 

WSJ Prime Rate: 7.25%

FTSE NAREIT Index: 762.70 (+0.99%) 

30-day SOFR Average: 4.20%

Fed Chair Powell signals another rate cut ahead – Says the Fed remains on track to ease later this month as officials weigh ending quantitative tightening in the coming months (WSJ)

Trump seeks to ease market fears while maintaining pressure on China – The president publicly pushes de-escalation to calm investors as Wall Street watches his delicate trade balancing act (WSJ)

U.S. small business sentiment slips 2 points to 98.8 in September – Tariffs and supply chain issues drive rising costs and inflation fears, with 31% of owners planning price hikes as policy uncertainty grows amid the government shutdown (Reuters)

Fed’s Collins signals support for further rate cuts – The Boston Fed president said moderating inflation and rising job market risks justify additional easing this year, keeping policy “mildly restrictive” as tariff effects filter through the economy (Reuters)

Fed’s Bowman expects two more rate cuts in 2025 – The governor said easing will likely continue at the final two meetings of the year as labor market softness outweighs inflation risks tied to new tariff (Reuters)

Insight: Today’s comments increase the odds of another rate cut, but the deeper question is whether labor softness reflects a cyclical slowdown or a pause as firms reassess hiring in light of expected worker productivity gains from AI and AI agents. (I think it’s the latter)

Rayonier agreed to acquire PotlatchDeltic in an $7.1B all-stock deal to form one of North America’s largest lumber REITs with 4.2 million acres across 11 states. The merger combines Rayonier’s extensive timber base with PotlatchDeltic’s 1.8 million-acre portfolio, six lumber mills, and a plywood facility to expand production, lower costs, and strengthen pricing power as lumber markets swing.

🧱 Lumber Finds Its Floor
Last month, we discussed lumber’s 24% slide since early August and what it might signal for housing and construction. I said the move looked like price normalization (after prices surged in reaction to Trump’s lumber tariffs) rather than a downturn, and prices have since rebounded about 6% over the past 30 days. Domestic producers with scale can capture market share as importers retreat. They can secure stronger supply deals with builders as demand steadies.

🧱 Scale Creates Strength Through Volatility
Both REITs have weathered sharp swings in lumber and housing cycles. The combined platform lowers per-unit costs, broadens regional reach, and improves leverage with distributors and builders. Scale allows Rayonier to manage production dynamically, channeling output toward higher-margin regions and maintaining stability as lumber futures continue to fluctuate.

🧱 Vertical Integration Anchors Profitability
PotlatchDeltic’s manufacturing capacity adds critical downstream exposure to Rayonier’s timber operations. The combined company now controls its supply chain from forest to finished product, trimming outsourcing costs, boosting mill utilization, and allowing shifts between log and processed production to protect margins when markets move.

Takeaway: This $7.1 billion lumber REIT merger caps a volatile year for wood markets shaped by Trump’s 10% softwood tariff and erratic pricing. By combining land, mills, and manufacturing, Rayonier builds a vertically integrated platform with scale and resilience, which positions it to manage volatility, capture pricing power, and gain market share across the timber industry.

HUD lays off all federal building inspectors – The move leaves over 5M affordable units without oversight just weeks after a Bronx public housing collapse, deepening fears over safety and accountability (Bloomberg)

Los Angeles faces dual rollback efforts on its ‘mansion tax’ – Mayor Karen Bass seeks wildfire exemptions while taxpayer groups push a statewide cap, as ULA revenues lag projections and deal activity falls up to 50% (Bloomberg)

Core open-end real estate fund benchmark NFI-ODCE Index posts 0.52% Q3 return – Income held steady but valuations weakened, reflecting ongoing softness in property prices (IREI)

Easing financial pressures set stage for CRE rebound – Marcus & Millichap report signals stabilizing liquidity and rising transaction volumes after years of constrained investment activity (IREI)

U.S. rents fell 2.1% YoY in September 2025 – Median asking rent across the 50 largest metros dropped to $1,703, marking the 26th straight annual decline (Realtor.com)

Government shutdown threatens U.S. home sales – Flood insurance suspensions could delay up to 126K closings and $55B in transactions, with heavy exposure in coastal states like Florida, Maryland, and Virginia (Reuters)

Rental affordability improved YoY – Typical households spent 23.4% of income on rent, down from 24.9% last year, with Miami least affordable and Austin most affordable (Realtor.com)

Homeowners stay put amid high rates, with 30% tapping home equity – A TD Bank survey found 75% plan to remain in place as most hold sub-6% mortgages, while many use HELOCs to pay debt or fund renovations (Homes.com)

U.S. multifamily rents fall 0.3% MoM in September to $1,712 – CoStar reports the sharpest monthly drop in over 15 years as annual growth stalls at 0.9% with Midwest and Northeast leading gains (Apartments.com)

Insight: This data from CoStar aligns with recent RealPage findings showing a 0.3% rent decline in Q3 2025 and a forecast for rent growth below 2% through Q3 2026. RealPage and CoStar (Apartments.com) both point to a cooling rental market but capture different dynamics: RealPage tracks effective rents that include concessions and reflect real income pressure, while CoStar measures asking rents that tend to lag. Together, they both reveal a market where landlords are offering deeper discounts as elevated supply meets softer demand.

San Francisco, CA housing market stays red-hot amid AI boom – Home prices near $1.3M and a 42-day median listing time reflect tight supply as high-earning AI workers drive luxury demand (TheRealDeal)

Manhattan office leasing rises 2% QoQ in Q3 to 9.42M SF – Availability drops to 14.6% as demand hits its strongest year-to-date level since 2002 and rents climb to a post-2023 high of $74.89/SF (Colliers)

Lewis Brisbois signs 70K-SF lease at 140 Broadway in New York, NY – Union Investment’s 51-story FiDi tower added the law firm across three floors following recent renovations that introduced a new 10K-SF amenity lounge (CommercialObserver)

Stellantis plans $13B U.S. manufacturing push – Automaker will add 5,000 jobs and launch five new vehicles as it reopens its Belvidere, IL plant and expands Midwest production (WSJ)

Global trade proves resilient despite tariffs – DHL and NYU Stern’s 2025 Global Connectedness Tracker shows no shift toward deglobalization as firms adapt supply chains and sustain cross-border flows (FreightWaves)

Levi’s plans to potentially double its 458-store U.S. footprint – The retailer is expanding Beyond Yoga locations and enhancing in-store experiences to strengthen its direct-to-consumer presence (Bisnow)

1.3M-SF data center planned near Philadelphia, PA faces resident pushback – Locals oppose the Pennhurst State Hospital redevelopment over water, power, and environmental impacts, prompting officials to draft stricter zoning limits (Bisnow)

Affinius Capital provides $204M refinancing for multifamily property in Sarasota, FL – Belpointe secured the loan for the 424-unit Aster & Links complex completed in 2024 featuring 50K SF of retail anchored by Sprouts Farmers Market (CommercialObserver)

Walker & Dunlop provides $146M refinancing for multifamily property in Yorba Linda, CA – Interstate Equities secured the Freddie Mac-backed, five-year fixed-rate loan with preferred equity for the 400-unit Bryant at Yorba Linda complex (CommercialObserver)

Värde Partners provides $125M refinancing for industrial property in Brooklyn, NY – Acumen Capital Partners secured the floating-rate loan for the former Pfizer headquarters at 630 Flushing Avenue repurposed as flex industrial space (CommercialObserver)

Mesa West Capital provides $66M refinancing for multifamily property in Orlando, FL – Onicx Group secured the floating-rate loan for the 264-unit Nova at East Park Village complex completed in 2025 (CommercialObserver)

Citigroup provides $50M refinancing for hotel in San Jose, CA – Valencia Hotel Group secured the loan for the 216-room Hotel Valencia on Santana Row ranked among the city’s top hotels (CommercialObserver)

Lumber giant Rayonier acquires peer PotlatchDeltic in $7.1B all-stock deal – The merger creates a 4.2M-acre timber company across 11 states positioned to benefit from new U.S. wood tariffs and recovering housing demand (Bloomberg)

Apollo renews offer to take Papa John’s private with $3.4B bid – The deal values the $1.6B pizza chain at a premium amid activist pressure and accelerating private equity consolidation in the restaurant sector (Reuters)

Housing Authority of the City of Los Angeles acquires 154-unit Emerald Apartments in Los Angeles, CA for $50M – Jade Enterprises sold the 2023-built South Park complex for about $323K per unit, with HACLA planning to convert it to affordable housing (CommercialObserver)

Derby Lane Partners raises $1.8B for real estate credit debut – Backed by Fortress, Koch, and BTG Pactual, the firm led by ex-BDT & MSD exec Adam Piekarski targets $5B in lending power with a focus on office-to-residential conversions (Bloomberg)

RXR’s News Corp building in New York, NY sees 42% valuation drop to $1.19B – 1211 Sixth Ave was reappraised after its loan was restructured under a $1.45B recap (TheRealDeal)

Homes.com launches AI-powered Smart Search tool – The new feature lets users type or speak natural language queries like “ranch-style house with a pool in Austin,” simplifying home discovery through intuitive, speech-enabled search (HousingWire)

Insight: A growing share of users now use ChatGPT as their primary search engine instead of Google. With Zillow’s new partnership and integration, ChatGPT now funnels homebuyer traffic straight to Zillow’s listings, giving the platform a major edge in capturing early-stage leads.

The new Smart Search adds convenience for users on Homes.com’s native platform, but it doesn’t address the core lead generation challenge. As AI-driven search grows, the ChatGPT-to-Zillow funnel will continue to direct more buyer traffic straight to Zillow.

$10.8B startup Bilt expands rent rewards model to mortgages – Partners with United Wholesale Mortgage to let homeowners earn points for on-time payments starting early next year (Bloomberg)

Floify launches AI data extraction tool to speed mortgage pre-approvals – The new Dynamic AI feature moves document uploads and verification to the start of the process to cut manual entry and streamline workflows (HousingWire)