Hello Brick Brief readers, 

Thank you for your continued support! Today we’re seeing home affordability gains fading as mortgage rates rebound, Burger King’s value strategy paying off in a cautious spending environment, and tenants gravitating toward prime offices as the market shows early signs of stabilization.

🏡 Affordability Gains Fade Fast
Falling mortgage rates temporarily improved affordability as the median monthly payment dropped 1.4% YoY to $2,530 when rates hit 6.17%. After the Fed’s October rate cut announcement, rates have subsequently rose 20 bps to 6.33% as markets backed away from aggressive easing expectations, erasing part of those affordability gains.

🍔 Burger King’s Value Strategy Pays Off
Burger King is winning in a cautious consumer environment by focusing on quality and consistency instead of discounts. Its U.S. same-store sales rose 3.1% in Q3 as upgrades and core menu marketing strengthened loyalty while Chipotle’s shrinking portions and higher prices weakened its value perception.

🏢 Prime Offices Drive Market Stabilization
Tenants continue to favor newer, higher-quality buildings as prime office vacancy tightened to 14.2%. Overall office vacancy fell to 18.8% in Q3 as demand finally outpaced supply for the first time since 2020, signaling early stabilization in the office sector.

30Y Mortgage: 6.33% (+6 bps)

10Y Treasury Yield: 4.10% (+3 bps) 

WSJ Prime Rate: 7.25%

FTSE NAREIT Index: 757.41 (+0.56%) 

30-day SOFR Average: 4.21%

Trump cuts China tariffs to 47% from 57% – The agreement with Xi trades lower tariffs for Beijing’s fentanyl crackdown and a one-year pause on rare earth export curbs, easing trade tensions temporarily (Reuters)

Jobless claims estimated to fall from 232K to 219K – Economists say the decline suggests a stable labor market and lowers chances of another Fed rate cut in December (Reuters)

Fed split clouds December rate cut outlook – Powell warned investors against assuming further easing as divisions grow between officials citing resilient spending and those flagging labor-market weakness (WSJ)

Median housing payment drops 1.4% YoY to $2,530 – The biggest decline in nearly a year as mortgage rates fell to 6.19%, prompting more listings and a slight uptick in buyer demand (Redfin)

Mortgage rates fall to 6.17% – The 30-year fixed rate hit its lowest level in over a year after the Fed’s latest 25 bps cut, offering modest relief for buyers and refinancers (Realtor.com)

Insight: Mortgage rates hit their lowest point just before the Fed’s October rate cut press conference. They have subsequently climbed 20 bps to 6.33% as markets backed away from aggressive rate-cut bets.

Zillow likely saw this recent rebound coming, as they have continued to maintain their forecast that mortgage rates will end 2025 in the mid-6% range.

Luxury home prices rose 4.8% YoY in September – Wealthy cash buyers kept demand strong as luxury outpaced non-luxury gains and inventory hit a four-year high (Redfin)

U.S. multifamily absorption collapses in Q3 – Only 11 markets saw demand outpace new supply, down from 68 last quarter, as completions surged and leasing slowed (GlobeSt)

Cushman & Wakefield sees sustained multifamily strength into Q4 – Leasing activity, tours, and applications across its 167K-unit portfolio remain elevated year over year, signaling resilient renter demand (CushmanWakefield)

Insight: What’s going on here? I believe that the GlobeSt report reflects CBRE’s national data showing actual leasing has slowed as new supply outpaces demand, while Cushman’s report highlights stronger early leasing signals within its own higher-quality managed portfolio.

San Francisco multifamily rents climb 7.5% YoY – Tight 97% occupancy and limited new supply fueled the nation’s strongest rent growth as AI-driven tech demand revived leasing (RealPage)

U.S. office vacancy falls to 18.8% – The rate declined 20 bps in Q3, marking the first annual drop since 2020 as demand outpaced supply (CBRE)

Prime office vacancy drops to 14.2% – Tenants continue favoring high-quality buildings, widening the gap with non-prime space at 19.1% (CBRE)

Leasing hits 59.8M SF in Q3 – Financial and tech firms drove activity above the five-year average, while new construction fell to decade lows (CBRE)

Comstock builds 10M SF minicity near DC – The developer’s $10B Reston Station project is transforming a 90-acre site into a mixed-use hub around a Metro station to attract tenants seeking modern, amenity-rich office space (CoStar)

Insight: As hybrid work becomes the norm, nobody wants to commute two hours to and from their office every day. Developers are now building mixed-use hubs that let people live, work, and socialize in the same connected environment.

xAI leases 105K-SF office at Page Mill Center in Palo Alto, CA from Hudson Pacific Properties – Elon Musk’s AI firm expanded near its headquarters as hiring surges and AI-driven demand lifts Silicon Valley office leasing (TheRealDeal)

Jencap Group renews and expands 20K-SF office lease at 1350 Broadway in New York, NY with Empire State Realty Trust – The insurance firm extended its Herald Square tenancy through 2034 at an asking rent of $61 per SF (CommercialObserver)

Trans-Pacific ocean rates jump 15–20% – Freightos reports Asia–U.S. West Coast prices at $2,027 per FEU as carriers manage capacity and trade optimism grows ahead of U.S.–China talks (FreightWaves)

Luxury and off-price retailers to widen divide this holiday season – Affluent consumers are expected to drive late-season luxury sales while value-focused shoppers flock to off-price stores, deepening retail bifurcation amid economic strain (Placer.ai)

Restaurant loan performance remains stable – Trepp reports minimal delinquencies despite a modest shift toward lower credit ratings, signaling lenders’ caution but continued borrower resilience (Trepp)

Related to build $7B+ AI data center in Michigan – The 1GW Saline Township campus anchors Oracle and OpenAI’s $300B Stargate project, Michigan’s largest-ever investment (WSJ)

Equinix and Digital Realty double down on core data center hubs – The REITs are expanding nearly 8GW of capacity in major metros like Northern Virginia, Dallas, and Chicago to meet AI inference demand (Bisnow)

Restaurant Brands beats Q3 earnings estimates as resilient traffic at Burger King and Tim Hortons lifted same-store sales 4% YoY. Burger King’s U.S. same-store sales rose 3.1% as restaurant renovations and marketing around core menu items like the Whopper continued to strengthen its turnaround. CEO Josh Kobza said the company is “zigging while others are zagging,” choosing to invest in quality and brand strength instead of chasing discounts as consumers pull back on spending (Reuters & CNBC)

Insight: Middle and lower income customers have become much more value focused, which makes them extremely sensitive to shrinking portions and rising prices. Shrinkflation erodes trust in a cautious spending environment because nobody likes feeling taken advantage of. While Chipotle’s shrinking portions have hurt its value perception, Burger King is doing the opposite by investing in quality, upgrading restaurants, and sticking to its core menu instead of joining value wars. Its Q3 same-store sales growth shows that it’s paying off. 

Meta to raise $30B in record bond sale – The company’s largest debt offering ever will fund soaring AI infrastructure costs as capex climbs to $70–72B and expenses rise 32% YoY (Reuters)

Core Scientific shareholders reject $9B CoreWeave deal – Investors voted down the all-stock acquisition amid valuation concerns and AI market froth, ending CoreWeave’s second failed bid for the crypto miner (Reuters)

Carmel Partners acquires Stella apartments in Los Angeles, CA for $141M from Nuveen – The 244-unit Marina del Rey complex sold at a 16% discount through the enclave’s largest multifamily trade in a decade (CommercialObserver)

University of Miami acquires Dominion Tower in Miami, FL for $92M – The 20-story, 123-unit multifamily property near Jackson Memorial Hospital was purchased in cash as the university expands its real estate holdings (CommercialObserver)

KB Home buys 115-acre site for master-planned community in Queen Creek, AZ for $52M from Henry Bosma – The Olea Groves project will include 500 homes with construction starting in spring 2026 (TheRealDeal)

Apollo’s Bridge Investment Group raises $2.15B for residential debt fund – Bridge Debt Strategies Fund V will target multifamily loans, Freddie Mac B-pieces, and floating-rate assets (GlobeSt)

FBI raids California real estate firm tied to bad bank loans – Agents searched Continuum Analytics, linked to $160M in defaults at Zions and Western Alliance, amid a criminal probe into alleged fraud (Reuters)

BGO hands back $173M Midtown East office tower to New York Life Real Estate Investors – The 503K-SF property was surrendered via deed-in-lieu, nine years after BGO’s $360M purchase (Commercial Observer)