Hello Brick Brief readers, 

Thank you for your continued support! In today’s news, we’re seeing a new $9B opportunistic real estate fund from Carlyle, multifamily REIT Elme Communities choosing to liquidate, and retail strength concentrated at the top. 

🏢 Carlyle Skips Office in $9B Opportunistic Fund
Carlyle raised $9B for its 10th and largest U.S. opportunistic real estate fund, with capital going toward SFR, multifamily, manufactured housing, self-storage, and industrial. The firm is avoiding office, retail, and hospitality as flight-to-quality dynamics leave most non-trophy assets with little recovery potential and too much capex risk.

🏘️ Elme Liquidates Portfolio in REIT Exit
Elme Communities is selling 19 assets to Cortland for $1.6B and plans to offload the rest within a year, exiting the public REIT space after concluding it lacked scale and investor support. The decision reflects stronger pricing in private markets and the structural challenges facing subscale REITs with limited growth paths.

🛒 Publix-Anchored Retail Draws Investor Demand

Retail property performance remains stable as limited new supply offsets vacancies, but investor interest is clearly flowing to high-performing segments. Simon raised its 2025 outlook on strong leasing and rent growth, while Bain Capital’s $395M acquisition of Publix-anchored centers signals growing demand for grocery-anchored retail in high-growth Sunbelt markets.

30Y Mortgage: 6.57% (-6 bps)

10Y Treasury Yield: 4.20% (-2 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 760.13 (+0.87%) 

30-day SOFR Average: 4.34%

U.S. employment index drops to lowest since October – Conference Board’s ETI fell to 107.55 in July as job growth slowed and more consumers report jobs are hard to get, but layoffs remain low (WSJ)

Elme Communities is selling 19 assets to Cortland Partners for $1.6B and plans to offload its remaining holdings within a year, choosing to exit the public REIT market after concluding it lacked the scale or cost-of-capital advantage to generate long-term value.

• The board cited weak trading volume, limited institutional interest, and higher cost of capital as structural headwinds for a small-cap multifamily REIT
• Elme’s stock had been trading in the ~$13-$15 range, above estimated NAV of ~$12 per share, suggesting the decision was driven by limited upside, not a discount
• The $1.6B Cortland deal covers properties in the Washington DC and Atlanta metros, with shareholders projected to receive $14.50–$14.82 per share from the first tranche
• Elme expects another $2.90–$3.50 per share from selling its 10 remaining assets, including the Watergate 600 office building in DC
• The liquidation follows a formal strategic review and reflects stronger buyer demand in private markets than in the REIT space

Takeaway: Elme’s wind-down shows how tough it is for subscale REITs to compete. With limited growth prospects and little institutional support, the board opted to sell while private market pricing remained strong rather than continue an uphill climb as a public company.

Trump nominates ex-Cushman & Wakefield CEO Ed Forst to lead GSA – Forst would oversee the government’s 360M SF office portfolio, pending Senate confirmation (Bisnow)

Mortgage rates fall to 10-month low at 6.57% – Buyers gain $20K in purchasing power since May as lower rates and high inventory create a more favorable market (Redfin)

A quarter of U.S. homes have gained $250K+ in value since purchase – California, Hawaii, and Massachusetts lead, while a proposed capital gains tax repeal would mostly benefit wealthier coastal homeowners (Redfin)

Office fundamentals showed early signs of stabilization in Q2, with investment sales and absorption rebounding in prime markets even as vacancy hit new highs nationwide

Office income growth is outpacing property gains – U.S. office returns turned positive in Q2 for the first time in over two years, led by markets like Seattle, Chicago, and Houston (CoStar)

U.S. office vacancy hit a new record at 18.4% in Q2 – Deliveries slowed to the lowest in a decade, absorption turned slightly negative, and asking rents held steady as supply pressures ease (Colliers)
Manhattan led the nation with 3.5M SF of Q2 absorption – Leasing activity is rebounding in top markets, while the Northeast was the only region to post a YoY vacancy decline (Colliers)

Office investment sales rose 51% to $18.1B in Q2 – Central business district assets drove gains, with new ownership expected to bring more tenant options as fundamentals stabilize (Colliers)

US prime office costs rose fastest globally in H1 2025 – Miami led with the biggest increases, driving North America’s outperformance (CoStar)

U.S. Bank to vacate over half its space in Seattle, WA’s U.S. Bank Center – The bank will shrink its footprint from 135K to 16.7K SF as part of ongoing real estate downsizing (CoStar)

Paris-based hedge fund Capital Fund Management leases 23K SF at BXP’s NYC office tower – Relocates to 510 Madison Avenue with long-term lease at $160/SF asking rent (CommercialObserver)

Industrial activity remains resilient despite rising vacancies, as tariff-driven manufacturing demand, strong pre-leasing, and investor interest in core logistics markets support rents and long-term fundamentals

Manufacturing activity surged in July – Factories ramped up output and shipments ahead of August 1 tariffs, led by autos, machinery, and metals (Placer.ai)

Warehouse vacancy rises to 7.1% as new supply hits record levels – Despite higher vacancy, well-located logistics-ready space remains scarce and rents climb to $10.12/SF, with pre-leasing activity and investor demand still strong (GlobeSt)

Insight: Record new warehouse supply has pushed vacancy higher, but much of it lacks the location or specifications needed for modern logistics, creating a shortage of usable space in core markets. In response, Prologis raised its 2025 development forecast to as much as $2.75B as tenants increasingly turn to build-to-suit projects to secure space that meets their needs, with CEO Hamid Moghadam calling recent leasing activity the strongest of his career. 

$27.6B in U.S. industrial transactions closes in H1 2025 – Sale prices slip from record highs as vacancies rise to 9%, but long-term demand and rent growth in major hubs persist (GlobeSt)

Retail property performance remains balanced – Historic low supply additions are offsetting vacancies from store closures, keeping the market stable in the second half of 2025 (CoStar)

Big Tech to spend nearly $400B on AI infrastructure in 2025 – Amazon, Microsoft, Google, and Meta ramp up data center investment as Wall Street warms to massive AI-driven capex (Bisnow)

Mall REIT Simon Property Group reported Q2 FFO of $3.05 per share, up from $2.93 a year ago, as strong leasing demand and tight retail supply drove higher occupancy and rents, prompting the REIT to raise its 2025 FFO guidance (Reuters)

Commercial and multifamily borrowing jumps 66% YoY in Q2 2025 – Loan originations climb 48% from Q1 as lending activity accelerates across most property types (IREI)

Canyon Partners commits $250M to buy A&D Mortgage bonds – The deal will help A&D issue up to $5B in non-qualified mortgage securitizations as demand for rental property loans rises (Bloomberg)

Madison Realty Capital lends $57M for NYC condo tower development – The loan will fund land and predevelopment for an 81-unit luxury project at 32 Thompson Street (CommercialObserver)

Durst Organization secures $1.3B CMBS refinancing for 4 Times Square in Manhattan – The 1.8M SF Times Square tower, anchored by TikTok, gets new debt as trophy office assets regain lender confidence (CoStar)

Multifamily REIT Elme Communities to liquidate after $1.6B sale – The Bethesda-based REIT will sell 19 multifamily properties to Cortland and market its remaining assets (Reuters)

Savills acquires relocation firms Hoffman and Compustall Services – The move expands its workplace transition and IT relocation services beyond traditional brokerage (CoStar)

Bain Capital and 11North Partners acquire a $395M portfolio of 10 open-air retail centers in Florida and South Carolina – Most properties are Publix-anchored and mark a major expansion for the JV (IREI)

Insight: Grocery-anchored centers continue to outperform due to steady foot traffic, limited new supply, and the essential nature of their tenants, with Nuveen citing sustainable traffic from market dominance as a key driver. That same resilience explains why grocery-anchored REIT Kimco raised its full-year FFO outlook in Q2 and why Bain Capital partnered with 11North Partners on a $395M acquisition of Publix-anchored centers.

CoreWeave acquires N.J. data center site for $322M – Cloud provider buys 107-acre, 2M SF Northeast Science and Technology Center in Kenilworth from Machine Investment Group and Onyx Equities (IREI)

DRA Advisors acquires Modera Skylar in Miami, FL for $73.4M – Mill Creek Residential and Rockwood Capital sell the 263-unit multifamily property, with JLL providing a $60.6M acquisition loan (CommercialObserver)

Carlyle raises $9B for its 10th and largest U.S. opportunistic real estate fund – The new Carlyle Realty Partners X fund surpasses the $8B raised for its predecessor in 2021 (PERE)

Insight: Carlyle’s opportunistic fund is focused on sectors with strong fundamentals and clear value upside like SFR, multifamily, manufactured housing, self-storage, and industrial. Why are offices not included? In office, the flight to quality has pushed most demand into top-tier assets, leaving the rest of the market behind with elevated vacancies, weak leasing, and little opportunity for a meaningful recovery. Opportunistic strategies rely on clear paths to value creation, but in office, the cheapest assets may lack viable repositioning or exit options without massive renovations, making them unattractive despite extremely low prices.

Schroders writes down 20% stake in A10 Capital – The UK firm marked its investment in the office-focused U.S. lender to zero amid rising CRE loan distress (Bloomberg)

Brooklyn Mirage owner Avant Gardner files for bankruptcy – Renovation delays, cost overruns, and lost permits triggered a liquidity crisis and will likely force asset sales to repay $155M in debt (Bloomberg)

Nearly 90% of CRE firms plan to adopt AI within five years – JLL survey finds most C-suite leaders have an AI strategy, but only one-third of senior managers are prepared for implementation (Bisnow)