The Brick Breakdown

Hello Brick Brief readers, 

Thank you for your continued support! Today we’re seeing signs of growing economic divergence, with resilient consumers, cautious policymakers, a housing market losing steam under high rates, and retailers split between value-driven growth and tariff-fueled cost pressures.

🏦 Fed Watch & Household Sentiment
Households remain resilient despite inflation, with 73% of adults saying they’re doing at least “OK,” but 60% still feel inflation is hurting their finances. With the Fed signaling caution on rate cuts due to tariff-driven inflation risks and a court ruling weakening Trump’s trade authority, policymakers face growing uncertainty heading into the second half of 2025.

🏘️ Housing Market Signals Trouble Ahead
Citi Research warns the housing market may soon flash a recession signal as inflation-adjusted residential investment stalls and building permits fall. While overall investor activity rose 2% in Q1, the gain was driven by single-family and multifamily properties, as condo purchases hit a 10-year low and 60% of buyers remain hesitant amid 7% mortgage rates and macroeconomic volatility.

🛍️ Retailers Navigate Consumer Shifts and Tariff Pressures
Discount chains like Ollie’s and Five Below posted strong Q1 foot traffic growth, reflecting consumer demand for value and rural expansion. In contrast, brands like Nike and Birkenstock are raising prices in response to rising import duties, highlighting how tariff pressures are beginning to filter into everyday retail costs.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.97%
10Y Treasury Yield: 4.50% (+3 bps)
FTSE NAREIT Index: 762.45 (+1.74%)
30-day SOFR Average: 4.31%

Market Pulse

Court rejection of Trump’s tariffs and Fed warnings on inflation highlight growing policy uncertainty, while weakening regional business activity suggests the economy is losing momentum despite steady household sentiment

US trade court strikes down Trump’s tariffs – Judges rule president lacked authority under emergency powers, casting doubt on broader trade agenda and lifting global markets (FT)

Fed survey shows stable household finances despite inflation – 73% of U.S. adults say they're doing at least OK, up from 72% in 2023, though 60% report inflation is still hurting their finances (Reuters)

Fed flags tariff risk to inflation path – May FOMC minutes show officials fear persistent inflation and weaker growth could force difficult tradeoffs, prompting a wait-and-see stance on rate cuts (CNBC) 

Dollar jumps after court blocks Trump tariffs – Greenback rises 0.72% vs yen, 0.63% vs franc, while euro falls 0.42% and pound drops 0.30% as markets bet on tariff reversal despite legal uncertainty (Reuters)

Texas service and retail sectors weaken in May – Service revenue slips, retail sales plunge to worst level since 2020, though price pressures ease and future outlooks improve (DallasFed)

Mid-Atlantic and Southeast manufacturing contracts at slower pace – Richmond Fed’s Fifth District index rose from -13 to -9 in May, showing continued weakness in regional activity, but milder declines in orders and shipments (RichmondFed)

Brick by Brick: Housing Investment Weakens as Rates Remain Elevated

Citi Research warns that the housing market may soon flash a recession signal, as rising mortgage rates and softening demand push residential investment toward contraction.

 • Residential fixed investment reached $1.22 trillion in Q1 2025, up 1% from Q4 and 3% year over year, but inflation-adjusted figures show no real growth
• Citi notes that this stagnation, combined with falling building permits and weakening homebuyer demand, suggests housing may drag on GDP in Q2
• The national median list price declined 1.1% year over year in April, while active listings jumped 8.2%, leading sellers to offer more price cuts and concessions
• Single-family construction permits have declined, while the effective supply of homes is increasing, a troubling sign during what should be the peak selling season
• Mortgage rates hovering near 7% are choking affordability, especially with long-term Treasury yields rising due to concerns over the fiscal deficit and tariff-driven inflation
• While new-home sales jumped in April thanks to heavy builder incentives, total sales for the first four months of the year are still down 1.2% from 2024
• Citi references economist Ed Leamer’s foundational work identifying housing as the best leading recession indicator and urges caution as conditions deteriorate

Takeaway: The housing market is hitting a wall as high rates and rising supply collide with weak demand. With investment stagnating and builders depending on incentives, housing may once again be the sector that signals broader economic contraction if labor market weakness follows

Residential

High mortgage rates and economic uncertainty are fracturing housing demand, with stalled investment, weak buyer confidence, and a shift toward riskier affordable markets signaling mounting pressure on residential growth

Housing flagged as major recession risk – Citi warns of falling permits, rising inventory, and flat real investment, with 7% mortgage rates stalling growth and multifamily values down 12.1% YoY (GlobeSt)

Homebuyer uncertainty hits post-2023 high – 60% unsure if now is a good time to buy as rates near 7% and macro volatility delays spring activity, BofA survey shows (Reuters)

Investor condo purchases hit 10-year low – Overall investor activity rose 2% in Q1, driven by single-family and multifamily gains despite a condo pullback (Redfin)

US refi applications fall to 3-month low – MBA index drops 7.1% as 30-year mortgage rates climb to 6.98%, near the 7% threshold (Bloomberg)

Gen Z drawn to cheap homes, but climate risks loom – Hailstorms and rising insurance costs in affordable Midwest markets threaten long-term ownership stability (Cotality)

Office

Nearly half of U.S. firms plan to add office space – 47% of Americas occupiers expect to expand by 2027 amid return-to-office trends, CBRE finds (CBRE)

Industrial

Five firms control 35.5% of U.S. self-storage market – Public Storage, Extra Space, U-Haul, NSA, and CubeSmart lead a fragmented sector, with smaller operators still owning the majority of inventory (RentCafe)

China–US container rates surge on tariff pause – Spot prices jump as 'fear and uncertainty' drive shippers to pay premiums for guaranteed space (FreightWaves)

Market Mix

CRE prices fall across all sectors in April – RCA index posts first broad-based monthly and annual drop since 2010, with multifamily down 12.1% YoY and overall values falling 1.1% MoM (GlobeSt)

REITs beat Q1 expectations on strong operations, resilient demand – Coastal REITs ramp up development as Sun Belt firms focus on ops and amenities, with AvalonBay, Essex, Equity Resi, Camden, MAA, and UDR all reaffirming 2025 guidance despite macro headwinds (Realpage)

Retail

Value retailers are benefiting from cost-conscious consumers, while rising footwear prices tied to new tariffs suggest inflationary pressures are beginning to filter into everyday goods

Discount stores Ollie’s and Five Below see strong Q1 foot traffic – Visits rose 12.4% and 6.1% YoY, with Ollie’s gaining per-store traffic and Five Below expanding in rural markets (Placer.ai)

Nike hikes sneaker prices up to $10 – Company denies tariff link, but analysts say increases offset Trump’s new China and Vietnam import duties (NYPost)

Birkenstock to raise prices in Q3 due to tariffs – Footwear costs set to increase as import duties pressure margins (X)

Data Center

Utility CenterPoint boosts 10-year capex to $52.5B thanks to data centers – Rising AI demand drives $4B in new Texas projects, with 7 GW of power requests since January (Reuters)

Earnings & Real Estate Impact

​​NVIDIA’s strong data center performance and bullish outlook signal accelerating global demand for AI infrastructure, which reinforces long-term growth prospects for data center real estate and power-intensive development

NVIDIA beat Q1 earnings expectations and reported strong data center performance. The chipmaker expects demand to remain elevated as reasoning AI drives a surge in inference workloads, with global AI factory construction accelerating across cloud, enterprise, and sovereign markets. Looking ahead, NVIDIA anticipates sustained growth in data center infrastructure investment as AI adoption expands across industries and geographies (CNBC)

Financings

Loans

Jamison secures $220M loan for LA Koreatown Opus project – BWE arranged financing from NY Life for the newly completed 428-unit, two-tower complex, now nearly 90% leased (TheRealDeal)

Vista Property secures $173M for Chicago Fulton Market tower – CIBC and PGIM fund 494-unit, 31-story project at 370 N Morgan, with delivery expected by spring 2027 (TheRealDeal)

Bridge lands $87M loan for $139M San Diego, CA multifamily deal – Freddie Mac backs purchase of 320-unit Santa Fe Ranch in Carlsbad from Nuveen (CommercialObserver)

Madison Realty lends $71M for Wilton, CT apartment project – AMS and Avenue Capital will build a 208-unit complex on a former office site, targeting delivery by early 2027 (CommercialObserver)

Woodfield, Flagler secure $81M loan for West Palm, FL project – PNC Bank backs 358-unit mixed-use development with 19K sf of retail, including a preleased grocery store, on city-leased land (TheRealDeal)

M&A

Building & Portfolio M&A

CREI recapitalizes $670M multifamily portfolio with CBRE IM – New JV covers 1,990 Class A units across six metros with 95% occupancy, as CBRE IM takes a 44.5% stake (ConnectCRE)

Swire Properties sells Miami Brickell supertall site to Melo for $211.5M – Melo Group acquired the 2.8-acre Miami parcel after Swire scrapped its 1,000-foot office tower plans due to market headwinds (TheRealDeal)

Lincoln Equities buys NJ multifamily for $122M – Ocean Gate’s 170 units in Long Branch to be converted to condos, with $121.5M in equity and debt arranged by Walker & Dunlop (MultiHousingNews)

Hines, Oaktree sell Walnut Creek, CA office for $111M at $32M loss – Hall Equities acquired the 536K sf Ygnacio Center for about half its 2018 price amid falling office values (TheRealDeal)

SomeraRoad buys NYC’s Hotel Bossert for $100M post-foreclosure – Developer plans residential conversion of the historic Brooklyn property, ending a decade of stalled hotel revival efforts by the Chetrits (TheRealDeal)

Terreno Realty sells Commerce, CA industrial campus for $97M – The 545K sf Garfield Business Center, 99% leased to 12 tenants, was acquired by an undisclosed buyer (TheRealDeal)

Clipper Equity buys Harlem development site from Durst for $50M – The 1800 Park Avenue plot offers 680K buildable sf and marks the property's fourth sale in 20 years (CommercialObserver)

Institutional Fundraising

RE credit investment platform Bravo Property Trust partners with Middle East investor on $400M in US real estate credit – Capital targets bridge, construction, and HUD-focused multifamily and healthcare loans (Bloomberg)

Cinnaire raises $340M for affordable housing across 11 states – Fund 43 will support 33 LIHTC projects totaling 2,455 units, including PSH for opioid recovery and autism-supportive housing (REBusinessOnline)

LACERS sets $300M real estate pacing plan for FY 2026 – Up to $100M will go to core strategies, with $200M earmarked for non-core plays in sectors like data centers, IOS, and build-to-rent (RealAssets)

Distress Watch

Multifamily distress is intensifying nationwide, but New York City stands out as rent-stabilized owners face severe financial strain, with bankruptcies rising and cash flows squeezed by capped rents and surging debt costs

American Dream mall value drops $800M to $2.5B – Lower PILOT revenue puts $800M muni bonds at risk, with reserves dwindling ahead of major balloon payments (Bloomberg)

Pinnacle’s $1B NYC rent-stabilized apartment portfolio enters bankruptcy – Surging rates and rent law caps crippled cash flow, with $564M owed to Flagstar (Bloomberg)

Foreclosed CRE holdings at US banks up 30% YoY – FDIC reports $2.8B in assets with sale gains near 5-year low, as multifamily foreclosures more than triple (CoStar)

$325M in defaulted debt on coliving assets hits market – Newmark marketing Phoenix and Denver loans tied to The X Co. after missed payments to Mack Real Estate (Bisnow)

Proptech & Innovation

Fannie Mae taps Palantir to fight mortgage fraud with AI – New partnership enables fraud detection in seconds, bolstering efforts to modernize operations (CNBC)