Key Insights

Consumers are shifting their spending priorities away from discretionary goods like apparel and electronics and toward experiences, leading to changes in retail demand. As traditional retail categories struggle, entertainment-focused retail spaces are seeing more activity. This shift could force landlords and shopping centers to adapt by incorporating more experiential tenants to maintain foot traffic and occupancy levels.

Homebuilder confidence has fallen to its lowest level in seven months as rising material costs and new tariffs add thousands of dollars to construction expenses. While demand for housing remains strong, particularly in the workforce segment, higher costs could slow new development and further strain affordability. Builders may struggle to maintain profit margins while keeping homes at price points that buyers can afford, adding more pressure to an already undersupplied housing market

Manufacturing and industrial real estate are facing growing uncertainty as New York’s manufacturing index plunges and freight volumes remain below last year’s levels despite a recent rebound. Weaker demand and rising input costs are adding pressure to industrial activity, while ongoing trade policy uncertainty clouds the outlook for logistics and warehouse space. Investors and developers in the sector will need to carefully navigate these fluctuations as economic conditions remain volatile.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.80% (-1 bps)
10Y Treasury Yield: 4.30%
FTSE NAREIT Index: 783.34 (+1.56 %)
30-day SOFR Average: 4.34%

Market Pulse

Slowing retail sales and rising loan rejection fears suggest weakening consumer confidence, while declining manufacturing activity and rising input costs could signal broader economic headwinds that may weigh on industrial demand and future growth

Retail sales rose 0.2% in February – A rebound from January’s decline but below expectations, as consumer spending slows amid inflation and economic uncertainty (CNBC) 

New York manufacturing slumps in March – The Empire State Index plunged to -20.0 as new orders fell, employment weakened, and input costs surged at the fastest pace in two years (NYFed)

US business inventories rose 0.3% in January – A rebound from December’s decline as weaker sales boosted wholesale stocks, potentially aiding Q1 GDP growth (Reuters)

Loan rejection fears rise – 8.5% of consumers are avoiding credit applications due to expected denials, the highest level since 2013, as tight lending conditions persist (Bloomberg)

Policy & Industry Shifts

Musk ally Christopher Stanley joins Fannie Mae board – Strengthening Musk’s influence in federal housing policy (Bloomberg)

Residential

Rising material costs and tariffs have pushed homebuilder sentiment to a seven-month low, potentially slowing new construction at a time when demand remains strongest for workforce housing, which has significantly outperformed upscale segments due to affordability constraints

Homebuilder sentiment hits seven-month low – NAHB index fell to 39 in March as tariffs drive up material costs, with builders warning of $9,200 in added costs per home (Bloomberg)

Workforce housing outpaces market – Lower-priced homes appreciated 91% since 2016, outperforming upscale housing as affordability drives demand (RisMedia)

Trump eyes federal land for housing – Plan aims to address 7M home shortage by developing underutilized federal land (Bloomberg)

Fannie Mae’s mortgage blacklist leaves thousands of condos unsellable – Stricter insurance and repair rules limit financing options (WSJ)

Industrial

Freight market remains volatile amid policy uncertainty – February shipments rebounded 10.5% from January but remained 5.5% lower YoY, with trade policy concerns clouding the outlook (FreightWaves)

Market Mix

Consumers are shifting spending away from discretionary goods and home improvement projects toward experiences and smaller-scale purchases, signaling a preference for services over major retail investments, which could impact demand for retail and home-related real estate

Discretionary spending shifts – Apparel (-3.2%) and electronics (-9.2%) sales fell, but entertainment visits rose 8.03%, as consumers prioritized experiences (Colliers)

Home categories diverge – Home furnishings sales rose 1.5%, while home improvement visits fell 7.2%, as buyers delayed big projects (Colliers)

Fitness & dining split – Gym visits fell 5.96%, but at-home fitness sales rose 2.44%, while restaurant visits dropped 7.35% (Colliers)

Big Tech Backs Nuclear Expansion – Amazon, Google, and Meta push to triple nuclear power by 2050 to meet soaring data center demand (Bisnow)

Financings

Hyatt’s $1B Bond Financing – Hyatt Hotels launched a $1B two-part bond sale to help fund its $2.6B acquisition of all-inclusive Carribean resort chain Playa Hotels & Resorts (Bloomberg)

M&A

Brookfield’s steep loss on its NYC office sale underscores the ongoing distress for lower-quality office properties, while KB Home’s office-to-residential conversion highlights the growing trend of repurposing underperforming office assets to meet housing demand

Brookfield takes $100M loss on NYC office – The firm sold a 287K SF Garment District property for $150M, well below its 2018 purchase price of $255M (TheRealDeal)

KB Home pays $58M for office-to-resi in San Ramon, CA – The developer acquired a 276K SF office building in the Bay Area, which it plans to convert into 190 homes (TheRealDeal)

Distress Watch

Forever 21 to close all 350 US stores – The mall staple cited competition from Shein and Temu as reasons for its Chapter 11 filing (CoStar)

RXR lost NYC’s 340 Madison Ave. to foreclosure – Barings acquired the 760K SF tower for $161M after RXR defaulted on a $315M loan (Bisnow)

Federal lease cuts put 200+ buildings at risk – Vacancy concerns rise as the government trims real estate footprint (CoStar)