The Brick Breakdown

Hello Brick Brief readers, 

Thank you for your continued support! Today’s highlights: US–China tariffs drop to 30% and 10%, CRE capital markets rebound in Q1, and retail leasing faces renewed pressure.

📉 Tariff Relief Eases Tensions, But Uncertainty Persists

The U.S.–China tariff truce cuts duties from 145% to 30% on Chinese goods and from 125% to 10% on U.S. goods, prompting a wave of cautious optimism and expedited shipments to refill business inventories. However, Simon Property Group warned in its Q1 earnings call that even with lower rates, tariffs continue to pressure retail tenants by disrupting inventory flows and dampening leasing activity.

🏦 CRE Capital Markets Regain Momentum
CRE debt originations rose 42% and equity sales climbed 18% in Q1 2025, driven by tight spreads, strong bank activity, and investor interest in sub-$100M deals. Multifamily led the rebound, while office remained mixed, with institutional buyers selectively targeting high-quality assets.

🛍️ Retail Market Faces Diverging Forces
Q1 retail leasing hit post-2020 lows amid bankruptcies, store closures, and tariff-driven cost pressures that squeezed margins. Still, brick-and-mortar remains dominant at 76% of U.S. retail sales, and competition for well-located space is intensifying as expanding brands seek omnichannel-ready locations

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.92% (+3 bps)
10Y Treasury Yield: 4.45% (+5 bps)
FTSE NAREIT Index: 769.90 (+0.75%)
30-day SOFR Average: 4.33%

Market Pulse

The sharp but temporary tariff reductions are fueling a rush to import goods, but lingering uncertainty over future hikes continues to disrupt long-term planning and supply chain stability

U.S. to cut tariffs on Chinese goods from 145% to 30%, China drops duties from 125% to 10% – 90-day truce begins as Trump says China will remove non-tariff barriers, but future hikes remain possible (Bloomberg)

CEOs rush shipments amid 90-day U.S.–China tariff truce – Tariffs drop to 30% from 145%, prompting businesses to expedite imports, but uncertainty and long-term supply shifts persist (WSJ)

Brick by Brick: TSG Buys EoS Fitness in $1.5B Expansion Play

 TSG Consumer Partners will acquire budget gym chain EoS Fitness for $1.5B, including debt, and plans to scale it into a national anchor for retail centers and wellness-focused real estate.

• EoS operates over 175 large-format gyms across California, Arizona, Texas, and Florida, and has added 500K members over the past two years, bringing its total to 1.5M
• The company often takes over former big-box retail spaces, helping landlords fill anchor vacancies with high-traffic, service-based tenants
• Memberships start at $9.99 per month and include amenities such as cold plunges, saunas, and rooms designed for social media content creation
• TSG plans to expand the brand to more than 250 locations by 2030 and pursue acquisitions to accelerate growth
• CEO Rich Drengberg will remain in his role and retain an ownership stake
• TSG, which manages $14B in assets, brings experience from scaling Planet Fitness and CorePower Yoga, and will focus on improving margins, brand value, and site selection
• Recent private equity activity in the sector includes deals involving Barry’s, Crunch, and Solidcore

Takeaway: Private equity firms like TSG acquire growth-stage consumer platforms to expand footprint, improve operations, and exit at a higher multiple. EoS offers the scale, brand potential, and recurring revenue to support that model, and its real estate presence in high-traffic retail centers gives TSG a physical growth engine to execute against.

Policy & Industry Shifts

House bill would extend Opportunity Zones to 2033 – Adds rural focus, expands eligibility, but 2027 start date sparks investor uncertainty (Bisnow)

Residential

Rising rents and aging housing stock are straining affordability, but strong demand in select downtown markets highlights a continued shift toward urban living despite high costs and limited new construction

Renters need $100K+ to afford rent in twice as many markets as 2020 – Median income barely keeps pace as typical U.S. rent hits $2,024, with affordability stretched in eight major metros (Zillow)

Typical U.S. home bought in 2024 was 36 years old – Aging inventory and affordability pressures are pushing buyers toward older homes, with Buffalo homes averaging 69 years (Redfin)

Downtown apartment markets thrive despite construction slowdown – Since 2020, D.C., Chicago, and Denver lead in new downtown units as adaptive reuse declines and developers weigh costs (GlobeSt)

Industrial

Drugmaker Genentech to build $700M facility in Holly Springs, NC – 700K SF site to create 400+ manufacturing jobs and support next-gen obesity drugs in growing biopharma hub (ConnectCRE)

Market Mix

Capital Markets

CRE capital markets rebounded in Q1 as debt and equity activity surged, with investors targeting smaller deals and multifamily assets while selectively reentering the office sector ahead of looming maturities

CRE debt originations up 42% YoY in Q1 2025 – Lending gains across all sectors as market braces for $2T in maturities, with $582B potentially troubled (Newmark)

CRE equity sales rise 18% YoY in Q1 – Liquidity strongest in sub-$100M deals; multifamily up 42% while office sales fall 16%, despite 49% boost in institutional office buys (Newmark)

Retail

Retail leasing slowed in Q1 amid tariffs and bankruptcies, but brick-and-mortar demand remains strong as brands compete for limited quality space and value-driven concepts outperform in a cost-sensitive market

Retail property rebound stalls in Q1 2025 – Store closures, bankruptcies, and tariff uncertainty drive weakest leasing quarter since 2020 as retailers delay new leases (WSJ)

Physical retail remains dominant – Brick-and-mortar stores account for 76% of U.S. retail sales, with rising demand for omnichannel fulfillment and shrinking supply driving competition for space (Colliers)

Tariffs pressure margins and prices – Retailers face rising costs and compressed margins from new tariffs, prompting price hikes, leaner product ranges, and increased consumer price sensitivity (Colliers)

Retail expansion persists despite closures – Store closures continue, but both domestic and international brands are aggressively expanding, with leasing competition at a 15-year high due to limited quality space (Colliers)

Taco Bell, Wingstop outperform in Q1 2025 – As McDonald's, Starbucks, and Chipotle saw foot traffic drop, value deals and bold menu innovation helped select QSRs grow amid economic headwinds (Placer.ai)

Bay Area retail holds steady in Q1 2025 – Availability remains low at 5.7%, asking rents rise 2% to $33.18/SF, but net absorption turns negative at -102K SF following two strong quarters (CBRE)

Earnings & Real Estate Impact

Simon Property Group delivered solid Q1 results but warned that persistent tariffs may strain inventory and challenge smaller tenants, despite stable leasing and overall performance

Mall landlord Simon Property Group beat Q1 FFO estimates and reaffirmed its full-year 2025 guidance. Although management described one retailer’s exit from four outlet deals as an isolated case, they cautioned that ongoing tariffs could disrupt inventory flows and increase pressure on small tenants (CommercialObserver)

Financings

Loans

BMC Capital arranges $67.6M financing for new Austin, TX multifamily – Deal includes $53.5M senior bridge loan and $14.1M pref equity for 300-unit property built in 2024 (REBusinessOnline)

Tishman Speyer secures $67.2M loan for Nashville, TN multifamily buy – Corebridge finances $112M acquisition of 358-unit property near Vanderbilt from entity tied to Flow (CommercialObserver)

Refinancings

Northmarq secures $52M Freddie Mac loan for Overland Park, KS multifamily – Price Brothers refinances 476-unit Stonebriar Woods in Overland Park with agency debt (REBusinessOnline)

M&A

Company M&A

TSG’s $1.5B acquisition of EoS Fitness signals a bet on scaling high-growth fitness platforms, with plans to expand nationally and position the brand for a future exit amid continued M&A momentum in the wellness sector 

TSG to acquire EoS Fitness for $1.5B – Budget gym chain with 175+ locations and $9.99 memberships changes hands as fitness M&A momentum continues (WSJ)

Building & Portfolio M&A

Essex Property Trust buys two Campbell, CA multifamily assets for $241M – REIT acquires 252-unit Parc at Pruneyard and 168-unit Revere Campbell amid continued Bay Area expansion (TheRealDeal)

Manulife US REIT to sell Atlanta office tower for $133.8M – The 28-story Class A building, Peachtree, will be sold to an unrelated buyer as part of efforts to meet upcoming debt obligations (IREI)

Parallel Capital buys San Diego, CA industrial park for $67M – Firm acquires 234K SF Rose Canyon Business Park, plans $5M in upgrades and office-to-industrial conversions (CommercialObserver)

Catholic order lists 6-acre San Francisco site for $59M – Little Sisters of the Poor puts Inner Richmond nursing home on market amid upzoning push, with potential for 350 housing units (TheRealDeal)

Distress Watch

RXR secures 3-year extension on $1B CMBS loan for Midtown Manhattan Office tower– Deal includes $300M renovation plan as Midtown Manhattan office leasing rebounds sharply (CommercialObserver)

$660M loan on federal-leased portfolio sent to special servicing – NGP faces imminent default on 41-property, 2.6M SF CMBS deal ahead of August maturity amid GSA downsizing (CommercialObserver)