Hello Brick Brief readers, 

Thank you for your continued support! Today we’re seeing a weakening labor market boost rate cut odds, AI-driven growth turn energy into a strategic asset, and Zillow highlight how housing supply gains hinge on policy while affordability stays constrained.

💸 Weak Jobs Strengthen Cut Bets
Private payrolls unexpectedly fell by 32K in September as large firms slowed hiring. The drop deepened concerns about labor demand and strengthened market expectations for further Fed rate cuts.

⚡ AI Boom Turns Energy Strategic
Brookfield pegs AI’s buildout at $7T, aligning infrastructure, renewables, and real estate as private capital floods into the sector. Utilities and energy emerge as strategic assets as BlackRock’s GIP pursues AES in a $38B deal, while pre-revenue data center energy developer Fermi secured a $15B valuation in its IPO.

🏡 Housing Faces Policy and Rate Crossroads
Goldman Sachs projects that easing land-use rules could unlock 2.5M homes over the next decade and reduce the national shortfall. In the short term however, Zillow expects mortgage rates to hold in the mid-6% range, keeping near-term affordability constrained.

30Y Mortgage: 6.37% 

10Y Treasury Yield: 4.10% (-5 bps) 

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 777.86 (+0.12%) 

30-day SOFR Average: 4.30%

US private payrolls unexpectedly fell 32K in September – ADP report signals weakening labor market as large firms slow hiring and Fed cut expectations strengthen amid data gaps from government shutdown (Reuters)

Insight: A surprise drop in private payrolls drastically strengthens expectations for further Fed rate cuts as labor market weakness deepens.

U.S. government enters shutdown – Funding lapsed Oct. 1 after failed budget talks, with the Trump administration signaling plans to use the shutdown to shrink federal agencies and cut jobs (WSJ)

AI is driving one of the most aggressive investment cycles in modern history. AI is driving one of the most aggressive investment cycles in modern history. Hyperscalers are committing unprecedented sums because the bigger risk lies in underinvesting and falling behind in the AI race. The firms that scale fastest gain the advantage in training larger models, attracting developers, and locking in customers, while slower rivals risk permanent loss of ground. That fear is fueling an infrastructure race where speed and scale outweigh short-term profits and where real estate and energy investment now move hand in hand.

🧱 Brookfield estimates global AI infrastructure will demand $7T of capital. In the U.S., hyperscalers are powering a $400B data center buildout in 2025 as they scramble for capacity. The rush to add servers is colliding with strained power grids, pushing utilities toward consolidation and attracting capital into energy markets. Just today, FT reported that BlackRock’s Global Infrastructure Partners is pursuing a $40B takeover of US utility AES to secure long-term supply as electricity demand climbs.

🧱 Developers and investors treat power as inseparable from computing. Builders chase land near grid hubs in Virginia, Texas, and the Midwest, while capital pours into utilities, renewables, and nuclear projects that can feed massive campuses. The contest now centers on controlling both the servers and the energy that sustains them.

🧱 Investor enthusiasm has spilled into public markets. Fermi, a Texas-based REIT founded less than a year ago, went public today at a $15B valuation despite having no revenue. Its flagship Project Matador aims to deliver more than a gigawatt by 2026 through a mix of nuclear and solar power. Buyers are betting that scale, speed, and political connections can outweigh the lack of operating cash flow.

🧱 Blackstone positions data centers as one of the safest plays in real estate, pointing to long leases with credit tenants as a shield against volatility. Hedge fund managers like David Einhorn push back, warning that trillions in spending could disappear if earnings fail to catch up. The split captures a market debate between those who see unstoppable digitization and those who see the early signs of a bubble forming.

Takeaway: Hyperscalers and private capital are pouring money into U.S. data centers and utilities because they fear the price of underinvestment more than the risk of overspending. This surge is linking servers to power grids, creating IPOs at $15B with no revenue, and sparking debate over whether the AI infrastructure race can build durable earnings or inflate the next great bubble. Although the industry remains in the early stages of AI adoption, the hundreds of billions already invested have yet to deliver significant earnings growth

US property buyer pool shrinks – State-level restrictions on foreign investment tighten amid sluggish capital flows, raising risks of broader market consequences (PERE)

Federal government release new rural OZ guidance – Treasury and IRS designate 3,309 tracts, cut rehab investment rule to 50% of basis, and expand buy-and-rehab viability ahead of OZ 2.0 launch in 2027 (Bisnow)

Goldman Sachs says easing land-use rules could add 2.5M homes in 10 years – Relaxing regulations would erase two-thirds of the housing shortfall and improve affordability despite financing and labor hurdles (Bloomberg)

Mortgage rates little changed at 6.33% ahead of shutdown – Zillow expects rates to finish the year in the mid-6% range as buyers retain leverage amid high inventory and low listings (Zillow)

Luxury home prices climb 4% to $1.25M – Sales fell to the lowest August level in more than a decade as high-end buyers sit on the sidelines despite inventory growth (Redfin)

Government shutdown threatens housing market – Furloughs, stalled federal loans, and delayed vouchers risk derailing 2,500 mortgages a day and straining already fragile affordability (Zillow)

U.S. office occupancy falls 1.6 pts to 54.1% – Peak Wednesday reached 62.9%, NYC dropped 3.4 pts to 54.3%, Austin down 3 pts to 68.4%, and Class A+ weekly avg slipped 3 pts to 76.3% (KastleSystems)

Insight: Offices continue to struggle as hybrid work persists, leaving occupancy stalled near half of pre-pandemic levels despite return-to-office pushes.

BlackRock expands HQ with 194K-SF office lease at 50 Hudson Yards in New York, NY – The asset manager subleased space from Meta, bringing its footprint at Related’s tower to 1.24M SF (CommercialObserver)

Versant signs 164K-SF office lease at 229 West 43rd St. in New York, NY – Comcast spinoff took temporary space at the former New York Times building owned by Columbia Property Trust (CommercialObserver)

U.S.-Mexico border markets are redefining logistics – Laredo overtook LA in 2024 import value, Kansas City surged as a top growth hub, and Monterrey, Juarez, and Tijuana anchor nearshoring despite USMCA risks and infrastructure strain (GlobeSt)

Industrial Outdoor Storage (IOS) becomes institutional – Rents up 123% since 2020 to $8.66 and vacancy at 8.7% as investors deploy billions through Peakstone, Barings/Brennan, and Realterm (GlobeSt)

Small- and mid-bay industrial users weather tariffs for now – Shorter leases, stockpiling, and rising vacancies highlight mounting pressure on small tenants even as rent collections hold steady (Bisnow)

Asia–U.S. West Coast container rates drop 15% to $1,853/FEU – Demand remains weak despite Golden Week frontloading as tariffs, consumer caution, and trade tensions weigh, while East Coast rates rise 16% to $3,967/FEU (FreightWaves)

Consumers remain cautiously optimistic – Summer shopping spree lifted discretionary and recreational spending, though outlook is tempered by job market concerns (CoStar)

Dillard’s defies department store slump – Visits grew YoY in July and August as Sunbelt footprint, strong fundamentals, and 7.5% growth at clearance centers turn it into a destination retailer (Placer.ai)

AI capex is driving unprecedented demand for power, pushing data center developers and utilities into massive buildouts and fueling a wave of energy-focused investment and M&A.

Brookfield predicts AI growth needs $7T – Firm aligns infrastructure, renewables, and real estate to fund massive buildout as private capital races to back data centers and power supply despite policy risks (Bloomberg)

BlackRock’s GIP in advanced talks to buy U.S. utility AES in $38B deal – AI-driven power demand fuels utility M&A, lifting AES shares 15% to an 11-month high (Reuters)

Insight: BlackRock’s GIP is pursuing AES to lock in long-term power supply as AI-driven data center demand transforms utilities into strategic assets.

Data center energy REIT Fermi surges to $15B IPO – Rick Perry-backed firm debuts on Nasdaq despite no revenue, fueled by AI infrastructure boom and political ties (Reuters)

Blackstone bullish on data centers – McCarthy-Baldwin says long-term leases with credit tenants mean the sector does not see a bubble forming, while rivals warn AI spending could destroy capital and concentrate players (Bloomberg)

Duke Energy eyes nuclear reactors and coal extensions – Carolinas plan targets 2037 for new nuclear, doubles battery storage by 2034, and adds gas capacity as electricity demand surges eightfold over prior 15 years (Reuters)

CRE shifts to higher-equity, nonrecourse deals – Sponsors now put in 35–40% equity and attract long-term institutional capital, creating stronger shock absorbers against volatility (GlobeSt)

Newgard Group and Two Roads secure $513M construction loan for two-tower condo project One Brickell Riverfront in Miami, FL – Carlyle led with $310M senior financing, TCG Real Estate added $60M, and 3650 Capital provided $143M mezzanine (CommercialObserver)

Legion Investment Group secures $155M construction loan for 83-unit condo project in West Chelsea, NY – Eldridge Real Estate Credit provided financing for the 23-story development at 550 West 21st St. slated for 2027 delivery (TheRealDeal)

Rilea Group and Ciprés secure $90M construction loan for Rider Residences condo project in Miami, FL – Banco Inbursa, owned by Carlos Slim, provided financing for the 146-unit, 12-story development with 11K SF of retail (CommercialObserver)

Vanbarton secures $280M refinance for 160 Water St. office-to-resi conversion in NYC – Alliance Bernstein provided the senior loan and Brookfield the mezzanine for the 588-unit Pearl House, now 99% leased (CommercialObserver)

Azorim North America secures $145M refinance for 364-unit Miroza at Ridge Hill in Yonkers, NY – Acore Capital provided a three-year senior and mezzanine package for the two-building multifamily complex completed in 2021 and 2024 (Commercial Observer)

Mast Capital and AEW sell 342-unit Remi on the River apartments in Miami, FL for $108M – Valeris Capital acquired the riverfront property with a $72M loan from Northwestern Mutual (CommercialObserver)

Crescent Real Estate acquires 457K-SF office tower in Dallas, TX for $292M+ – Union Investment sold Texas Capital Center at 2000 McKinney, the city’s priciest office trade of 2025 (TheRealDeal)

Future Foam acquires 210K-SF industrial facility in Fullerton, CA for $145M – Principal Financial Group sold the 17-acre property at 1050 S. State College Blvd., marking Orange County’s priciest industrial sale of 2025 (TheRealDeal)

Berkeley Partners raises $610.5M Fund VI for light industrial – Vehicle exceeded $500M target and is 30% called with seed assets (ConnectCRE)

Office Properties Income Trust to be delisted from Nasdaq – REIT missed $30M in interest payments, warned of default, and faces unsustainable $1B debt load as its D.C.-heavy Class-B portfolio struggles (Bisnow).

States adopt private permitting to cut delays – 75% of builders face backlogs, prompting Florida, Georgia, Arkansas, D.C., and New Hampshire to let private reviewers speed approvals and projects (GlobeSt)