The Brick Breakdown

Hello Brick Brief readers, 

Thank you for your continued support! Today we’re seeing labor resilience complicate the Fed’s path forward, multifamily performance hold steady despite supply and debt challenges, and discount retail gain momentum as consumers shift toward value-driven spending.

📉 Labor strong, but tariffs delay Fed cuts

April job openings beat at 7.39M vs. 7.10M forecast, showing firm labor demand even as quits fall and layoffs rise under mounting trade pressure. The OECD cut its 2025 GDP forecast to 1.6% and flagged 3.9% inflation, while Fed officials emphasized patience, with Bostic still open to cuts and Cook warning trade risks could reignite inflation.

🏘️ Multifamily holds firm as supply slows

National occupancy stands at 95.7% and rents are up ~1% YTD, with strong household formation offsetting delivery pressure. Still, development is pulling back, refinancing hurdles are rising, and $310B in loans mature this year amid elevated rates.

🛒 Discount retail thrives on value shift

Dollar General topped Q1 earnings expectations and raised its outlook as more middle- and upper-income shoppers seek value, while Placer.ai data shows Dollar Tree and Five Below lead in year-over-year visits and Dollar General ranks highest in loyalty. This shift is fueling demand for small-format retail and strengthening investor interest in anchored shopping centers.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.96%
10Y Treasury Yield: 4.45% (+3 bps)
FTSE NAREIT Index: 767.95 (-0.39%)
30-day SOFR Average: 4.31%

Market Pulse

Job openings beat expectations at 7.39M, but rising layoffs, falling quits, and 90% of business owners fearing supply chain shocks signal softening confidence amid tariff-driven strain

Bostic remains open to a 2025 cut, but Fed officials broadly stress patience, with Cook warning that trade uncertainty could dampen investment and reignite inflation pressures

April Job openings beat at 7.39M vs. 7.10M forecast – Labor demand remains firm, but rising layoffs and falling quits point to softening under tariff pressure (Bloomberg)

Tariffs will drag U.S. GDP forecast, says OECD – GDP forecast cut to 1.6% for 2025 with inflation expected to reach 3.9%, delaying Fed rate cuts as policy uncertainty and trade retaliation weigh on growth (WSJ)

RCM/TIPP May survey shows sentiment up to 49.2 – Confidence rose across 18 of 21 demographic categories, with easing financial stress but continued pressure from inflation and tariffs (RealClearMarkets)

Fed officials stress policy patience as tariff risks cloud outlook – Bostic still sees room for a 2025 cut, but Cook warns trade uncertainty is dampening investment and could revive inflation pressure (Reuters)

90% of U.S. business owners fear supply chain disruption from Trump tariffs – Gallagher survey shows rising concern over sourcing risks, higher costs, and operational strain (Reuters)

Brick by Brick: AI Demand Drives Data Center Growth and Power Deals

Artificial intelligence is driving a sharp increase in data center development, along with major shifts in how large tech companies secure energy for operations.

• CoreWeave signed a $7 billion lease with Applied Digital for 250 MW of capacity in Ellendale, North Dakota, with an option for 150 MW more
• Meta agreed to buy over 1,100 MW of electricity from Constellation Energy’s Clinton nuclear plant under a 20-year contract starting in 2027
• Amazon Web Services is expanding into Mexico, Chile, New Zealand, Saudi Arabia, and Taiwan while partnering with Nvidia to increase chip supply
• Developers are focusing on 20 to 50 MW data centers near urban areas to reduce latency and serve growing computational needs
• Power demand is rising across the sector, prompting long-term supply contracts and renewed interest in nuclear energy as a reliable base load
• Applied Digital, backed by Nvidia and Macquarie, is scaling its North Dakota footprint and planning additional facilities in Iowa and South Dakota

Takeaway: The push to expand computing infrastructure is reshaping the data center market, and long-term leases and energy contracts are becoming essential as firms compete for capacity, power, and proximity to population centers.

Policy & Industry Shifts

Trump’s plan to IPO Fannie and Freddie without relinquishing control preserves government backing and mortgage rate stability, but heightens political influence over housing finance and disappoints investors expecting full privatization

Trump signals tighter GSE grip to boost budget – Administration may IPO Fannie and Freddie while keeping control, disappointing Wall Street expectations (Bloomberg)

Senate Democrats press RealPage on AI lobbying – Lawmakers seek answers on firm’s ties to 10-year state AI regulation ban amid concerns over rent-collusion software and consumer harm (Bisnow)

Residential

Reuters poll sees 3.5% rise in home prices for 2025 – Tariffs are expected to limit affordable housing supply as construction costs climb and rates stay elevated (Reuters)

Foreign demand for U.S. homes rose in Q1 2025 – International buyers made up 1.9% of Realtor.com traffic; Miami drew the most interest, while Texas metros saw growing share (Realtor.com)

Multifamily

Multifamily fundamentals remain stable for now, but rising loan extensions, slowing development, and diverging rent trends signal growing financial strain and a shifting balance of power in the rental market

Multifamily supply tempers rental crisis – Half of top 100 U.S. rental markets now trade at a discount as post-pandemic construction boom shifts leverage toward renters (RisMedia)

Resilient fundamentals despite supply surge – National occupancy reached 95.7% and effective rents rose ~1% YTD as strong household formation offset delivery pressure (Colliers)

Buyers outnumber sellers – Multifamily leads all asset classes in sales volume, but many owners are holding amid negative leverage and refinancing hurdles (Colliers)

Development slowing in 2025 – Completions are expected to drop by ~150,000 units from 2024's 50-year high, easing supply-side pressure in 2026 and beyond (Colliers)

Rent growth varies by region – Midwest markets like Kansas City, Chicago, and Detroit lead YoY rent gains, while Austin, Denver, and Phoenix face rent declines (Colliers)

Loan extensions rising – $97B in multifamily loans were extended into 2025, and $310B are set to mature this year as refinancing challenges grow with elevated rates (Colliers)

Office

Office occupancy fell to 51% last week – Peak day occupancy hit 60.3% on Wednesday as workers extended the holiday weekend, with all 10 tracked cities posting declines (KastleSystems)

Industrial

Industrial momentum is cooling as vacant warehouse deliveries pile up and factory orders decline, while rising steel tariffs risk further dampening expansion by raising construction and equipment costs

Trump to double steel tariffs to 50% – New levy aims to boost U.S. steel jobs and production as election-year trade policy intensifies (FreightWaves)

Factory orders fall 3.7% MoM in April – Core capital goods drop 1.5% as post-tariff front-loading fades, though orders remain up 2% YoY (Reuters)

Over half of Q1 warehouse deliveries sit vacant – 45M SF of spec space came online empty, pushing U.S. industrial vacancy to 7% as supply outpaces absorption and large-block leasing slows (Bisnow)

Market Mix

Banks return cautiously to CRE lending – Commercial banks’ share of originations has fallen 17% since 2019, as lenders adapt to stricter standards, legacy loan losses, and a changed risk landscape (GlobeSt)

Retail

Dollar and discount stores gain ground in 2025 – Economic uncertainty fuels renewed growth, with Dollar Tree and Five Below leading in YoY visits and Dollar General topping loyalty metrics (Placer.ai)

Data Centers

Meta strikes 20-year nuclear deal with Constellation – AI energy demand drives Meta to secure 1,121 MW from Illinois’ Clinton plant as subsidies expire and reactor expansion is considered (Bloomberg)

Regional

Chicago Fire owner to fund $650M soccer stadium at The 78 – Joe Mansueto will privately finance 22,000-seat venue in Chicago, anchoring Related Midwest’s long-stalled megadevelopment (Bisnow)

Earnings & Real Estate Impact

Strong earnings and rising traffic from higher-income shoppers show discount retailers are well-positioned to gain share in a strained economy, though tariffs may pressure margins and force strategic sourcing shifts

Dollar General beat Q1 earnings and revenue expectations and raised its FY guidance as the discount retailer attracts more middle and higher-income shoppers seeking value. Dollar General expects tariffs to lead to some price increases but is working with vendors and shifting supply chains to minimize the impact on shoppers (CNBC) 

Financings

KKR reports record $42B commercial loan pipeline – Tariff-driven demand and retreating banks boost private credit opportunities as firm remains cautious on inflation and construction costs (CommercialObserver)

Rocket Companies plans to issue $4B in debt – Proceeds will help refinance Mr. Cooper’s existing obligations and support Rocket’s $11B acquisition spree, including Redfin and Mr. Cooper Group (HousingWire)

Loans

Fort Lauderdale, FL multifamily project lands $92M loan – Affinius Capital provided construction financing to Grover Corlew for the 312-unit Mayla Cypress development (TheRealDeal)

Roundhouse and Kennedy Wilson secure $71M Fannie Mae loan for MT Multifamily – Colliers arranges refinancing for Bozeman’s Oxbrow project, funding Phase 1 payoff and equity for 132-unit Phase 2 (CommercialObserver)

Bayline secures $61M for Savannah-area multifamily – Bank OZK provides $47.5M loan and FCP adds $13.25M in preferred equity to finance 333-unit Mosaic Pooler project (CommercialObserver)

Woodfield secures $50M loan for Charleston, SC multifamily – Mesa West Capital provided the refinance for The Ames, a 304-unit community in Summerville (MultihousingNews)

M&A

Building & Portfolio M&A

Starwood sells Whole Foods-anchored center in West Palm for $133M – Invesco acquires 28-acre property and assumes $79M loan, marking a near break-even exit for Starwood after 2022 purchase (CommercialObserver)

Institutional Fundraising

Starwood Capital raises $2.86B for private credit funds – Starwood Real Estate Debt Strategies U.S. leads global debt vehicle closings as traditional lenders retreat and demand for flexible financing grows (PRNewswire)

Proptech & Innovation

Handoff raises $5.8M to scale AI for contractors – Austin-based proptech automates back-office tasks for small residential builders and currently serves over 10,000 users across $6B in projects (CommercialObserver)