The Brick Breakdown

Hello Brick Brief readers, 

Thank you for your support! In recent news, recession fears are rising, data centers remain a bright spot, and a proposed $33B cut to HUD’s budget signals major pressure on housing programs.

📉 Recession fears rise as economic uncertainty slows hiring
Despite a stronger-than-expected 177,000 jobs added in April, employers are slowing hiring and delaying investment decisions as tariff pressures and policy uncertainty mount. Apollo’s chief economist now forecasts a summer recession, citing tighter capital access and cooling CRE demand as key warning signs.

🧠 Data centers continue to shine amid broader slowdown
Iron Mountain beat Q1 earnings expectations and raised its full-year forecast thanks to strong growth in data center and digital services revenue. The results reinforce data centers as a defensive bright spot even as economic pressures hit other segments of the real estate market.

🏠 Trump budget proposes $33B in HUD cuts, raising housing concerns
The administration's plan would slash funding for rental assistance and community development grants, threatening affordable housing initiatives across the country. Industry experts warn these cuts could intensify the housing crisis, especially in low-income communities already facing supply shortages.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.86% (+3 bps)
10Y Treasury Yield: 4.31% (+8 bps)
FTSE NAREIT Index: 772.81 (+1.21%)
30-day SOFR Average: 4.35%

Market Pulse

Despite solid April job growth and rising factory orders, growing tariff uncertainty is prompting employers to slow hiring and delay investment, fueling concerns that policy instability could tip the economy into a recession by summer

U.S. economy adds better-than-expected 177,000 jobs in April – Unemployment remains steady at 4.2% despite tariff uncertainty and federal layoffs (WSJ)

U.S. factory orders rise 4.3% in March – Third consecutive month of growth, driven by 27% increase in transportation equipment orders (WSJ)

Apollo Global Management’s chief economist predicts a summer recession due to China tariffs – CRE market faces uncertainty, with reduced demand and tighter capital access expected (CommercialObserver)

Builders and manufacturers hold off on investment – Uncertainty over Trump administration tariffs and economic policies delays decisions, with companies awaiting clarity on new rules (Bisnow)

Employers slow hiring – Amid economic uncertainty and tariff impacts, many U.S. companies pause hiring, especially for entry-level roles (WSJ)

Policy & Industry Shifts

Trump’s proposed $33B HUD budget cut threatens affordable housing programs nationwide, raising concerns about increased rent burdens and reduced access for low-income households

Trump’s budget seeks $33B in HUD cuts – Targets state rental assistance, community development grants, and other housing programs (HousingWire)

NYC real estate industry seeks to block new law requiring landlords to pay broker fees – Law could increase rents and make housing less accessible, according to industry groups (Bloomberg)

Residential

High housing costs and economic uncertainty are keeping buyers on the sidelines this spring, prompting builders to boost incentives as mortgage applications and pending sales fall. In Florida, prices are starting to slip, especially for condos, as affordability and regulatory pressures weigh on the market

High housing costs and economic uncertainty dampen 2025 spring homebuying season – Mortgage applications down 6%, pending sales fall 2.8% YoY, and median monthly payment hits record $2,870 (Redfin)

Home builders offer more incentives to attract buyers – Builders like D.R. Horton and PulteGroup increase mortgage-rate buydowns, price cuts, and design upgrades as demand remains sluggish and tariffs threaten to raise costs (WSJ)

Florida home prices fell 1.7% YoY in March – Condo prices dropped 7% due to high costs and new building requirements (Bloomberg)

Office

Trepp suggests largest REITs believe worst is behind for office sector – Transaction volumes surge 80% YoY in January 2025, but vacancy rates remain elevated and property prices still 20% below 2022 peak (GlobeSt)

Industrial

​​Tariff-driven uncertainty is slowing logistics construction in the Northeast, but major manufacturers like Kimberly-Clark and Hotpack are ramping up U.S. investments, as some companies shift toward domestic production and supply chain resilience

Northeast U.S. logistics construction slows in Q1 2025 – Active construction down 20.8% to 24.4M sq. ft., with pre-leasing rates up 560 bps to 22.6% (CBRE)

Kimberly-Clark to invest $2B in U.S. manufacturing – Company plans Ohio and South Carolina projects, creating over 900 jobs in industrial automation and advanced manufacturing (Bisnow)

Hotpack to invest $100M to build its first manufacturing plant in the US – Dubai-based company chooses Edison, NJ for North American manufacturing and distribution center (CoStar)

Market Mix

CRE investment rose 17% in Q1 2025 despite fewer deals, driven by strong multifamily and student housing demand, while education institutions like Boston-area universities scale back real estate plans amid funding cuts and uncertainty

CRE investment up 17% in Q1 2025 – Despite a 12% drop in transactions, commercial real estate saw a surge in investment, led by multifamily at $30B, while office sector saw a decline (GlobeSt)

Regional

Boston universities reassess real estate plans – UMass Boston, Boston University, and Northeastern University slow expansion due to federal funding cuts and economic uncertainty (Bisnow)

Student Housing

Student housing transaction volume rose 43% YoY in 2024 to $8.5B – Strong fundamentals and investor interest drive growth (GlobeSt)

Earnings & Real Estate Impact

Iron Mountain’s strong Q1 and raised outlook underscore continued demand for data center infrastructure, reinforcing investor confidence in the sector despite broader economic uncertainty

Data Center REIT Iron Mountain beat Q1 earnings estimates raised its annual revenue and AFFO revenue forecast, driven by strong growth in its data center, digital, and asset lifecycle management segments (Reuters)

M&A

Building & Portfolio M&A

Su Development sells Soma Towers in Bellevue, Seattle for $192.8M – Property features 273 apartments and 29,964 sq. ft. of commercial space (REBusinessOnline)

Carolwood in escrow to buy LA 41-story office tower EY Plaza for $130M – Brookfield's lenders opted to sell the building at 725 South Figueroa Street after $305M in debt (TheRealDeal)

PCCP buys eight Oakland apartment complexes from Veritas Investments for $62.8M – Purchase of 337 units works out to $186K per unit (TheRealDeal)

Amazon buys 522 Fifth Ave. office tower in Manhattan – The 23-story property near Grand Central Terminal offers 600,000 sq. ft. of space, adding to Amazon’s NYC real estate portfolio (Bloomberg)