Hello Brick Brief readers, 

Happy Friday. Today we’re watching for September’s CPI release, while existing-home sales hit a seven-month high and mall operators turn to AI to boost performance.

🧱 Markets Brace for CPI Amid Shutdown and Rate-Cut Bets

Markets see a 99% probability of an October Fed rate cut ahead of this morning’s special September CPI release despite the government shutdown. Sub-4% Treasury yields reflect firm conviction in easing, while jobless claims rising to 232K this week point to softer labor-market momentum.

🏠 Falling Mortgage Rates Fuel Uneven Housing Rebound

Existing-home sales climbed 1.5% in September to a seven-month high as 6.17% mortgage rates unlocked demand among upper-tier buyers. Yet affordability pressures and muted confidence kept activity soft among lower-income buyers, aligning with Zillow’s forecast for flat home values through 2025.

🛍️ Retail Recovery Deepens while Malls Embrace AI Efficiency
Retail fundamentals improved in Q3 with 1.8M sq. ft. of absorption, a 4.9% availability rate, and steady rent growth as openings outpaced closures. Interestingly, mall operators are unlocking new revenue and efficiency gains with AI by using footfall tracking, tenant portals, and automated marketing to drive sales and reduce costs.

30Y Mortgage: 6.18% (+1 bps) 

10Y Treasury Yield: 4.00% (+5 bps) 

WSJ Prime Rate: 7.25%

FTSE NAREIT Index: 782.32 (-0.18%) 

30-day SOFR Average: 4.18%

Jobless claims estimated to rise to 232K from 220K – Continuing claims near 1.94M as longer unemployment spells highlight weaker hiring, though layoffs remain low ahead of next week’s expected Fed rate cut (Reuters)

Bond traders brace for CPI risk after October rally – 10-year Treasury yields have fallen below 4% as markets await inflation data that could challenge expectations for further Fed rate cuts (Bloomberg)

Lower mortgage rates and higher listings are driving a modest rebound in home sales, but lingering affordability challenges and cautious buyer sentiment are keeping the recovery uneven across income tiers.

Existing-home sales rise 1.5% MoM and 4.1% YoY to 4.06M in September – Sales hit a seven-month high as easing mortgage rates and rising listings lifted upper-tier demand, though affordability remains tight for lower-income buyers (Reuters)

Zillow forecasts flat home values for 2025 with 1.9% growth in 2026 – Existing-home sales are expected to reach 4.07M this year, up 0.3% YoY, while rent growth cools to 2.8% for single-family and 1.1% for multifamily units amid rising inventory (Zillow)

Mortgage rates fall to 6.17%, near 3-year low – Buyers gained $26K in purchasing power YoY, yet pending sales slipped 0.7% as economic unease and high prices kept demand muted despite rising listings and seller concessions (Redfin)

U.S. property taxes rose 30% since 2020 – Homeowners are spending 30% of income on principal and interest as 6.25% mortgage rates, higher insurance premiums, and rising taxes push housing costs to record highs (Cotality)

Affordable housing NOI rose 5.6% YTD – Income growth has been outpacing expenses as HUD rent adjustments and easing cost pressures lift portfolio performance nationwide (IREI)

Sun Belt metros dominate built-to-rent construction – Phoenix leads with over 10K units underway, followed by Dallas with 5.8K, as southern markets account for most of the 63.8K units being built nationwide (TheRealDeal)

Multifamily buyer sentiment hits 70% positive in Q3 – Optimism rose across core and value-add assets as Fed rate cuts and improving debt markets narrowed the bid-ask spread (CBRE)

Average core multifamily cap rate falls to 4.73% – Modest compression signals early pricing recovery and stronger investor confidence heading into year-end (CBRE)

Cities rethink downtown revival as remote work reshapes demand – Bloomberg argues that future success depends on restoring mixed-use vitality, walkability, and diverse activity instead of repeating past mistakes of isolated office and civic districts (Bloomberg)

UPenn’s Wharton School leases 80K SF at 345 Montgomery Street in San Francisco, CA – The business school signed a long-term deal for the Cube building, doubling its local footprint and expanding its AI-focused MBA program (TheRealDeal)

Moloco relocates HQ to 60K SF at 135 Commonwealth Drive in Menlo Park, CA – The AI advertising firm subleased former Meta offices for its new Bay Area headquarters, one of Q3’s largest tech leases (TheRealDeal)

Verra Mobility subleases 57K SF at 55 Water Street in New York, NY – The transportation tech firm signed a 10-year deal with EmblemHealth to establish its Northeast headquarters in the 53-story FiDi tower (TheRealDeal)

Asia-U.S. container rates jump 18% to $1,687 per FEU – Trans-Pacific prices are rebounding as carriers cut capacity and impose GRIs, signaling early stabilization in global ocean shipping (FreightWaves)

Retail demand rebounds in Q3 with 1.8M sq. ft. of net absorption and a 4.9% availability rate – Store openings and expansions outpaced closures as fundamentals stabilized after earlier softness (CBRE)

Rents rise to $24.92 per sq. ft., up 0.4% QoQ and 1.8% YoY – Developers limited speculative starts, focusing on necessity-based projects amid selective tenant expansion (CBRE)

AI tools are boosting mall performance by 30% – Operators are using footfall tracking, tenant portals, and automated marketing to raise sales, cut costs, and improve conversions (BCG)

Insight: A key discussion topic among investors is whether AI can deliver enough efficiency gains to justify the massive infrastructure buildout underway. Interestingly enough, at least according to BCG, mall operators are already proving it can, using AI tools to lift sales, streamline operations, and boost profitability.

Chili’s and Texas Roadhouse post strong Q3 traffic – Both chains sustain growth through value-focused menus and rising visits from higher-income diners amid softening consumer spending (Placer.ai)

Google to supply 1M AI chips to Anthropic – The tens-of-billions deal gives Anthropic over 1 GW of compute capacity by 2026 and deepens Google’s role as both investor and infrastructure provider in the AI race (Bloomberg)

AI data center startup Crusoe raises $1.4B at a $10B valuation – The OpenAI infrastructure partner tripled its valuation in a year as Mubadala and Valor led an oversubscribed round amid record private capital fueling the AI buildout (FT)

Blackstone beat Q3 earnings expectations as distributable earnings rose 48% YoY to $1.9B, driven by $7.3B in real estate sales and $3.6B in new acquisitions. The firm’s activity reflected renewed liquidity and pricing stability across CRE markets after a year of limited transaction volume (Bisnow)

CBRE beat Q3 earnings expectations as EPS rose 34% and revenue increased 14% YoY, driven by a 40% surge in data center-related revenue. Leasing volume jumped 18% and U.S. sales climbed 32%, led by data center and office deals, prompting CBRE to raise its full-year guidance (Bisnow)

Insight: CBRE and other major brokerages are benefitting from rising CRE liquidity and the accelerating data center boom, as improving investment and lending activity drive new growth across office, industrial, and capital markets deals.

Wyndham lowered its 2025 outlook after U.S. RevPAR dropped 5% on weaker demand in Texas, California, and Florida. The company now expects adjusted net income of $347M–$358M and a 2–3% annual RevPAR decline, even as it added record new rooms and expanded its development pipeline (Bisnow)

Banks launch record $38B debt deal to fund Oracle-linked data centers – JPMorgan, MUFG, and others back Vantage’s Texas and Wisconsin projects powering Oracle’s $500B Stargate AI infrastructure with OpenAI (Bloomberg)

Sentinel Real Estate secures $68M refinancing for 386-unit Rockwell at Crown in Gaithersburg, MD – The firm refinanced the 2022-built multifamily complex it acquired earlier this year for $150M (CommercialObserver) 

Sherwood Equities lists $100M+ residential development site in New York, NY – The firm is marketing a 250K-SF Hudson Yards parcel with plans for a 42-story, 233-unit tower designed by Perkins Eastman (TheRealDeal)

Blackstone sells FedEx-occupied warehouse in Queens, NY for $87M – Morgan Stanley Real Estate Investing acquired the 116K-SF industrial property near LaGuardia Airport, which is fully leased to FedEx with 17 years remaining (CommercialObserver)

David Werner Real Estate acquires Midtown office tower in New York, NY for $165M – The 532K-SF property was sold by Durst Organization, while 601W Companies took a minority stake as Werner considers a potential residential conversion (CommercialObserver)

North America’s wealthiest families are boosting exposure to real estate and private credit – Family offices now allocate 29% of portfolios to private markets while retreating from riskier startup bets (IREI)

Insight: Something interesting to note is that as family offices boost real estate allocations, institutions trimmed theirs for the first time in 13 years, albeit only by 10 bps.

Lenders modified $11.2B in CRE loans in Q3 – The “extend and pretend” strategy is gaining momentum as elevated rates and falling valuations push hotels and multifamily to lead loan extensions (GlobeSt). 

WAV Group and Fluente release MLS AI governance white paper – The report outlines a six-part framework for broker-led data control, calling for MLSs to become the exclusive publishers of property listings to AI systems to ensure accuracy, attribution, and compliance (HousingWire)