The Brick Breakdown

Hello Brick Brief readers, 

Thank you for your continued support! Today we’re seeing positive May PPI inflation data and a weakening job market, a weakening housing market, and increasing pharmaceutical investment despite slow life sciences leasing in Q1. 

📉 Fed likely eyeing September cut as inflation and job data shift
Producer prices rose 0.1% in May, with core PPI up 2.7% as tariffs and supply costs continue to build. Jobless claims reached 248,000 last week, the highest since 2021, leading markets to expect two rate cuts by October.

🏠 Housing cools as inventory grows and buyer power returns
Zillow forecasts a 1.4% drop in home values for 2025, driven by rising supply and slower demand. Fewer than 3 in 10 homes sold above asking in early June, the weakest spring level since 2020.

🧬 Biomanufacturing grows as lab leasing slows in early 2025
JLL reports lab leasing pulled back in Q1 due to shifting budgets and policy uncertainty. At the same time, reshoring momentum continues with over $250 billion in new investment supporting U.S. pharmaceutical production.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.85% (-4 bps)

10Y Treasury Yield: 4.35% (-5 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 776.49 (+0.41%) 

30-day SOFR Average: 4.30%

Market Pulse

Cooling inflation and rising jobless claims in May have strengthened expectations for a September rate cut, as markets respond to easing price pressures and signs of labor market strain

Producer prices rise 0.1% in May – BLS reports 2.6% annual gain as service and goods costs inch higher, while core PPI climbs 2.7% amid tariff and supply chain pressures (BLS)

Jobless claims hit 8-month high at 248K – Filings hold steady as tariff uncertainty clouds outlook and continuing claims rise to highest level since 2021 (AP)

Fed seen cutting rates by September – Softer May inflation and rising continuing jobless claims boost odds of earlier easing as markets now price in two cuts by October (Reuters)

30-year Treasury auction eases fears – $22B bond sale sees strong demand as yield drops to 4.844%, but concerns linger over debt, deficits, and tariff-driven inflation (Bloomberg)

Brick Breakdown: Private Equity Eyes Retail and Restaurants

Private equity is ramping up its presence across food and convenience retail, with dealmaking momentum building around Couche-Tard’s $51B bid for Seven & i, Apollo’s pursuit of Papa John’s, and Bojangles exploring a sale at 3x its 2019 valuation. Rising interest rates and margin pressure are fueling consolidation, while brand value and scale remain key draws.

• Couche-Tard says it has received multiple PE-backed proposals to buy 2,000+ U.S. stores as part of its strategy to win FTC approval for a Seven & i takeover. The $51.3B offer would mark the largest foreign acquisition of a Japanese firm and reshape global convenience retail.

 • On Wednesday, Papa John’s stock jumped 7.4% on reports of a buyout bid from Apollo and Qatari fund Irth Capital. The pizza chain has been in turnaround mode under new leadership, which is attracting sponsors focused on consumer rebrands and international growth.

• Bojangles is exploring a sale that could value it above $1.5B, nearly triple its 2019 buyout price. With chicken category growth outpacing other fast food segments, PE firms are betting on regional cult brands with expansion potential.

Takeaway: Private equity is reentering consumer deals with renewed appetite, drawn by defensible brands, stable cash flows, and roll-up potential in fragmented sectors. In a higher-rate environment, firms are leaning on carveouts, turnarounds, and operational value creation to drive returns. Retail and restaurants, long overlooked, are now back on the menu.

Policy & Industry Shifts

Legal and policy shifts in New York’s rental market are raising concerns among landlords, as industry groups appeal the broker-fee ruling and the city ends key incentives tied to housing vouchers

Appeal filed against NYC broker-fee law – Real estate groups challenge ruling allowing enforcement, citing rent hike risks and contract violations amid soaring lease costs (Bloomberg)

NYC ends landlord incentive for housing vouchers – CityFHEPS will no longer pay a month’s rent to landlords holding units during application processing, raising fears of reduced participation in the program (TheRealDeal)

Residential

Rising inventory and softer demand are cooling national home prices, even as seasonal momentum returns in tight Northeast markets and rental concessions begin to ease

Zillow forecasts 1.4% home value drop in 2025 – Rising inventory and weak demand weigh on prices, though existing home sales are expected to rise 1.9% from 2024 (Zillow)

 Only 28% of homes sold above asking in early June – Redfin says it’s the lowest spring level since 2020 as buyers regain leverage and pending sales fall 1.1% year over year (Redfin)

Rental concessions fade as peak season arrives – Zillow says only 35% of listings offered incentives in May, down from winter highs but still a record for the month (Zillow)

Springfield, MA tops May’s hottest housing list – Realtor.com says New England dominates again as tight supply drives demand, with 13 of top 20 markets in the Northeast (Realtor.com)

Office

$100M+ office sales jump 50% YoY in early 2025 – JLL cites rising cap rates and limited supply as investors rush to capture arbitrage before market normalization (GlobeSt)

Leasing

Instacart renews 60K sf lease in San Francisco, CA – The grocery tech firm signs a 9-year extension at 300 Mission Street, reaffirming commitment to its longtime HQ amid broader tech pullbacks (TheRealDeal)

Amazon expands Miami, FL Wynwood office to 76K sf – Tech giant adds 25K sf to its lease at the newly completed Wynwood Plaza, reinforcing Miami’s push to become a tech hub (TheRealDeal)

Industrial

Micron boosts U.S. chip investment by $30B – The company raises its planned domestic spending to $200B, revising its agreement with the Commerce Department to secure federal grants (CoStar)

Warehouse vacancy doubles as tenants seek quality – CBRE says 3B SF of older space is now under pressure, prompting owners to pursue costly upgrades to stay competitive (GlobeSt)

Industrial rent growth to diverge through 2029 – CBRE says overbuilt hubs like Riverside, CA to lag, while balanced markets like Charlotte, NC and Omaha, NE are set to outperform (CBRE)

Market Mix

Life Sciences

Lab leasing slowed in early 2025 due to political and funding uncertainty, while pharmaceutical firms accelerated biomanufacturing investment through large-scale reshoring efforts

Lab leasing drops in Q1 2025 – JLL report cites political and funding uncertainty as key headwinds, though $250B+ in reshoring boosts biomanufacturing activity nationwide (JLL)

Biomanufacturing investment climbs in 2025 – Lab leasing slows amid business uncertainty, but pharma firms ramp up U.S. production spending (IREI)

Retail

Fast-casual chains grow visits in Q1 2025 – Placer.ai reports rising foot traffic and per-location visits for expanding regional brands despite broader dining sector stagnation (Placer.ai)

Earnings & Real Estate Impact

Luxury furniture retailer RH beat Q1 earnings expectations and maintained its FY guidance as it shifts production out of China to blunt tariff impacts, targeting 52% U.S. manufacturing by year-end (CNBC) 

Financings

Loans

Deutsche Bank provides $180M loan for D.C. office-to-resi conversion – Henderson Park and Lowe to transform 1250 Maryland Ave. SW into 428 apartments near The Wharf (Bisnow)

Uncommon Developers secures $150M loan for Downtown LA tower – Barings and Nuveen finance 52-story Figueroa at Wilshire after $210M acquisition from Brookfield (CommercialObserver)

Builders Capital provides $63M loan in Steamboat Springs, CO – RAL, KZ Capital, and  Latitude secure financing for 78-unit Roan luxury townhome project near ski resort (CommercialObserver)

Structured Finance

Industrial Logistics lines up $1.2B refinance – REIT plans a CMBS deal backed by nearly 25% of its portfolio, leveraging strong performance in markets like Honolulu and Rock Hill, SC (CoStar)

M&A

Building & Portfolio M&A

Galvanize buys ~$370M Maryland portfolio – Billionaire Tom Steyer’s firm acquires 680K SF across five properties, its largest deal yet, targeting deep green retrofits to cut emissions by up to 138% (Bloomberg)

NorthPoint buys $270M industrial portfolio in Elgin, IL – Kansas City firm acquires 2.8M sf across 12 warehouses from High Street Logistics (TheRealDeal)

EQT buys Phoenix, AZ warehouse for $128.2M – Region’s largest industrial deal of the year includes 1.1M SF Sarival Logistics Center acquired from Blackstone (CoStar)

Blackstone sells Orlando, FL industrial portfolio for nearly $100M – BKM Capital Partners and Kayne Anderson Real Estate acquire nine light industrial buildings with plans to rebrand as Gridline Orlando (CoStar)

Miami-Dade buys $54M development site near Miami International Airport – County acquired the 7.2-acre property from Neology Development to support airport expansion plans (CommercialObserver)

Institutional Fundraising

Ben Ashkenazy raises $750M for acquisitions – The embattled real estate mogul is targeting distressed retail and hospitality assets after recent exits and legal battles (TheRealDeal)

Castle Peak Holdings closes $315M second opportunistic real estate fund – The firm behind Trailborn brands raised the capital in four months, with its first investment being the Snow King Resort in Jackson Hole, Wyoming (IREI)

Distress Watch

CDPQ’s Ivanhoe Cambridge defaults on $359M loan tied to NYC tower – Former Goldman HQ at 85 Broad faces lease renewals and potential housing conversion amid downtown office struggles (Bloomberg)