The Brick Breakdown

Hello Brick Brief readers, 

Thank you for your continued support! Today’s highlights: the Fed signals delayed rate cuts despite economic growth concerns, demand for data centers and supporting energy infrastructure climbs, and Class A office space continues to outperform.

📉 Rate Outlook Shifts Amid Growing Economic Strain

The Fed is signaling no rate cuts before September, citing tariff-driven uncertainty and inflation risks, while Moody’s downgrade and a steep drop in the Leading Economic Index signal slowing growth. JPMorgan’s Jamie Dimon warned tariffs could trigger a credit crunch and 10 percent market drop, adding pressure to an already fragile outlook.

💾 26North Eyes DigitalBridge and Power Needs Reshape Data Center Strategy

26North is nearing a deal to acquire DigitalBridge, aiming to scale rapidly with sector expertise and deep development pipelines amid surging institutional interest in digital infrastructure. Meanwhile, Blackstone’s $11.5B bet on TXNM Energy underscores the energy investment needed to power AI growth, as grid constraints slow new development in key markets like the Pacific Northwest.

🏢 Office Market Shows Selective Strength Despite High Vacancy

Office vacancy remains elevated at 18.1%, but demand is concentrating in Class A buildings as tenants favor quality and landlords limit new supply. Net absorption turned positive for a third straight quarter, led by Manhattan, though tariff uncertainty continues to delay leasing decisions and relocation plans.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.99 (+7 bps)
10Y Treasury Yield: 4.45% (-3 bps)
FTSE NAREIT Index: 777.52 (+0.16%)
30-day SOFR Average: 4.33%

Market Pulse

The Fed is delaying rate cuts despite worsening economic signals, as tariff uncertainty, weak consumer sentiment, and rising debt costs raise concerns about a potential credit crunch and slowing growth

30-year Treasury yield rose above 5% after Moody’s US downgrade – Credit cut over rising debt costs briefly pushes rates to highest since 2023 (CNBC) 

CB’s Leading Economic Index drops 1.0% in April, deepest fall since March 2023 – Consumer pessimism and weak building permits drive fifth straight decline, signaling slower 2025 growth (ConferenceBoard)

Dimon warns tariffs pose underestimated risk – JPMorgan CEO sees 10% market drop and credit crunch as firms cut guidance and costs climb (WSJ)

Jefferson says Fed policy in "very good place" – Signals patience on rate cuts amid tariff uncertainty and inflation risks (Bloomberg)

Fed signals no rate cuts before September – Williams and Bostic cite tariff-driven uncertainty and data gaps as reasons to stay patient (Bloomberg)

Consumers begin cutting spending amid tariff fears – Sentiment hits decade-low as higher prices, debt, and uncertainty push Americans to trim non-essentials (CNBC) 

Brick by Brick: 26North Eyes DigitalBridge in Major Data Center Play

Alternative asset manager 26North is in advanced talks to acquire DigitalBridge Group, a leading digital infrastructure investor with a ~$2B market cap and nearly $100B in assets under management.

• DigitalBridge backs major platforms like Vantage, DataBank, Scala, Yondr, and AtlasEdge, with a 16 GW development pipeline spanning data centers, towers, and edge infrastructure
• The firm’s public stock has fallen nearly 80% since its 2021 peak despite strong sector fundamentals, creating an opportunity for 26North to acquire a scaled platform at a discounted price
• 26North, founded in 2022 by Apollo co-founder Josh Harris, would gain immediate sector expertise, project pipelines, and relationships with hyperscalers and global operators
• Mercuria is reportedly partnering on the deal, which comes as institutional demand for digital infrastructure accelerates alongside AI and cloud adoption
• Blue Owl recently closed a $7B data center fund, underscoring the flood of capital targeting compute-intensive infrastructure
• Analysts say DigitalBridge brings strategic value through both its portfolio and its operational capabilities, making it an ideal acquisition for a firm looking to scale quickly in the space

Takeaway: The potential sale of DigitalBridge reflects surging demand for institutional-grade data center platforms as AI transforms infrastructure investment. 26North is not just buying discounted assets. It is acquiring sector knowledge, operating scale, and development capacity in one of the fastest-growing corners of real estate.

Policy & Industry Shifts

Trump admin pulls $210M from six tech hubs – Awards for CRE, biotech, and AI projects canceled over concerns of rushed, unfair process (Bisnow)

FHFA eyes GSE cuts to boost efficiency – Director Pulte likens reform to “DOGE,” citing fraud concerns and hinting at presidential decision on conservatorship (RisMedia)

Residential

Housing affordability remains a top concern as elevated rates, tariffs, and uncertainty weigh on spring demand, even as supply reaches a five-year high

NY Fed's Williams calls housing affordability top economic issue – Cites severe supply-demand imbalance and urges state, local action amid rising uncertainty (RisMedia)

Spring homebuying sputters as supply hits 5-year high – Existing-home sales fall to 6-month low as high rates, tariffs, and uncertainty chill demand (Redfin)

Mortgage lenders lose $28 per loan in Q1 – Losses narrow from Q4 as rising production expenses offset revenue gains, with 42% of firms still unprofitable (MortgageOrb)

Office

The office market is stabilizing at the top end, with Class A absorption driving gains amid limited new supply, though tariff uncertainty continues to slow broader leasing activity

Office vacancy hits 18.1% in Q1 – Net absorption turns positive for third straight quarter, led by Manhattan’s 3.6M SF gain (Colliers)

New supply drops to 15-year low – Only 5.6M SF delivered as developers hold back amid construction and financing headwinds (Colliers)

Class A demand drives growth – 5.5M SF absorbed in top-tier buildings, while Class B and C shed 3.8M SF (Colliers)

Tariff uncertainty slows leasing – Tenants favor renewals over relocations as cost pressures and policy risks cloud outlook (Colliers)

Market Mix

Life Sciences

Life sciences layoffs strain shrinking talent pool – Biotech faces 21.4% lab vacancy and labor shortages despite low unemployment and rising training gaps (Bisnow)

Retail

Retail leasing climbs despite tariff fears – Tenants signed 55M SF in Q1 as demand stays strong amid consumer uncertainty (CoStar)

Data Centers

Power constraints stall Pacific Northwest data center boom – Grid bottlenecks and lack of political urgency halt growth in former hotspots like Hillsboro and central Washington (Bisnow)

Student Housing

Student housing sales rebound to $6.6B in 2024 – Investor demand surges in Florida, Georgia, and Carolinas as 2025 outpaces prior year (CoStar)

Financings

Refinancings

Gencom lands $300M Blackstone loan to refi Miami’s Ritz-Carlton Key Biscayne – Fortune International joins as partner to expand resort into 22-acre beachfront masterplan (CommercialObserver)

Affinius Capital provides $80M refi for Downtown Brooklyn apartments – Loan will fund lease-up and final construction of Goose Property’s 163-unit tower at 570 Fulton (CommercialObserver)

Dwight Mortgage Trust lends $50M for Minneapolis multifamily refi – Sherman Associates secures bridge loan for 222-unit Moment Apartments with retail tenants Starbucks and New Horizon Academy (CommercialObserver)

M&A

Company M&A

Blackstone and 26North are making major bets on power and digital infrastructure, reflecting rising institutional demand driven by AI, cloud, and expected data center growth

Blackstone will acquire TXNM Energy for $11.5B – Deal reflects bet on rising U.S. power demand from AI and crypto data centers, with approval expected by 2026 (Reuters)

Asset manager 26North nears deal to buy $2B-listed DigitalBridge – Asset manager in late talks to acquire $100B AUM data center investor amid stock slump (Bisnow)

$1B US-listed office landlord Paramount Group explores sale – Strategic review follows CEO payment scandal and executive exits at major NYC and SF office landlord (WSJ)

Building & Portfolio M&A

RXR to buy Manhattan’s 590 Madison Ave. office tower for $1.1B – Acquires former IBM building near Central Park from Ohio pension fund (Bloomberg)

Miami Worldcenter retail hits market for $300M+ – Developers list 273K SF open-air mall with tenants like Apple, Lululemon, and Lucid amid strong Miami retail demand (TheRealDeal)

Vanbarton to buy Midtown Manhattan bank building for $140M office-to-resi – Plans housing conversion near Grand Central (Bloomberg)

Evergreen Devco sells Denver-area apartments for $97M – FJ Management acquires 250-unit Outlook Table Mesa in Wheat Ridge, part of Clear Creek Crossing development (ConnectCRE)

Distress Watch

NYC’s Chrysler Building hits market amid lease shakeup – Cooper Union seeks new operator to boost income after $18.8M court win and RFR’s default on rising ground rent (CommercialObserver)

$191M foreclosure set for D.C. office near White House – AREP and Westbrook default on loan for 405K SF trophy asset at 1625 Eye St. NW (Bisnow)