The Brick Breakdown

💸 Tariff risks mount as economic outlook dims
Producer prices fell in March, but inflation expectations surged to 6.7% and consumer sentiment dropped to 50.8 as tariffs raise fears of a policy-driven recession. Fed officials now project inflation could rise to 3.5%–4% in 2025 with GDP growth slowing below 1%, while Wall Street leaders warn that trade uncertainty is already disrupting investment.

🖥️ AI drives massive data center expansion despite volatility
Amazon and Google reaffirmed $175 billion in 2025 data center spending, citing surging demand for AI infrastructure even as tariff-driven cost pressures mount. Despite broader market volatility, tech giants remain committed to long-term growth, viewing digital infrastructure as too critical to delay.

🏢 Office-to-resi conversions gain momentum amid market shifts

Peebles and McNeely are seeking to raise $1.5 billion for a fund focused on office-to-residential conversions, highlighting the growing popularity of adaptive reuse strategies. As demand fades for lower-tier office space, investors are targeting distressed assets as a lower-cost, lower-tariff path to meet housing needs.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 7.10% (+18 bps)
10Y Treasury Yield: 4.47% (+2 bps)
FTSE NAREIT Index: 755.02 (1.85%)
30-day SOFR Average: 4.34%

Market Pulse

Tariff-driven uncertainty is rattling markets and raising inflation expectations, with Fed officials and Wall Street leaders warning that rising rates, weakened sentiment, and stalled investment could push the U.S. closer to a policy-induced recession

US producer prices fell 0.4% MoM in March – Driven by energy costs, while tariff impacts may push inflation higher in coming months (Bloomberg)

Inflation expectations jump to 6.7% in April – Consumer sentiment falls to 50.8 as tariff fears and economic uncertainty deepen recession worries (UMichSCA)

Mortgage rates jump back above 7% – Volatile bond market drives biggest Treasury yield spike since 1981, as investor uncertainty over shifting policy rattles mortgage markets (MortgageNewsDaily)

Fed's Williams warns tariffs will raise inflation to 3.5%-4% in 2025 – GDP growth to slow below 1%, unemployment to rise to 4.5%-5%, but sees Fed policy as appropriately managing current risks (Reuters)

Fed’s Musalem warns of tariff-driven inflation and labor market weakness – Says inflation could rise even as jobs decline, with long-run expectations at risk if policy uncertainty persists (Bloomberg)

Wall Street warns tariffs could derail U.S. economy – JPMorgan’s Dimon and BlackRock’s Fink cite market turmoil, recession risks, and delayed investments as early signs of damage from trade uncertainty (WSJ)

Residential

Affordability remains fragile as home prices hit record highs and tariff-driven uncertainty fuels job fears and stock market volatility, leading to a pullback in luxury demand and a weaker housing outlook

Home prices hit record $385K in Feb – National gains remain subdued as weak demand, tariff pressures, and job fears weigh on affordability; retirees drive growth in TN and SC (Cotality)

Affordability inches up in February – Median home price at $402.5K as qualifying income dips below median family income, but West and Northeast remain deeply cost-burdened (RisMedia)

Luxury buyers pull back as tariffs roil markets – High-end home deals collapse nationwide amid stock losses, rising uncertainty, and fears over future inflation (WSJ)

Industrial

Falling container prices and softening freight activity reflect near-term disruption, while Novartis’ $23 billion U.S. expansion highlights how Trump’s tariff policy is accelerating onshoring and reshoring of critical manufacturing

Container prices and truck crossings fall – Import volumes soften as tariff avoidance fades and West Coast, border logistics face mounting obstacles (CoStar)

Imports edge up 1.6% at Port of LA – Empty containers surge 23% as frontloading and tariff fears cloud H2 demand outlook (FreightWaves)

Swiss pharmaceutical Novartis unveils $23B U.S. expansion – Plans include 7 new facilities and major upgrades to boost domestic drug manufacturing and R&D amid tariff-driven reshoring push (Bisnow)

Market Mix

Despite rising recession and tariff fears, Amazon and Google are holding firm on $175 billion in data center investments for 2025, underscoring AI's dominance as a long-term growth driver. Meanwhile, retailers like Sam’s Club are ramping up expansion and consumers are frontloading spending, revealing early behavioral shifts in response to expected price hikes

Amazon and Google reaffirm $175B in 2025 data center spend – CEOs cite surging AI demand despite recession fears and tariff-driven cost uncertainty (Bisnow)

U.S. hotel revenue per available room rose just 0.8% – Weak demand and lower occupancy drove underperformance despite easy Easter comps (CoStar)

Sam’s Club to add 15 stores annually – Expansion and remodel push aims to boost value appeal amid tariff-driven uncertainty (Bisnow)

Consumers pull forward spending ahead of tariffs – Foot traffic surged at warehouse clubs and discretionary retailers in late March, signaling early demand shifts amid price fears (Placer.ai)

Earnings & Real Estate Impact

JPMorgan’s strong Q1 results were overshadowed by warnings of tariff-driven economic turbulence, with the bank signaling caution on dealmaking but expecting trading revenue to benefit from ongoing market volatility

JPMorgan beat Q1 earnings expectations but warned of economic turbulence from tariffs, inflation, and volatility, signaling caution on investment banking but optimism for trading revenue amid market swings. 

Financings

Sequoia Mortgage Trust to issue $471.5M – Deal backed by 390 prime jumbo residential mortgages from RWT Holdings (NationalMortgageNews)

CDPQ lends $331M for Jersey City luxury tower – Tishman Speyer secures financing for 924-unit 50 Hudson St., part of a two-tower waterfront project completing by 2028 (Bloomberg)

M&A

Building & Portfolio M&A

Amazon buys 618K SF facility near Nashville for $116M – Purchase at Speedway Industrial Park pushes local industrial footprint past 10M SF (BizJournals)

Luxury Real Estate

NYC West Village penthouse listed for $87.5M – The 9,532 SF duplex at 140 Jane St. sets a new record for below 14th Street amid surging luxury demand and tight supply (Bloomberg)

Bezos sells Seattle mansion for record $63M – Record-setting deal follows his move to Florida (SeattleTimes)

Institutional Fundraising

Peebles, McNeely launch $1.5B fund for office-to-resi conversions – Donahue Douglas to target 10 cities, citing distressed assets, housing shortage, and lower tariff exposure (Bloomberg)

Distress Watch

Oakland Marriott handed to lender in lieu of foreclosure – Hawkins Way surrenders 276-room hotel amid ongoing East Bay lodging slump (GlobeSt)

Proptech & Innovation

Multifamily buildings adopt smarter leak tech – New cost-effective systems improve ROI and reduce water damage risk across multiple units (GlobeSt)