The Brick Breakdown

Hello Brick Brief readers, 

We’re watching June inflation data closely this week alongside real estate investors, as the Fed assesses how tariffs are feeding into price growth and shaping the path for rate cuts. A hotter-than-expected print could signal that tariffs are driving inflation, delaying Fed rate cuts further, extending the pain for first-time buyers relying on family help, and keeping the office recovery stuck in neutral as uncertainty slows tenant decisions.

🇺🇸📉 Inflation Risks Complicate Fed Path
The EU is threatening $24.5B in tariffs in response to Trump’s proposed 30% duties on EU and Mexican imports, adding pressure to auto and alcohol sectors as the August 1 deadline approaches. Fed officials are backing a cautious stance on rate cuts, with Goolsbee and Hammack citing tariff-driven inflation risks while Trump intensifies pressure on Powell for holding rates steady and allegedly mishandling a $2.5B Fed HQ renovation.

🏠💸 Family Help Fills Housing Gap
Nearly 24% of Gen Z and millennial buyers used gifts or inheritance for down payments, according to Redfin, as mortgage rates near 7% and home prices keep rising. First-time buyer share has dropped to a record low, while luxury and international buyers are driving up prices with $10M+ deals and a $494K median spend by foreign purchasers.

🏢📉 Office Market Sees Mixed Signals
Trophy buildings in cities like Miami, NYC, and SF are commanding record rents, but broader sentiment remains weak as total leasing volume dipped and nearly half of CRE pros expect continued softness. Redevelopment outpaced new construction in Q2, and hybrid demand is pushing tenants toward smaller, high-efficiency spaces with more owner-users active in the market.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.83% (+1 bps) 

10Y Treasury Yield: 4.43% (+1 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 772.53 (+0.67%)

30-day SOFR Average: 4.34%

Market Pulse & Rate Watch

Trump’s tariff push has triggered a $24.5B EU retaliation threat, muddied the inflation outlook, stalled Fed rate cut momentum, and fueled political pressure on Powell as tensions mount ahead of the August 1 deadline

EU threatens $24.5B in countermeasures over Trump’s 30% tariffs – Talks continue as August 1 deadline looms, with European auto and alcohol stocks hit by trade uncertainty (Reuters)

San Francisco Fed: Trump tariffs to boost factory jobs but cut real income – Manufacturing gains offset by nationwide decline in inflation-adjusted employment and earnings (Reuters)

New tariffs may delay Fed rate cuts – Chicago Fed’s Goolsbee says Trump’s latest trade moves cloud inflation outlook, urging more caution despite earlier momentum for easing (WSJ)

Fed’s Hammack backs wait-and-see stance on rates – Cleveland Fed chief says inflation isn’t low enough for cuts and urges patience amid tariff uncertainty (Bloomberg)

Fed Chair Powell requests Fed IG review of $2.5B HQ renovation – Move comes amid Trump pressure campaign to oust him over interest rates and alleged unlawful project changes (Axios)

Insight: Trump is using the Fed’s $2.5B renovation to try to force Powell out and reassert political control, but Powell’s call for an IG review shows he’s drawing a line.

Brick by Brick: Jersey Mike’s Plans $400M Bond Sale to Return Capital to Blackstone

Sandwich chain Jersey Mike’s is issuing $400M in whole business securitization bonds backed by franchise fees and trademarks, marking its second asset-backed deal since Blackstone acquired a majority stake earlier this year.

• Proceeds from the sale may be used to distribute funds to Blackstone following its $8B buyout of the sandwich chain
• The bonds are backed by Jersey Mike’s intellectual property and franchise royalties, giving investors a direct claim on the brand’s core revenue streams
• In a whole business securitization, lenders gain control over brand assets and cash flows if the company defaults, offering more protection than unsecured corporate debt
• Jersey Mike’s previously sold $850M of similar debt in December to help fund the buyout, and $500M in both 2019 and 2021
• About 99% of Jersey Mike’s restaurants are franchised, and Q1 sales rose 5% at locations open more than a year
• Guggenheim Securities is leading the deal, part of a broader trend of private equity firms using securitized debt to extract capital from consumer brands

Takeaway: Whole business securitization allows Blackstone to tap Jersey Mike’s brand value and stable royalty income for capital return. As investor appetite for asset-backed debt grows, this strategy continues to offer PE firms a path to liquidity without needing to sell.

Residential

The housing market is splitting along wealth lines, with first-time buyers sidelined by affordability while foreign and luxury demand drives prices higher

Nearly 1 in 4 young homebuyers used family money – Redfin survey finds 23.8% of Gen Z and millennial buyers relied on gifts or inheritance to fund down payments amid high housing costs (Redfin)

First-time homebuyers hit record low – Gen Z and millennials face steep affordability barriers as mortgage rates near 7% and starter home prices surge past reach (Fortune)

Foreign buyers snapping up U.S. homes again – International buyers paid a median of $494K, well above the U.S. average, as overseas demand rebounds for the first time since 2017 (NationalMortgageNews)

Luxury market outperforms broader housing sector – High-net-worth buyers drive $10M+ sales surge in 2025, with cross-border demand rising and tight inventory pushing prices up (Inman)

Office

​​The office market remains split, with trophy buildings commanding record rents and tenant demand hitting a post-2021 high, while weak sentiment, shrinking leases, and more conversions signal a long road to broad recovery

U.S. office demand holds steady in Q2 – Active tenant requirements rose 5.8% to the highest since 2021, despite leasing volume dipping 2.2% (JLL)

Trophy buildings drive record rents – Miami, NYC, and SF saw top-tier buildings command all-time high rents as average pipeline asking rent surged to $92.38/SF (JLL)

Conversions outpace new office starts – Q2 saw 8M SF removed for redevelopment versus just 7.7M SF delivered and under 1M SF breaking ground (JLL)

Office sentiment remains weak entering H2 2025 – Nearly half of real estate pros see below-average conditions, with optimism focused on other property sectors instead (CoStar)

Office occupiers reshape CRE in 2025 – Owner-user deals still elevated, leases smaller but more strategic, and hybrid models drive higher space per on-site worker (SiteSelectionGroup)

Starbucks to require four in-office days starting Sept. 29 – Corporate employees must return more frequently as part of turnaround plan; remote managers must relocate to Seattle or Toronto (Bloomberg)

Insight: Starbucks is tying its turnaround to in-person work, showing how struggling companies are using RTO to regain control.

Leasing

Harvey AI triples San Francisco HQ with Kilroy lease – The $5B legal tech startup signed for 92K SF at 201 Third St., boosting Kilroy’s occupancy amid an AI-fueled office rebound (CoStar)

The Conference Board signs 30K SF lease at 875 Third Ave in New York, NY – Nonprofit relocates within Midtown East under 20-year deal with Global Holdings (CommercialObserver)

Alexandria Real Estate signs 466K SF San Diego, CA lease with longtime pharma tenant – The life science REIT's largest deal ever will deliver a build-to-suit research hub at Campus Point by 2028 (PRNewsWire)

Industrial

Vacant industrial properties face pricing pressure – Fully leased assets like EQT's $142M NJ deal command premiums, while supply risk drives discounts for large empty facilities (CoStar)

Port of LA imports jump 10% in June – Retailers rush to stock up ahead of holiday season as tariff concerns loom despite recent truce with China (Reuters)

Market Mix

Retail

Aldi, Trader Joe’s, and Lidl lead grocery growth in H1 2025 – Visits rose 7.1%, 11.9%, and 4.9% YoY, far outpacing the 1.5% sector average (Placer.ai)

Insight: Aldi, Trader Joe’s, and Lidl are outpacing the grocery sector by expanding thoughtfully into key markets, optimizing store efficiency to boost visits per location, and tailoring their product assortments to attract loyal customers in both suburban and urban segments.

Data Centers

Trump to unveil $70B in AI and energy investments – Announcement set for Pittsburgh event alongside Sen. McCormick, spotlighting tech and energy priorities ahead of election (Reuters)

Meta to build gigawatt-scale AI data centers – Zuckerberg plans multibillion-dollar investment in titan campuses like Prometheus to power Meta’s superintelligence ambitions (Bloomberg)

Insight: Meta is pouring billions into massive data centers and top AI hires because it wants to be the number one player in the next era of AI computing 

Utilities slow rollout of self-powered data centers – Developers seek on-site generation to bypass decade-long grid delays, but outdated utility practices and regulatory hurdles limit adoption (Bisnow)

Hospitality

Sub-$50M hotel deals dominate 2025 market – Economic uncertainty, high renovation costs, and flexible financing drive activity among local buyers and family offices (CoStar)

Financings

Refinancings

AllianceBernstein provides $120M refi for Amazon-leased Westhampton, NY industrial site – 94% leased Hamptons park sees strong lender interest amid e-commerce growth (CommercialObserver)

Structured Finance

Blackstone-owned sandwich chain Jersey Mike’s to issue $400M in asset-backed securities – Debt backed by franchise fees and trademarks may fund payout to Blackstone after $8B buyout (Bloomberg)

M&A

Company M&A

Realtor.com acquires Zenlist home search app – Zenlist enables collaborative property browsing between agents and buyers, with over 35K users and multiple MLS ties (Inman)

Building & Portfolio M&A

Industrial

Brookfield buys 53-building industrial portfolio for $428M – Deal with Stonelake spans 3.6M SF across Dallas, Houston, Atlanta, and Nashville, boosting Brookfield’s bet on onshoring and light industrial demand (CoStar)

Multifamily

Pacific Housing and Kennedy Wilson acquire Richmond, CA multifamily complex for $225M – 1,008-unit Bella Vista at Hilltop includes affordable housing and resort-style amenities (TheRealDeal)

Office

Zara billionaire Amancio Ortega to buy Miami, FL office tower for $275M – Ponte Gadea nears deal for 1111 Brickell Ave from KKR and Parkway in South Florida’s largest office sale of 2025 (CommercialObserver) 

Proptech & Innovation

ReadySpaces launches flexible warehouse directory – New platform helps small businesses find co-warehousing options despite industry reluctance to share listings (GlobeSt)