Hello Brick Brief readers, 

Thank you for your continued support! Today we’re seeing the Fed debate AI’s impact on rates, housing affordability remain strained, and JLL projecting Texas will surpass Virginia as the top data center market by 2030.

🤖 Fed Debates Whether AI Keeps Rates Higher
Fed officials are mixed on AI’s rate impact, as Barr and Jefferson warn an AI investment boom could keep the baseline rate higher by raising demand for capital and pushing neutral rates up. Goolsbee and Daly sound more open to easing, with Daly arguing productivity gains could become disinflationary over time and support ~1–2 cuts in 2026 once they show up in the data.

🏠 Housing Affordability Forces Price Discovery
Homebuilder sentiment hit a five-month low as high construction costs and still-elevated mortgage rates keep buyers sidelined despite incentives, pushing NAHB confidence down to 36 in February. Redfin reported US home prices rose 0.3% MoM in January and slowed to 2.1% YoY amid growing buyer leverage, while NAHB economist Robert Dietz believes existing home sales still reflect pandemic-era pricing, as new builds are 15% cheaper than 2022.

⚡ Data Center Growth Shifts To Texas As AI Bottlenecks Deepen
JLL is projecting that Texas will overtake Virginia as the world’s largest data center market by 2030, as AI-driven demand and power constraints push new supply into emerging hubs across North America. To help resolve a memory bottleneck for data centers, Micron is planning to invest $200B in US manufacturing to expand AI memory supply, including a $100B manufacturing complex in upstate New York.

Fed warns AI-driven productivity could push neutral rates higher – Officials like Barr and Jefferson say an AI investment boom may raise capital demand and reduce savings, limiting room for cuts even as Trump allies argue productivity gains should bring rates down (Bloomberg)

Fed’s Barr backs holding rates steady as goods inflation lingers – He said policymakers need clearer evidence inflation is retreating toward 2% and warned an AI-driven productivity boom is not a reason to cut, with rates likely on hold for some time (Bloomberg)

Fed’s Daly urges vigilance for early AI productivity signals – She said AI’s macro impact is still unclear in the data, but disinflationary productivity gains could eventually support one or two rate cuts in 2026 (Bloomberg)

Fed officials Barr and Jefferson argue that an AI investment boom could keep the baseline rate higher because companies will need massive funding for data centers, chips, and infrastructure, raising demand for capital and pushing real interest rates up to balance investment with available savings. Daly, on the other hand, argues AI could become disinflationary over time, as faster productivity allows workers and firms to produce more output per hour, lowering unit costs and easing price pressures, which could eventually give the Fed room for 1–2 cuts in 2026 once those gains show up in the data.

Fed’s Goolsbee signals more 2026 rate cuts if inflation cools – He said policymakers could keep easing if services inflation falls and tariff-driven price hikes prove transitory on the path back to the 2% target (Bloomberg)

Data center REITs drive listed real estate rebound in early 2026 – FTSE Nareit All Equity REITs index is up 9.2% YTD as data center REITs jump ~22% on renewed AI infrastructure demand and improving landlord pricing power (TheRealDeal)

CBRE, Colliers, Marcus & Millichap defend brokerage model as AI fears hit stocks – CEOs said AI may streamline underwriting and analytics but cannot replace relationship-driven negotiation in complex CRE transactions, even as investors question high-fee service margins (CoStar)

Insurers face $17B office loan maturity wall in 2026 as lending pivots away from the sector – Life companies are letting many office loans refinance elsewhere and reallocating new capital toward multifamily and industrial loans (Bisnow)

NYC weighs 9.5% property tax hike to plug $5B budget gap – Mayor Mamdani’s proposal would raise $3.7B but faces pushback as landlords warn of deeper strain on rent-stabilized housing and small businesses (Bloomberg)

San Francisco passes law to spur office-to-housing conversions – The city approved a special financing district to lower project costs and accelerate apartment redevelopment of vacant downtown office buildings (CoStar)

Homebuilder sentiment hits five-month low as affordability bites – NAHB confidence fell to 36 in February as high construction costs and still-elevated mortgage rates keep buyers sidelined even with incentives (Bloomberg)

Home prices could fall in many markets in 2026 as resale sellers finally cut prices to compete with builder discounts – NAHB economist Robert Dietz says existing homes still reflect pandemic-era pricing while new builds are ~15% cheaper than 2022, forcing broader price discovery as affordability strains persist (Realtor.com)

U.S. home prices rise 0.3% MoM in January as YoY growth slows to 2.1% amid buyer leverage – Elevated mortgage rates near 6.1% are keeping demand muted with 47% more sellers than buyers, limiting price gains across many metros (Redfin)

U.S. rents fall for 29th straight month as median asking rent dips 1.5% YoY to $1,672 – Vacancies climbed to 7.6% across major metros, shifting more markets into renter-friendly territory even as tight hubs like Boston and New York remain landlord-favored (Realtor.com)

Apartment transactions rose for the third straight quarter in Q4 2025, with ~$60B of deals across ~1,910 properties – Cap rates averaged 5.55%; the largest $200M+ trades clustered in coastal markets like San Jose, Seattle, and Boston (RealPage)

Office CMBS delinquency hits record 12.34% as lenders end “extend and pretend” – Creditors are increasingly forcing defaults and workouts as refinancing gaps persist and hybrid work drives structural value declines in struggling downtown office markets (WSJ)

Office market turns K-shaped as trophy towers regain momentum – Demand is concentrating in best-in-class space in cities like NYC and Dallas, while older buildings lag and AI adds uncertainty to the long-term leasing outlook (Bloomberg)

Avison Young saw office investment sales jump 20%+ in 2025 as values bottomed – Investors returned to value-add office deals as pricing reset created attractive entry points; core buyers remain limited, and high concessions still complicate underwriting (CoStar)

Groombridge, Wu, Baughman & Stone signs 43K SF office lease at SL Green’s 1185 Avenue of the Americas in Manhattan, NY – Science-focused law firm is relocating from 565 Fifth Avenue within Midtown (CommercialObserver)

East West Bank signs 38K SF office lease at Rudin’s 345 Park Avenue in Manhattan, NY – The California-based lender is relocating and expanding from its Madison Avenue offices within Midtown East (CommercialObserver)

BlackRock launches industrial net lease REIT after ElmTree and HPS deals – The $13.5T asset manager formed HPS Net Lease Income REIT to target stabilized build-to-suit warehouses and sale-leasebacks as reshoring and e-commerce drive demand (CoStar)

In early September 2025, BlackRock completed its acquisition of ~$7.3B-AUM net lease giant ElmTree Funds to build a scaled industrial net lease platform inside its new private financing arm and channel more institutional capital into long-duration warehouse cash flows.

BlackRock and Hines see the same structural tailwinds for industrial, with e-commerce expansion and reshoring-led manufacturing investment sustaining long-term demand for modern warehouse space.

Micron invests $200B in U.S. manufacturing to expand AI memory supply as HBM shortages become a data center bottleneck – The buildout includes a $100B manufacturing complex in upstate New York (WSJ)

Grocer Sprouts Q4 visits rise 4.0% YoY as expansion broadens trade areas beyond core markets – Growth is increasingly coming from shoppers traveling 5+ miles, signaling stronger destination appeal as the grocer scales into new states like New York (Placerai)

Texas set to overtake Virginia as world’s largest data center market by 2030 – JLL said AI-driven demand and power constraints are pushing new supply into emerging hubs and reshaping North America’s digital infrastructure map (CoStar)

Ormat signs 150 MW Nevada geothermal deal to power Google data centers – The long-term NV Energy PPA supports new projects coming online in 2028–2030 as Big Tech turns to clean power to meet surging AI-driven electricity demand (Reuters)

Developer proposes 4M SF data center campus in Hampton, GA near Atlanta – The 603-acre hyperscale project is slated for completion by 2033 as metro Atlanta’s pipeline continues surging; local officials are weighing a temporary moratorium on new projects (Bisnow)

Wartsila targets US data center power boom as turbine shortages open new market – Finnish engine maker has secured ~1.2 GW of gas-engine orders since last summer and sees AI-driven electricity demand creating rare pricing and share gains in backup generation (Bloomberg)

US hotel property sales rose 6.7% in 2025 to $24.2B – Deal activity skewed toward smaller economy-class assets with average sale prices near $9M as transaction volume gradually recovers (CoStar)

Fairfax and management agree to take Kennedy Wilson private in $1.6B deal – Kennedy Wilson manages $31B across multifamily, industrial, office and a $10.5B debt platform (Bisnow)

Theater chain AMC seeks $2.5B refinancing package as debt wall nears – The company is marketing a $750M term loan and new secured debt to refinance maturities and fund theater upgrades (Bisnow)

Brookfield wins extension on $835M One New York Plaza office loan in Manhattan, NY – The CMBS maturity was pushed to 2028 after a $25M paydown and $20M leasing reserve; occupancy is down to 83% (Bisnow)

Dan Hotels buys Sapir Organization’s NoMo SoHo hotel at 9 Crosby Street in Manhattan, NY for $121M – Sale resolves Sapir’s bankruptcy-linked disposition and helps pay down $155M of bond debt tied to the property (CommercialObserver)

Mall REIT Simon moves to reclaim Saks stores in Palo Alto, CA and Woodbury, NY – The landlord alleges $5.7M in unpaid rent as Saks fights to keep the leases protected in Chapter 11 (Bloomberg)

AI Threatens Proptech SaaS Business Models – VCs say AI will layer onto systems of record near term, but “vibe coding” and workflow automation could compress software fees and disrupt entry-level roles before any full rip-and-replace shift (CommercialObserver)

Tokenized real estate investment grows toward $4T projection by 2035 – Experts warn blockchain deals may expand access and liquidity but still require old-fashioned due diligence as bad actors market weak assets to novice investors (Bisnow)