Hello Brick Brief readers, 

Happy Wednesday. Today the Fed will announce its July rate decision. In recent news, we’re seeing a weakening labor market, planned tariff-driven price increases, May home price declines, and selective office market recovery. 

📉 Slower Hiring, Shaky Optimism
Job openings fell to 7.44M in June as hiring and demand cooled, especially in food service, reflecting growing employer caution. While consumer confidence ticked up in July, expectations stayed recessionary as tariff passthrough and looming consumer price hikes from companies like P&G weighed on sentiment. A weakening labor market improves the odds of a rate cut, but tariff-driven planned price increases from tariffs make the Fed’s decision more complicated.

🏠 Home Prices Under Pressure
U.S. home prices dipped in May across both FHFA and Case-Shiller indices, with rising inventory and growing price cuts pointing to softness ahead. Entry-level home sales rose 3.9% YoY as first-time buyers shifted toward the only segment with expanding supply, pushing starter home prices to a record $260K.

🏢 Office Recovery Gains Steam
Office REIT BXP beat Q2 earnings and raised its full-year FFO outlook on the back of strong leasing and accelerated return-to-office momentum. The recovery remains uneven, with demand concentrated in high-quality urban properties where tenants are doubling down on top-tier space.

30Y Mortgage: 6.77% (-4 bps) 

10Y Treasury Yield: 4.33% (-8 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 778.68 (+1.46%) 

30-day SOFR Average: 4.35%

Job openings fell and hiring slowed in June, while consumer confidence remained cautious as tariff-driven price hikes and U.S.-China trade uncertainty cloud the outlook; weak labor data supports rate cuts, but rising prices complicate the Fed’s path

Procter & Gamble will raise prices on a quarter of U.S. products to offset Trump tariffs – Consumer brands expect $7.1B–$8.3B in full-year losses as more price hikes loom (Reuters)

Insight: P&G’s Q2 earnings and its planned mid-single-digit price increases on a quarter of its items in early fiscal 2026 are exactly the kind of slow tariff passthroughs I’ve discussed in earlier editions of The Brick Brief. Rather than raising prices all at once, producers like P&G are phasing in increases to manage consumer reaction while working to protect margins. Luckily, single-digit price increases will likely have a muted effect on broader CPI.

U.S. job openings fell by 275,000 to 7.44M in June – Hiring and openings declined, led by food service losses, as labor market activity slowed and business hiring hesitancy grew (Reuters)

U.S. consumer confidence rose 2 points to 97.2 in July – Future expectations improved but stayed below recession threshold, as concerns over tariffs and high prices persisted (ConferenceBoard)

U.S. and China agreed to seek a 90-day tariff truce extension after talks in Stockholm – Final decision rests with Trump, as both sides continue negotiations and China pushes for tariff reductions (Reuters)

Mall landlord CBL Properties is acquiring four enclosed malls from Washington Prime Group for $178.9 million, a rare portfolio deal that signals renewed institutional interest in middle-market malls once considered obsolete.

• The acquisition includes Ashland Town Center (KY), Mesa Mall (CO), Paddock Mall (FL), and Southgate Mall (MT), each a dominant retail hub in its respective region
• CBL previously shed 20 malls and declared bankruptcy in 2020 before doubling down on mid-tier centers, repositioning them with more local curation and anchor replacements
• The company increased an existing loan with Beal Bank by $110 million to finance the purchase, marking its first major acquisition since 2015
• After years of closures and distress, mid-tier malls are drawing new attention as retailers expand and open-air vacancies tighten nationally
• These malls offer stable rent rolls in markets with little competition, especially in secondary cities where they serve as the only enclosed option for miles
• The move contrasts with strategies from Simon and Brookfield, which have focused almost exclusively on luxury assets in dense, affluent markets
• Unlike the office sector where value has collapsed outside of top-tier assets, CBL’s move suggests that select mid-tier malls in undersupplied markets may be regaining investor interest and offering durable income, even after years of distress

Takeaway: CBL’s return to acquisitions shows that mid-tier malls are gaining traction as steady income assets. With little new retail construction and renewed tenant demand, these centers are proving competitive outside of the trophy tier. The trend stands in contrast to the office sector, where value remains concentrated in a narrow band of premium properties.

Senate committee advances ROAD to Housing Act to boost affordability – Bill would expand housing supply, streamline programs, and encourage pro-housing zoning reforms (ConnectCRE)

DOE picks four federal sites for AI data centers and power plants – Private firms will develop projects in Idaho, Tennessee, Kentucky, and South Carolina (Bisnow)

Home prices declined in May as inventory and price cuts increased, while affordability challenges pushed the homeownership rate down to 65% and fueled a continued shift toward renting in major metros

FHFA House Price Index fell 0.2% in May but rose 2.8% YoY – Prices declined in most regions monthly, but all divisions posted annual gains, led by the Middle Atlantic at 5.9% (FHFA)

Case-Shiller U.S. home prices fell 0.3% in May – Annual growth slowed to 2.3% as inventory and price cuts hit multi-year highs, pointing to more price softness ahead (Zillow)

Starter-home sales rose 3.9% YoY in June – Inventory hit a five-year high, driving record $260K prices as first-time buyers shift toward entry-level homes amid weak broader sales (Redfin)

U.S. homeownership rate slipped to 65% in Q2 2025 – Homeowner vacancy held at 1.1% while rental vacancy eased to 7%, with affordability challenges driving more households to rent (Realtor.com)

Renters now outnumber owners in major U.S. metros – Manhattan tops 75%, Miami 69%, and Boston, LA, SF all above 60% as renting becomes the urban default (CommercialObserver)

NYC median asking rent hit $3,491 in Q2 2025, up 3.7% YoY – Rents now consume 55% of median household income, with Bronx affordability most strained and closing the gap expected to take decades (Realtor.com)

Manhattan office leasing continues to outperform

AI procurement platform Zip leases 75K SF at 680 Folsom in San Francisco’s Yerba Buena – Former Macy’s space quadruples Zip’s footprint as AI firms drive SoMa office demand (TheRealDeal)

Alphadyne Asset Management renews 44K-SF lease at NYC’s 17 State Street – RFR Realty lands multiple renewals and new tenants, with plans for upgraded amenities (CommercialObserver)

CityPickle inks 37K-SF flagship lease at NYC’s Paramount Building – Pickleball club expands NYC presence with new location at 1501 Broadway (CommercialObserver)

TM:RW takes 20K-SF at NYC’s 220 West 42nd Street in Times Square – Yellowstone Real Estate Investments lands immersive retailer as anchor tenant in Candler Building (CommercialObserver)

U.S. container rates stabilize as new trade deals set tariffs at 15%–20% – Trans-Atlantic volumes drop after auto tariffs, Asia-West Coast rates spike then fall as shippers adjust to shifting tariffs (FreightWaves)

Mars Inc. to invest $2B in U.S. manufacturing by 2026 – Includes new $240M Nature’s Bakery facility in Salt Lake City and expands pet food and snack production, creating hundreds of jobs (Bisnow)

Starbucks will close mobile order, pickup-only stores – CEO calls the format “overly transactional” as the company pivots to more inviting, staffed locations after six quarters of falling same-store sales (WSJ)

Insight: Starbucks’ pivot away from pickup-only stores signals a move to rebuild its brand around warmth, comfort, and the in-store experience. This turnaround story is something I think is worth paying attention to, because I believe Starbucks will need to follow through with real investments in store design, atmosphere, and amenities to make this shift work.

Taco Bell drives Yum! traffic up 2.6% YoY in Q2 2025 – Popeyes lifts RBI visits, while Wendy’s visit gap narrows as value deals and new menu items boost QSR resilience (Placer.ai)

Immigration raids drive shoppers and workers away from LA’s Fashion District – Foot traffic fell 32% YoY after June crackdown, squeezing small businesses and cutting cash flow (Bisnow)

California hotel sales fell 7.4% YoY in H1 2025 – Foreclosure deals boosted dollar volume, masking weak underlying demand and falling prices (CoStar)

Office REIT BXP beat Q2 earnings expectations and raised its FY FFO outlook thanks to strong leasing activity as the RTO trend accelerates, driving demand for high-quality office space in major urban markets (Reuters)

Insight: The office recovery and RTO trend is something The Brick Brief has been tracking closely for a few months now, and BXP’s strong Q2 results confirm this shift is real. Demand is clearly concentrated in high-quality urban space, and the leasing momentum is beginning to show up in earnings.

Mavrek Development lands $106M refi for Chicago’s Saint Grand apartments – 21-story, 248-unit Streeterville tower refinanced with Canyon Partners as lender (TheRealDeal)

Union Pacific agrees to acquire Norfolk Southern to create a $250B US rail giant – Creates first coast-to-coast U.S. rail company, pending regulatory approval (FT)

REIT Brixmor Property Group acquires LaCenterra Retail Center at Houston, TX’s Cinco Ranch for $223M – 409K-SF Katy lifestyle center attracts 5M+ visits yearly, with PGIM Real Estate as seller (ConnectCRE)

Mall owner CBL Properties buys four mid-tier malls from Washington Prime Group for $179M – Deal marks CBL’s first major acquisition since 2015 (WSJ)

Namdar Realty Group and Klosed Properties buy 128K-SF Brooklyn, NY retail condos in for $53M – CIM Group sells 84%-leased Dumbo retail anchored by Life Time Fitness, with $41M loan from Blue Owl Capital (TheRealDeal)

Concord Capital buys five historic LA apartment buildings for $79M – 537-unit, prewar portfolio highlights investor demand for rent-stabilized assets (CoStar)

Pillar Communities acquires Phoenix, AZ’s Huxley Scottsdale in for $76M – 193-unit, five-story multifamily from High Street Residential and PGIM, with $41.5M loan from Nationwide (ConnectCRE)

ParkTerra and Jen Partners buy Anaheim, CA’s Axis office park for $62.5M – Sellers Pendulum and Goldman Sachs exit below 2018 price as CBRE pitches site for redevelopment (CommercialObserver)

Real estate lender S3 Capital raises $730M – $450M for value-add credit Fund III and $280M in separately managed accounts and co-investments (IREI)

$23B in delinquent CMBS loans remain unresolved as most borrowers stall repayments – Office and retail properties lead the backlog, with lenders extending loans and few foreclosures amid rate uncertainty (Bloomberg)

AI is streamlining real estate operations by reducing maintenance costs and automating financing workflows, driving faster, more efficient decision-making across commercial and multifamily sectors

Proptech firms are using AI for predictive maintenance – Reducing HVAC failures, cutting costs, and streamlining work orders as adoption expands across commercial and multifamily real estate (CommercialObserver)

Lev expands CRE software adoption with AI-driven financing platform – Manhattan startup automates deal setup, lender matching, and workflows for 100+ teams, launching investment sales tools soon (CommercialObserver)