Key Insights

Trump’s 25% tariffs on Mexico and Canada could drive higher inflation, especially in manufacturing and housing, as rising input costs (+7.5%) and slowing growth weigh on the economy.

With 748 leases canceled (~10% of active leases) and agencies like the SEC cutting office space, D.C. faces rising vacancies and $1B in lost tax revenue by FY2028.

Despite slowing home sales (1 in 7 deals canceled) and high interest rates hitting home improvement spending, multifamily remains strong—Yardi raised its 2025-26 supply forecast, and major funds like Fairfield ($1.5B) and Cantor Silverstein ($470M) continue investing.

Quick Markets

30Y Mortgage: 6.74% (-4 bps)
10Y Treasury Yield: 4.159% (-9.5 bps)
FTSE NAREIT Index: 809.31 (+0.67%)
30-day SOFR Average: 4.36%

Market Pulse

Trade tensions and rising costs threaten economic momentum, with new tariffs on Mexico and Canada adding inflationary pressure just as manufacturing growth slows

Trump Imposes 25% Tariffs – Effective today, new tariffs on imports from Mexico and Canada fuel fears of rising inflation and trade war tensions (AP)
US Manufacturing Growth Slows – February PMI fell to 50.3 as new orders declined and input costs surged 7.5% due to tariff uncertainty (Investopedia)

Policy & Industry Shifts

Government downsizing accelerates the office sector downturn, with federal lease reductions and SEC office cuts deepening commercial real estate challenges.

TSMC to Invest $100B – The Taiwanese chipmaker plans five new US semiconductor plants (Reuters)
Federal Lease Cuts – The government has canceled 748 commercial leases, ~10% of all active federal leases (CoStar)
D.C. Faces $1B in Lost Tax Revenue – Federal workforce cuts are reducing commercial property values and local spending (Bisnow)
SEC May Lose Office Space – The GSA is planning to terminate SEC leases in Los Angeles, Philadelphia, and possibly Chicago, forcing full-time telework if new space isn't secured (Bloomberg)

Housing & Real Estate Trends

The housing market continues to weaken as high interest rates drive home sales cancellations and curb remodeling demand, adding pressure to the broader real estate sector

Pending Home Sales Drop – 1 in 7 pending home sales were canceled in January, the highest rate for this time of year (Redfin)
Home Improvement Spending Slows – High rates and immigration uncertainty weaken remodeling demand, pushing related stock prices lower (FT)
Multifamily Construction Outlook Improves – Yardi raised its 2025-2026 multifamily supply forecast, expecting the second-highest completions level since 2008 (GlobeSt)
LA Wildfire Damages – January’s fires caused $53.8B in property damage, with real estate losses projected to exceed $1B (Bisnow)

Financings

Lenders show confidence in major markets, with large-scale refinancings signaling resilience in commercial and multifamily assets

$450M Refinancing – Wells Fargo & Morgan Stanley refinanced Hines’ Texas Tower in Houston, marking the first CMBS deal of its kind outside NYC in two years (TheRealDeal)
$275M Loan – Apollo refinanced Rockpoint & Brooksville’s luxury apartment towers in Manhattan’s financial district (Bloomberg)
$42M Freddie Mac Loan – Newmark recapitalized a 320-unit multifamily complex near Orlando, with GSH Real Estate securing $59M in total financing (CommercialObserver)

M&A

Commercial real estate M&A remains selective, with firms focusing on high-quality assets and strategic acquisitions

Howard Hughes Rejects $900M Buyout – The board deemed Bill Ackman’s Pershing Square offer "not acceptable in its current form" (Bloomberg)
Blackstone Eyes Midtown Manhattan Office Tower – The firm is in talks to acquire a 1.9M SF office building last appraised at $896M from Fisher Brothers & JPMorgan Asset Management (TheRealDeal)
Peterson Cos. Buys Bethesda Tower – The firm acquired a 322-unit luxury high-rise from JBG Smith for $194M (Multihousingnews)
Bascom Acquires LA Multifamily – The group purchased the 257-unit Highridge Apartments for $127M from Essex Property Trust (CommercialObserver)

Institutional Fundraising

Investors are betting on data centers for high growth and multifamily for stability, as capital flows toward resilient and demand-driven asset classes

$3.6B Data Center Fund – Principal AM closed its fund at $3.6B, targeting $8B in hyperscale data center investments (Businesswire)
$1.5B Multifamily Fund – Fairfield closed its fourth value-add fund, focused on 30 U.S. markets (GlobeSt)
$470M OZ Fund – Cantor Fitzgerald & Silverstein Properties will develop 1,932 multifamily units across four cities (ConnectCRE)

Distress Watch

$6.1B in Delinquent Multifamily Loans – Community banks report a multifamily loan delinquency rate of 0.97% (CommercialObserver)
Denver Office Tower Default – Westport Capital surrendered a 300K SF property to its lender, Benefit Street Partners, after defaulting on a $48M loan (TheRealDeal)

Market Watch

LA Retail Vacancy Steady at 5.9% – However, investment sales fell to $345.3M in Q4, down from $527.6M in Q3 (CBRE)