Hello Brick Brief readers, 

Happy Monday. In recent news, odds for a December rate cut fell below 50%, Fitch projected a weak housing market through 2027, and the Union Pacific–Norfolk Southern merger moved into its next phase.

📉 Markets Repriced December Cut Odds
Traders pared December easing bets on Friday as firmer Fed rhetoric pushed them to price a 54% chance of no rate cut and lift the 10Y yield to 4.15%. Mortgage rates moved to 6.38% after Logan and Schmid warned that uneven inflation progress and resilient demand reduce the case for further preemptive easing.

📊 Housing Faces Cooling Momentum
Housing demand continues to soften as Fitch projects flat national price growth in 2026 and highlights Southern supply gluts that weigh on prices despite tight Northeast markets. AI and other pressures are slowing junior-level white-collar job growth, which will weaken demand for affordable homes until the entry-level labor market recovers.

🚂 Coast-to-Coast Rail Merger Reshapes Logistics
The $85B Union Pacific–Norfolk Southern merger would create the first coast-to-coast rail network and unlock faster single-line service that shifts long-haul freight patterns. This scale draws heavy regulatory scrutiny and carries significant implications for industrial real estate because rail-driven routing changes influence demand across port-adjacent warehouses, inland hubs and last-mile infill sites.

30Y Mortgage: 6.38% (+4 bps) 

10Y Treasury Yield: 4.15% (+3 bps)

WSJ Prime Rate: 7.25%

FTSE NAREIT Index: 762.08 (+0.28%)

30-day SOFR Average: 4.14%

Traders reacted to firmer Fed rhetoric pushing for caution on further easing and are now pricing a 54% chance of no December rate cut.

Bonds head for their strongest year since 2020 – Fed rate cuts, easing inflation, and slowing consumer demand lift Treasurys and corporate debt despite tariff concerns (WSJ)

Fed hawks push back on easing – Hammack, Logan and Schmid warn on inflation as traders shift to a 60% chance of no December rate cut after weeks of expecting another move (Reuters)

Fed's Logan resists a December cut – She says inflation is not cooling fast enough and argues the labor market does not warrant more preemptive easing (Reuters)

Fed's Schmid pushes back on more cuts – He says additional easing could entrench inflation and that labor market stress comes from structural forces, not policy (Bloomberg)

Kugler resigned from the Fed after violating trading rules – Newly released disclosures show improper stock transactions that prompted an ethics probe (WSJ)

Union Pacific and Norfolk Southern are attempting to build the first single-carrier coast-to-coast freight rail system in an $85B merger that would dramatically change how bulk goods and intermodal containers move across the United States. 

🧱 Shareholders Approve the $85B Transcontinental Rail System
Over 99% of shareholders at both Union Pacific and Norfolk Southern voted in favor of the $85B deal, which would form the nation’s first coast-to-coast freight railroad, linking over 50,000 route miles and nearly 100 ports into a single network that can handle long-haul grain, autos, chemicals and intermodal freight.

🧱 Regulatory Review Now Defines the Timeline
The transaction enters its critical phase as the Surface Transportation Board begins reviewing the deal under its stricter post-2001 Class I merger framework, which requires demonstrable public-interest and competitive benefits. Union Pacific and Norfolk Southern expect to file a full application by late 2025 or early 2026, which sets up a roughly 12 to 18 month review period and makes early 2027 the earliest realistic closing date subject to conditions and remedies.

🧱 Antitrust Scrutiny Will Focus on Market Concentration and Shipper Impact
Regulators and state officials are likely to apply intense scrutiny since the merger would consolidate two of the four largest U.S. freight railroads into a single transcontinental operator with expanded pricing and routing influence. Republican attorneys general and shipper groups have already raised concerns about higher rates, reduced service flexibility and greater dependence on one carrier in key corridors, citing past consolidation and service problems as warning signs.

🧱 Industrial Real Estate Could Realign as Freight Flows Shift
The combined network would likely rewire national freight flows by enabling end-to-end single-line service that removes interchange handoffs and shortens important lanes by one to two days. Faster and more predictable long-haul rail would increase throughput at major coastal gateways, which supports stronger demand for port-adjacent warehouses that rely on high container velocity. Inland hubs such as Chicago, Kansas City, Memphis, Dallas and Atlanta would likely capture additional intermodal volume as shippers channel more freight into large rail-served distribution nodes that feed regional trucking networks. Infill last-mile facilities would retain a central role since final delivery still depends on dense truck coverage, and any rail service volatility tends to push time-sensitive freight toward truck-focused urban warehouses rather than away from them. This shift would add another tailwind for owners of last-mile infill industrial sites since stronger rail connectivity would amplify the same demand drivers tied to e-commerce growth that Blackstone and Hines both highlight as core investment themes.

Takeaway: The Union Pacific–Norfolk Southern merger creates meaningful network efficiencies by stitching major U.S. freight corridors into a single coast-to-coast rail system with faster transit times and more reliable long-haul service. The transaction, however, faces real antitrust risk as state officials and shippers are questioning whether one transcontinental operator would hold excessive pricing and routing power in critical markets. The eventual outcome will matter for industrial real estate because changes in rail velocity and routing will directly influence demand for port-proximate warehouses, inland intermodal hubs and last-mile distribution assets across the national logistics chain.

JLL sees construction costs continuing to rise in 2026 – Trade tariffs and immigration enforcement are pushing material and labor costs higher even as interest rate cuts offer limited relief (JLL)

HUD moves to redirect two-thirds of its $3.5B homelessness budget toward treatment programs – The shift cuts permanent housing aid and ties assistance to treatment and work requirements, raising fears of widespread loss of support (Bisnow)

Fitch flags cooling housing conditions through 2027 – The firm expects home price growth to be flat in 2026 after 1.5% in 2025 and 4% in 2024 due to low affordability and supply gluts, with Southern inventory weighing on prices and tight Northeast supply supporting gains (FitchRatings)

High-end job growth has stalled leading to weakening housing demand – Key white-collar sectors have flatlined, shrinking the qualified buyer pool and reducing the impact of builder incentives (HousingWire)

Insight: This data shows why you need to track the economy, rates, and broader macro trends to understand real estate supply, demand, and pricing - everything moves together. AI and other pressures are slowing junior-level white-collar job growth, which weakens demand for affordable homes. Until the job market recovers for entry-level participants, even lower rates may not bring buyers back.

Luxury housing is on track to surpass $330B by 2030 – Southeast markets led growth as cash buyers, wealth transfers and tight high-end inventory funneled demand into new developments and larger estates (HousingWire)

Home improvement contractors stay cautiously optimistic despite softer demand - 57% expect growth over the next 12 months, down from 71% a year ago, as material costs, tariffs and an 11% quarterly drop in backlogs signal cooling activity (HousingWire)

State Street expands to 163K SF at 700 District Ave in Burlington, MA – The financial services giant renewed its lease and added about 15K SF to anchor The District office building through 2037 as Boston sees a burst of recommit-and-expand deals (CoStar)

Nexon America renews 49K SF with BLT Enterprises at 621 Hawaii Street in El Segundo, CA – The video game developer extended its creative office headquarters lease through 2033 in a deal valued at about $15M (CommercialObserver)

Union Pacific and Norfolk Southern shareholders approve $85B merger – The deal moves forward with 99% support and would create the first coast-to-coast U.S. freight rail operator pending regulator review (Reuters)

Self-storage construction slows nationwide – Yardi Matrix says new starts fell 7.8% YoY through Q3, but a larger pipeline is boosting 2025 and 2026 completion forecasts (ConnectCRE)

Aldi effect reshapes U.S. grocery aisles – Private label sales are rising 4.2% as inflation pushes shoppers toward cheaper store brands that now outpace national brands’ 1.1% growth (FT)

Insight: I’m glad that cheaper private-label alternatives are finally putting pressure on food oligopolies because this is how we drive costs down for everyone.  I don’t even eat chips anymore, but I’d gladly choose the generic branded bag at half the price as they basically taste the same as PepsiCo’s Frito-Lay lineup.

Indoor mall traffic rose ~4% YoY in October – Open-air centers climbed ~3% YoY and outlet malls returned to positive territory after September’s steep drop, signaling an early-holiday rebound (Placer.ai).

Outlet mall traffic swung from an ~8% YoY decline in September to slight YoY growth in October – Value-focused shoppers drove the strongest recovery across mall formats (Placer.ai)

Kim Kardashian’s Skims hits a $5B valuation after raising $225M – The brand accelerates store expansion as its 18 U.S. locations and growing mall presence push net sales toward $1B in 2025 (Bisnow)

Tech giants pour billions into AI infrastructure – Google, Nvidia, OpenAI, Meta and Oracle accelerate a wave of $40B-plus data center and chip deals as demand for compute surges (Reuters)

Google announces $40B Texas data center buildout – Three new sites in Armstrong and Haskell counties expand AI capacity as tech giants race to secure power, land and cloud infrastructure (Reuters)

BlackRock and ACS launch a $27B data-center JV – GIP committed €5B in equity and €18B in debt for a 50% stake, while Spanish construction firm ACS contributed a $2.3B data-center portfolio across the U.S., Europe, and Australia with an 11-GW pipeline (Bisnow)

This JV is primarily European so it’s not directly relevant, but I included it because the portfolio and pipeline span US data centers and BlackRock’s GIP is involved.

Tech moguls explore building data centers in outer space – Energy constraints in the AI race push billionaires to consider lunar-powered compute hubs for future model training (WSJ)

U.S. hotel RevPAR jumps 6.2% YoY for the week ending 8 November – Easy election-week comps and stronger group demand lifted occupancy and ADR, with Top 25 markets posting 9.6% YoY growth and limited shutdown impact (STR)

J.P. Morgan, Sculptor Real Estate and Morning Calm provide a $686M construction loan for a condo tower in Las Vegas, NV – Azure Resorts & Hotels, Luxus Developments and Two Roads Development will use the financing to build the Four Seasons Private Residences at 669 Dragon Peak Drive; project is 75% pre-sold (CommercialObserver)

Tokyo Tatemono US and BMO Bank provide an $88.4M construction loan for a mixed-use project in Long Beach, CA – JPI will use the financing to build Portico, a 272-unit development at 450 Promenade North that forms the first phase of the larger Mosaic redevelopment (CommercialObserver)

Carlyle Group sells a 12-story luxury rental building in Brooklyn, NY for $85M – Hubb NYC Properties bought the 105-unit property at 181 Front Street in Dumbo with a $43.33M loan from JLL Real Estate Capital (CommercialObserver)

Ken Griffin sells a 48K SF retail building in Palm Beach, FL for $80.5M – TZ Capital will acquire the former Neiman Marcus property at 151 Worth Avenue and plans extensive renovations to attract boutique retail tenants (TheRealDeal)

Breakthrough raises a $430M life sciences fund – The Tishman Speyer and Bellco Capital JV closed its second vehicle to capitalize on what it calls the strongest life sciences investment window in years (PERE)

Insight: They see life sciences as compelling because the construction pipeline has thinned at the same time onshoring is pushing pharma firms to expand their US footprint. Sentiment is currently deeply negative after a wave of COVID-era overbuilding left large blocks of lab space sitting vacant. 

On the other hand, however, they may be overlooking how AI-driven modeling and drug discovery could reduce the long-term need for traditional wet lab space. Google’s Isomorphic Labs is moving toward human trials with AI-designed drugs that replace much of early discovery and validation work, which could ultimately reduce how much physical lab space pharma companies need. Isomorphic is still in the preclinical stage and hopes to begin human trials this year, though it will likely need several years to ramp before any material impact shows up in real estate demand. How much demand this could actually remove is unclear, since the impact depends on how quickly pharma firms trust AI pipelines enough to shift work out of traditional wet labs, but the risk is real.

Marquee Capital forms a $400M programmatic JV to acquire and manage Midwest retail strip centers – The venture provides $400M of investment capacity, including an initial $70M tranche for recapitalizations and near-term acquisitions (IREI)

AI home search tools expanded in 2025 – Redfin and Real Brokerage launched conversational AI search to boost lead quality and tours while MoxiWorks, Renowned, and Opteon rolled out new platforms that strengthen agent marketing and valuation workflows (HousingWire)

Figure’s loan marketplace hit $2.5B in Q3 volume – HELOC demand and new products drove a 70% YoY jump while Figure Connect, its blockchain-native loan marketplace, added $1.1B and first-lien HELOC volume nearly tripled (HousingWire)