The Brick Breakdown

Hello Brick Brief readers, 

Hope you had a great weekend!

It’s a big week ahead with major bank earnings and key inflation data from June CPI and PPI, which should offer more clarity on how tariffs are affecting the broader economy and provide the Fed a better picture of how to move rates through the rest of 2025.

In recent developments, Trump unveiled new tariffs targeting Mexico and the EU, consumers continued shifting toward both luxury and discount retailers, and CMBS issuance hit a record $59.6B for the first half of 2025.

📈 Inflation Outlook Shifts Fed Expectations
June inflation is expected to rise to 2.9%, reversing a steady decline as tariffs begin passing through to consumer goods. Trump’s threat of 30% tariffs on EU and Mexico starting August 1 has escalated trade tensions, and despite recession odds falling to 33%, renewed pricing pressure may keep the Fed sidelined on rate cuts.

🏦 CMBS Market Roars Back in 2025
CMBS issuance reached $59.6B in the first half of 2025, up 35% from a year ago and marking the strongest start since before the financial crisis. The surge is fueled by large single-asset, single-borrower (SASB) deals, with Blackstone alone backing more than $11B in new issuance.

🛍️ Retail Shoppers Polarize on Price and Experience
Retail traffic has surpassed pre-COVID levels, but consumer behavior is increasingly split between luxury and discount spending. Mid-market brands are losing ground as shoppers cross-shop multiple stores to prioritize value, brand identity, and product fit over convenience.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.82% (+3 bps) 

10Y Treasury Yield: 4.42% (+6 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 767.39

30-day SOFR Average: 4.34%

Market Pulse & Rate Watch

Rising core inflation and new tariff threats are increasing pricing pressure just as recession fears ease, creating a mixed outlook that may delay Fed rate cuts despite stronger growth

Trump threatens 30% tariffs on EU and Mexico starting August 1 – Move escalates trade tensions as allies warn of countermeasures and negotiations stall (Reuters)

Recession risk drops to 33% as job growth and GDP outlook improve – WSJ survey shows weaker inflation than feared as tariffs hit softer and later than expected (WSJ)

US inflation expected to accelerate to 2.9% in June – Economists cite modest tariff pass-through on goods as core CPI rises for first time since January (Bloomberg)

Brick by Brick: Compass Opens Private Listings, Escalates Fight With NAR and Zillow
Compass is making its Private Exclusive listings available to outside brokerages and MLSes, but only if they agree not to monetize the listings or penalize Compass agents for bypassing the MLS. The move deepens its ongoing disputes with Zillow and the National Association of Realtors over control of listing data.

• Compass is suing Zillow over its policy that removes listings not uploaded within 24 hours of public marketing, calling it a direct attack on Compass' model
• The brokerage is also refusing to comply with NAR’s Clear Cooperation Policy, which mandates MLS upload for publicly marketed homes within a day
• Compass says it is protecting agents by banning platforms from selling leads, running third-party ads, or repackaging listing data
• Critics argue Compass uses off-market listings to double-end deals and limit outside competition
• MLSes could agree to Compass’ terms, but platforms like Zillow may continue to block these listings, creating a fractured distribution landscape

Takeaway: Compass is forcing the industry to reckon with who controls listing visibility. Its selective sharing model challenges long-standing rules and puts pressure on MLSes, Zillow, and NAR to either adapt or risk losing access to top-tier inventory

Policy & Industry Shifts

Congress makes Opportunity Zones permanent under new law – OZ 2.0 launches in 2027 with stricter eligibility, new reporting rules, and a map reset every 10 years (Bisnow)

Florida ends sales tax on commercial leases – New law eliminates decades-old tax starting Oct. 1, boosting tenant savings and driving office, retail, and industrial demand (GlobeSt)

Residential

Compass opens private listings to rivals with conditions – Brokerage will share off-market inventory only if firms agree not to monetize listings or penalize agents under MLS or Zillow rules (TheRealDeal)

Office

Office Visits Remain 33.3% Below 2019 Levels – Hybrid work has reshaped workplace norms, with only modest gains despite return-to-office pushes (Placer.ai)

Industrial

Build-to-suit share climbs to 34.5% as speculative industrial construction slows – Rising vacancy and cost uncertainty shift development toward tenant-specific projects  (CushmanWakefield)

Temporary U.S.-China tariff relief boosts port activity – Short-term import surge highlights industrial demand sensitivity in port-proximate markets (CushmanWakefield)

Trans-Pacific freight rates tumble despite tariff pause – Asia–U.S. East Coast rates fall 16% as trade uncertainty continues to disrupt global shipping flows (FreightWaves)

Market Mix

Retail

Retail real estate is being reshaped by a polarized consumer base, with demand concentrating in discount centers and luxury corridors while mid-tier assets face mounting vacancy risk

Offline Retail Surpasses Pre-COVID Levels – Consumers now bypass convenience to cross-shop multiple stores, prioritizing brand and product match over efficiency (Placer.ai)

Discount and Off-Price Traffic Up 30% Since 2019 – Value-driven shopping dominates as consumers flock to dollar stores, value grocers, and off-price apparel (Placer.ai)

Luxury and Discount Segments Outperform Mid-Market – Spending has split between premium and budget tiers, leaving mid-range retailers and restaurants behind (Placer.ai)

Insight: Consumer behavior has split as value-driven and premium shoppers dominate, leaving mid-tier brands struggling to stay relevant

Eatertainment Up, Museums Down, Movies Volatile – Value perception shapes entertainment habits, with only blockbuster films driving meaningful movie theater traffic (Placer.ai)

Hospitality

Air travel is rebounding on volume, but weaker hotel performance signals a shift in spending away from leisure experiences toward essentials like food and retail, pressuring hospitality revenues

Airport Visits Driven by Frequent Travelers Only – Experience spending lags as infrequent travel and casual outings lose share to retail and dining (Placer.ai)

TSA data shows record July 4 air travel – 18.6M passengers flew July 1–7, up 1.2% YoY, but hotel occupancy, RevPAR, and demand fell YoY despite peak ADR gains on July 4 (CoStar)

Insight: TSA data rose while hotel performance fell, likely because more travelers took shorter trips or opted for Airbnb and other STR alternatives to avoid peak holiday rates.

Financings

CMBS issuance hits $59.6B in H1 2025, up 35% YoY – Single-asset single-borrower deals dominate as Blackstone backs $11.2B, marking strongest first half since before 2008 (Trepp)

Loans

Pretium issues $1B in homebuilder loans as banks pull back – Don Mullen’s firm aims to fund 5,000 new homes and become a top private lender by 2027 (Reuters)

Refinancings

Vornado secures $450M refinancing for Apple-anchored Manhattan office – Penn 11 building sits across from Penn Station as Vornado boosts liquidity (CoStar)

Värde Partners lends $97M to refinance Manhattan luxury multifamily – 186-unit Hudson Yards property is backed by Joy Construction, Maddd Equities, and Drew Katz (CommercialObserver)

Blue Owl Capital lends $66M to refinance San Antonio, TX data center – AGC Equity Partners secures loan for 75.8K SF Stream-operated facility with 8.5 MW capacity (CommercialObserver)

M&A

Company M&A

Walgreens shareholders approve $10B buyout by Sycamore Partners – Deal takes retailer private with up to $14.45/share payout and expected closing in late 2025 (WSJ)

Entertainment Chain Lucky Strike buys 58 locations for $306M across 16 states – Deal cuts $21M in annual rent and boosts cash flow as company gains control of key real estate assets (Bisnow)

Insight: Lucky Strike is turning landlord to cut rising rent costs and lock in long-term control of its highest-performing entertainment venues. That contrasts with PE retail buyout models that unlock value by selling off real estate, showing a focus on operational flexibility over short-term gains.

Office REIT Orion Properties rejects $126M buyout bid from Kawa Capital – 7.8M SF portfolio firm declines offer amid stock rebound and GSA lease exposure concerns (TheRealDeal)

Building & Portfolio M&A

Data Center

Menlo Equities buys Atlanta airport data center from Digital Realty for $65.5M – 383K SF facility sold at $171/SF, well below Georgia's $300/SF average (Bisnow)

Multifamily

Veris sells North Jersey apartment complex for $85M – Signature Place in Morris Plains includes 197 units, with proceeds going toward a $200M loan repayment (CoStar)

Distress Watch

$120B in low-DSCR multifamily loans set to mature by 2026 – Trepp flags South Atlantic and Pacific regions as prime buying grounds amid refinancing strain and discounted asset potential (Trepp)

One California Plaza in Downtown LA enters foreclosure as value drops 74% – 42-story office tower is now worth $121M, far below $300M CMBS loan amid high vacancy and NOI decline (TheRealDeal)

Silver Creek secures $71M to rescue Los Angeles, CA mixed-use project from foreclosure – New loan revives stalled development with hotel, apartments, and Viper Room rebuild (TheRealDeal)

Proptech & Innovation

Disaster-resilient RSG 3-D building system gains traction in California – Prefab panels offer fireproof, high-strength shells at competitive costs as wildfires drive demand for safer construction (GlobeSt)