Hello Brick Brief readers, 

Thank you for your continued support! Today we’re seeing markets digest fresh employment data, households squeezed by affordability pressures, and Macy’s deliver a surprising lift as mid-tier retail proves resilient.

🏦 Market Sees September Rate Cut as Almost Certain
Markets now view a September rate cut as nearly guaranteed after July’s steady but slowing labor data. Fed officials remain divided, with Waller calling for multiple cuts while Bostic and Musalem prefer a slower pace, leaving policy messaging mixed.

🏠 Households Remain Under Affordability Pressure
Homeowner households fell 0.1% YoY in Q2, the first decline since 2016, while renter households rose 2.6%. High prices and 6.56% mortgage rates are keeping ownership out of reach for many and reinforcing the long-running affordability squeeze.

🛍️ Macy’s Delivers a Surprise Boost
Macy’s reported its strongest comparable sales growth in 12 quarters, raised its outlook, and saw shares jump 20%. The results surprised given value retailers’ dominance, and the company’s modernized stores show how refreshed design is shaping mid-tier retail success.

30Y Mortgage: 6.49% (-4 bps) 

10Y Treasury Yield: 4.22% (-6 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 766.37 

30-day SOFR Average: 4.36%

Markets are weighing steady July hiring against mixed Fed messaging, with Waller pushing for aggressive cuts while Bostic and Musalem urge patience

US hiring and layoffs steady in July – Layoff rate held at 1.1% and hiring at 3.3% while job openings slipped to 7.2M, signaling a labor market that is slowing but not stalling (WSJ)

Fed Beige Book shows little or no US growth – Consumer spending flat to declining as wages lag prices, tariffs drive input costs higher, and most districts report stagnant employment (Bloomberg)

Fed Governor Waller backs multiple rate cuts starting in September – Says policy is above neutral and tariffs have slowed hiring, urging proactive easing to avoid a sharp labor downturn (Bloomberg)

St. Louis Fed President Musalem says rates are well positioned – Calls for a balanced approach as labor market cools and inflation hovers near 3%, with tariff impacts expected to fade in coming quarters (Bloomberg)

Atlanta Fed President Bostic supports one rate cut in 2025 – Says policy is “marginally restrictive” and risks between inflation and employment are balanced, though timing could shift with labor data (Bloomberg)

Two of San Francisco’s biggest hotels, Hilton Union Square and Parc 55, have finally found buyers after a two-year struggle in default and receivership. Witkoff Group, Newbond Holdings, and Conversant Capital are acquiring the properties after agreeing to assume and restructure a $725M CMBS loan.

• Hilton Union Square is San Francisco’s largest hotel with 1,921 rooms, while Parc 55 ranks among the top five with 1,024 keys. Together they anchor the Union Square hospitality market
• The properties were valued at nearly $1.6B in 2016, but a July bondholder report pegged them at just $450M to $500M. The collapse reflects a steep drop in convention traffic, slower international tourism, remote work reducing corporate travel, and persistent concerns about safety downtown
• Park Hotels & Resorts, the former owner, defaulted on the $725M CMBS loan in 2023 as cash flow could not cover debt service. The hotels were transferred to a court-appointed receiver working for Wilmington Trust and Wells Fargo as special servicer
• Foreclosure deadlines were extended several times while the receiver searched for a buyer. Witkoff, Newbond, and Conversant stepped in with deposits and agreed to inject capital to stabilize operations and fund renovations
• Buyers are betting on a rebound. Tourism is expected to reach 23.5M visitors in 2025 with nearly $9.4B in spending, up from last year. Upgrades and repositioning could allow the hotels to capture more of that recovery as convention business and leisure travel gradually return
• The Bay Area hotel market remains stressed, with multiple properties in Oakland, Berkeley, and San Jose also slipping into foreclosure. Hilton Union Square and Parc 55 stand out due to their scale and central role in San Francisco’s hospitality ecosystem

Takeaway: San Francisco hotels have been hit hard by the collapse of business travel, weak conventions, and safety concerns that drove values down by more than two-thirds since 2016. Park Hotels defaulted when revenues could not meet CMBS debt, but new investors are wagering that fresh capital and a slow rebound in tourism will restore cash flow. The deal highlights how opportunistic buyers are stepping into distressed trophy hotels at steep discounts, hoping to ride the city’s recovery cycle.

U.S. homeowner households dip 0.1% YoY in Q2, first decline since 2016 – Renter households rise 2.6% as high prices and 6.56% mortgage rates push more Americans to rent; homeownership rate 65% (Redfin)

26.1% of U.S. homes worth $12.7T face severe climate risk – Insurance burdens are heaviest in Florida and Louisiana, while flood, wind, and wildfire exposures threaten property values and market stability (Realtor.com)

NYC and Miami lead office recovery with visits down 11.9% and 16.2% since 2019 – San Francisco and Denver lag with declines over 45% (Placer.ai)

Office visits concentrate near workplaces – Share of visits from residents within 5 miles continues to rise, showing commute distance drives return-to-office trends (Placer.ai)

Manhattan office leasing hits 3.7M SF in August, up 41% YoY – Availability rate tightens to 15%, sublet supply falls for 11th straight month, and average asking rent rises to $74.73/SF (Colliers)

Personal Touch Homecare leases 21K SF at 15 Parkville in Brooklyn, NY – Guardian Realty Management-owned mixed-use property will serve as office and training center under 10-year deal at $55 PSF (CommercialObserver)

Texas and Mountain states drive long-term population growth – Lakeland, FL and Provo, UT among fastest-growing metros at nearly 9% population growth since 2021 (Placer.ai)

Open-air shopping center visits surpass pre-pandemic levels at +1.6% – indoor malls remain 4.6% below 2019, reflecting consumer preference shifts (Placer.ai)

Thrift store visits up 39.5% since 2019 and 7.9% YoY – Rising incomes, suburban growth, and looming tariff-driven apparel price hikes fuel mainstream secondhand momentum (Placer.ai)

Macy’s shares jumped 20% after reporting its best comparable sales growth in 12 quarters, beating Q2 earnings expectations, and raising its FY outlook. Macy’s credited its strong results to resilient consumer demand and revamped stores, while also warning it will raise select prices to offset tariffs (CNBC) 

Insight: Macy’s results came as a surprise in a market where value-driven retailers have dominated and mid-tier peers have fallen behind. Its store revamps point to the growing importance of design and environment, a focus that Dillard seems to share given its $34M Texas Longview Mall purchase to secure control of the shopping experience.

PPG, Ark Ventures, and EquiShares secure $205M construction loan for multifamily project in North Miami Beach, FL – BDT & MSD finances 728-unit Palm Aire development (TheRealDeal)

Bank OZK and 3650 Capital provide $91M construction financing for multifamily project in Stamford, CT – F.D. Rich Company developing 198-unit Coastline complex with retail, parking, and full amenities (CommercialObserver)

DCHFA provides $62M construction financing for Wagner Senior Residences in Washington, DC – Justice Housing and The Miller Group developing 67-unit affordable and supportive senior housing project in Skyland (CommercialObserver)

Richman Group secures $62.3M construction financing in Lake Worth Beach, FL – Merchants Bank of Indiana provides $47M, Palm Beach County adds $13M bond loan, and Merchants Capital issues $2.35M tax-exempt mortgage for 195-unit workforce housing project (TheRealDeal)

Carlisle Corp. refinances two Hyatt hotels in Memphis, TN with $51M loan – Peachtree Group provides three-year floating rate financing for 227-room Hyatt Centric and 136-key Caption by Hyatt (CommercialObserver)

Student housing giant Yugo buys student housing operator Campus Advantage to reach 40,000 U.S. beds – Deal adds 88 properties, 430 employees, and names founder Mike Peter CEO of Yugo U.S. (Bisnow)

Barings explores $1B sale of JW Marriott Marco Island in Marco Island, FL – 800-room luxury resort with 100K SF event space, private beach, and golf courses marketed by JLL (Bloomberg)

Owners list Manhattan, NY office development site for $500M+ – GDS Development/Corem and Deutsche Bank/MRP Realty market 527K SF Park Avenue project near JPMorgan HQ with Newmark handling sale (Bloomberg)

JV led by Michael Stern’s JDS and Terra acquires Bay Garden Manor condo in Miami Beach, FL for $120M – 238-unit waterfront property to be redeveloped into a 330-foot luxury tower (CommercialObserver)

Aurec Capital and Golden Arc acquire luxury apartment building in Brooklyn, NY for $53M – Buyers purchase 105-unit Sheepshead Bay property with full amenities (CommercialObserver)

1789 Capital pursues $1B South Florida real estate fund – Firm led by Omeed Malik and Donald Trump Jr. plans Palm Beach and Boca Raton developments with Frisbie Group (Bloomberg)

Realterm closes $350M inaugural logistics credit fund – Vehicle expands into direct lending for industrial and logistics assets including transportation-advantaged outdoor storage (IREI)

Witkoff, Newbond, and Conversant acquire San Francisco, CA hotels tied to $725M CMBS loan – Buyers take over 1,921-room Hilton Union Square and 1,024-key Parc 55 after receivership (TheRealDeal)

Houston REIT Silver Star defaults on $57.8M loans and delays shareholder meeting – Founder Allen Hartman pushes liquidation plan while the board fights to continue a pivot to self-storage (Bisnow)

CRE loan servicer Trimont adopts JPMorgan’s blockchain platform – $730B manager uses Kinexys to cut loan payment processing from two days to minutes (Bloomberg)

Insight: Although some crypto is pure hype, Trimont’s adoption shows that blockchain can deliver real improvements by drastically reducing transaction processing times.