Hello Brick Brief readers, 

Thank you for your continued support! Today we’re seeing new-home sales confirm affordability pressures and housing price discovery, Dillard’s join tech giants in owning critical real estate, and the AI boom push power costs and investment higher.

🏠 Housing Affordability
July’s new-home sales confirm that even builder buydowns cannot shield prices forever. Sales fell 8.2% YoY and median prices slipped 5.9%, showing that downwards price discovery is occurring every day as affordability pressures and weaker job growth weigh on buyers.

🛍️ Real Estate Control
Dillard’s $34M acquisition of Longview Mall mirrors Silicon Valley’s owner-user trend, where Apple and Nvidia have been buying discounted office campuses to secure long-term control of mission-critical assets. By owning the mall outright, Dillard’s can dictate tenant mix, customer experience, and reinvestment strategy rather than adapting to outside landlords.

⚡ AI and Energy Strain
The AI buildout is fueling record demand for power, with PJM households facing electricity bills up to 14% higher as data centers push grids to their limits. Investors are pouring in capital, from CoreWeave’s $4B JV in Pennsylvania to JLL’s projection of $10B+ in New York data center development by 2030.

30Y Mortgage: 6.54% (-1 bps) 

10Y Treasury Yield: 4.29% (+2 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 773.02 (+1.05%) 

30-day SOFR Average: 4.35%

Trump moves to fire Fed Governor Lisa Cook over mortgage fraud allegations – Dollar initially drops 0.3% before paring losses as investors question Fed independence (Bloomberg)

Trump upholds 15% South Korea tariff – Rejects President Lee’s push for changes while highlighting $350B US investment and shipbuilding cooperation (Bloomberg)

US top-credit borrowers are starting to fall behind – 90-day delinquencies hit 0.12% in superprime (+109% YoY) and 0.31% in prime (+47% YoY), showing rising repayment stress (Reuters)

Brick by Brick: Dillard’s Buys Longview Mall to Control Its Retail Ecosystem
Department store Dillard’s has bucked the trend of department stores divesting mall real estate by acquiring Longview Mall with Trademark Property, aiming to protect its customer experience and shape the property’s evolution.

• Dillard’s and Trademark paid $34M for Longview Mall, a 646K SF regional center nearly 90% leased, where Dillard’s is a high-performing anchor
• By owning the mall, Dillard’s can create a tailored shopping environment around its store, shaping amenities, maintenance, and tenant mix to complement its brand rather than adapting to outside landlord or tenant decisions
• Trademark plans to reinvest in the property by modernizing operations with upgrades to lighting, entrances, and communal areas, while refreshing the tenant roster to enhance the shopping experience
• Longview Mall serves over 3.7 million visitors annually and is the only enclosed mall within a 45-mile radius, giving Dillard’s a unique regional footprint to anchor
• The move contrasts with JCPenney’s 119-store, $947M transfer to PE firm Onyx through a lender’s trust, which left JCPenney responsible for operating costs under triple-net leases but without strategic control over redevelopment or long-term capital planning
• On July 30, 2025 Apple bought Kilroy Realty’s 663K SF Mathilda Campus in Sunnyvale, CA for $365M, converting leased offices into owned space as part of nearly $1B in Bay Area acquisitions. The strategy ensures stability and prevents rivals or landlords from controlling mission-critical facilities
• Owner-user deals accounted for 51.5% of Bay Area office transaction volume in the first half of 2025 as tenants like Apple and Nvidia purchased their own R&D campuses from landlords at below-replacement-cost pricing. Just as these tech companies are securing control of essential facilities, Dillard’s is doing the same in retail by buying the mall it anchors at a steep discount compared to trophy malls owned by Simon Property

Takeaway: By owning Longview Mall outright, Dillard’s can curate the tenant mix, control the customer environment, and build a mall ecosystem designed to support and elevate its store. Unlike JCPenney, which ceded real estate control in its portfolio transfer, Dillard’s is following a strategy that mirrors Silicon Valley’s owner-user push, where cash-rich tenants are buying discounted campuses from landlords to secure long-term stability and control over mission-critical real estate. Both moves reflect a broader shift toward using ownership to safeguard key environments at a moment when market pricing makes it possible.

Affordability pressures remain severe as buyers face falling new-home sales despite builder incentives, renters cut essentials to cover housing costs, and single-family rents continue climbing in major metros

US new-home sales fall 0.6% MoM in July to 652K – Sales are down 8.2% YoY as high mortgage rates and weaker job growth weigh on demand, with inventory at 499K units and median prices down 5.9% to $403.8K (Reuters)

Insight: A few weeks ago I dug into whether builder buydowns were keeping new-home prices artificially high. July’s numbers give a clearer answer. Even with incentives, sales are down 8.2% YoY and median prices slipped 5.9%. Builders, especially those in the Sunbelt, are still moving homes, but each sale is pulling prices lower. Downwards price discovery is occurring every day.

Mortgage spread falls to 3-year low at 2.26 pts – Narrower gap with 10-year yields lets mortgage rates drop faster, boosting buyer power by about $20K since May (Redfin)

1 in 5 young renters skip meals to make rent – 70% of Gen Z and millennial renters struggle with housing costs, often cutting back on dining, vacations, or healthcare as affordability pressures persist despite recent rate relief (Redfin)

Single-family rents up 2.9% YoY in June – Chicago (+5.7%) and New York (+5.5%) led while Miami fell 0.5%, with luxury rents rising 3.7% and entry-level 1.7% (GlobeSt)

1,580 apartment properties trade for $35.1B in Q2 – Volume rose 11% from Q1 but fell 14% YoY, with five deals over $175M and cap rates averaging 5.41% (RealPage)

Small-cap multifamily sales hit $11.9B in H1 2025 – Volume rose 9% YoY and 10% QoQ, led by senior living (+16%) and student housing (+6%), with Chicago and San Francisco posting the strongest market gains (GlobeSt)

Wildfire risk threatens $1.3T in Western homes – California leads with 1.26M at-risk properties as underinsurance, soaring costs, and insurer pullbacks drive stalled recovery and rising delinquencies (Cotality)

Small office deals show resilience – Office transactions in the $5M–$25M range jumped 18% YoY in H1 2025, with Palm Beach, the D.C. Metro and Boston leading growth (GlobeSt)

Investors pour $11B into New York offices – Surge in CMBS refinancing by Paramount, Blackstone, Vornado, and Durst signals renewed confidence as Midtown availability drops to 15.5% (FT)

American Eagle Outfitters expands by 54K SF to 392K SF at New York, NY office – Tenant grows HQ in NoMad tower owned by George Comfort & Sons, Jamestown, and Loeb Partners Realty (CommercialObserver)

Survey signals cap rates may have peaked – CBRE finds all-property cap rate slipped to 6.84% in H1 2025 as Treasury yields stabilized, though tariff concerns weigh on deal volume expectations (GlobeSt)

Five Below and Ollie’s visits surge in Q2 2025 – Foot traffic jumped 14.3% and 18.3% YoY as both chains expand aggressively, with same-store visits rising 5.9% and 9.4% and cross-visitation hitting record highs (Placer.ai)

Geopolitical tensions hit US hotels – International arrivals are projected to drop 8.2% in 2025, led by a 20.2% plunge in Canadian visitors, delaying recovery to pre-2019 levels until 2029 (CoStar)

Medical outpatient building transaction volume down 19% YoY – Sales totaled $3.5B in H1 2025 as Q2 showed modest recovery, with stabilized cap rates signaling potential rebound ahead (CushmanWakefield)

Medical outpatient building pricing up 9% YoY – Off-campus assets led at $351 psf, 16% above on-campus levels, while cap rates held near 7% as healthcare real estate remained a top investor target (CushmanWakefield)

The AI boom is straining power grids and driving household bills higher while fueling massive investment, from CoreWeave’s $4B Pennsylvania campus to more than $10B projected for New York by 2030

AI boom drives power bills higher – Household electricity costs in PJM states surged up to 14% as data center demand fuels record capacity prices and political backlash (Bloomberg)

Insight: Almost every day, new stories show how AI is straining the grid, and today is no different. Electricity rates are rising because data centers consume huge amounts of power, driving demand beyond what existing supply can handle. That imbalance forces utilities to invest billions in new plants and transmission, and consolidation through M&A gives them the scale and capital to finance those upgrades.

The next logical step is for us investors is to figure out how to benefit from this data center-driven energy trend and where in the buildout we can make money. For example, yesterday the Brick Brief discussed Blackstone’s $1.6B acquisition of Shermco, an electrical equipment services provider positioned to profit from the massive grid investment ahead.

New York to see $10B+ in AI data center investment – JLL projects over $10B in infrastructure by 2030 as the state faces pressure from active neighboring markets, with 70% of its power expected to come from renewables (IREI)

CoreWeave secures $4B data center JV funding – Blue Owl, Chirisa, and Machine Investment Group back Lancaster, PA campus to expand AI infrastructure in the Mid-Atlantic (IREI)

Thrive Living lands $65M multifamily construction loan from J.P. Morgan – Financing supports 290-unit LA affordable housing project with A. Walker & Company and Basis Investment Group (CommercialObserver)

HHHunt Corporation secures $619M refinancing from PGIM Real Estate for Southeast multifamily portfolio – Loan covers 15 properties across VA, NC, MD, TN, and GA through Freddie Mac and Fannie Mae executions (CommercialObserver) 

Southern Land Company lands $75M refinance from Aareal Capital for 148-unit multifamily, Charleston, SC – Recapitalizes Society at Laurens; Walker & Dunlop arranged (CommercialObserver)

ZD Jasper lands $73M construction loan from Madison Realty Capital for boutique condo in New York, NY – Financing supports 18-story, 24-unit project at 171 East 86th St (TheRealDeal)

Vornado buys office from Saks Fifth Avenue in New York, NY for $218M – REIT acquires 36-story, 382,500 SF tower at 623 Fifth Ave, planning redevelopment into a boutique office by 2027 (Bloomberg)

Two Arrows Group, Spark & Halo, OlivePoint Capital buy retail and apartments in Aurora, CO for $50.5M – JV acquired Parkside at City Center retail and Stella on the Park apartments from Milender White (TheRealDeal)

VRS commits $150M to Silver Creek Cambio Manufactured Housing Fund – Virginia Retirement System investment backs value-add strategy targeting under-managed, low-occupancy manufactured housing communities across the U.S. (IREI)

Ohio Workers’ Compensation commits $50M to SROA Capital Fund IX – Commitment backs $900M closed-end fund targeting self-storage properties across the U.S. (IREI)

Carolwood’s $130M deal for distressed Downtown LA office tower EY Plaza falls through – Brookfield defaulted on $305M debt before value dropped to $150M (CommercialObserver)