Key Insights

📉 Economic Uncertainty and Its Impact on Real Estate
Goldman Sachs has raised U.S. recession odds to 35%, driven by tariff concerns and a global slowdown, which could exacerbate economic uncertainty and influence the real estate market. The potential for three Fed rate cuts could keep borrowing costs lower, but the risk of rising inflation and slower economic growth could dampen investor confidence, especially in commercial sectors.

🏠 Residential Market Dynamics: Affordability Challenges and Limited Inventory
The U.S. residential market remains competitive, with 82% of mortgages carrying sub-6% rates, leading to limited resale inventory as many homeowners are reluctant to move due to high mortgage rates. The rise in multigenerational homebuying, hitting a record 17% in 2024, reflects the affordability challenges many families face, pushing them to consolidate under one roof to manage rising housing costs.

📦 Industrial Sector Faces Slowing Manufacturing and Supply Chain Activity
The U.S. manufacturing sector showed signs of slowing in March, with factory activity dipping and logistics managers reporting a significant decline in supply chain activity. The end of the tariff-driven inventory pull-forward and a drop in transportation prices may reduce demand for industrial spaces in the short term, while economic uncertainty could further impact investment in industrial real estate.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.71% (-3 bps)
10Y Treasury Yield: 4.19% (-2 bps)
FTSE NAREIT Index: 779.90 (+0.055%)
30-day SOFR Average: 4.33%

Market Pulse

The U.S. economy faces heightened recession risks, with Goldman Sachs raising the odds to 35%, as slowing manufacturing and construction activity, coupled with tariff concerns, could lead to lower GDP growth and potential rate cuts by the Fed

Goldman Sachs raises US recession odds to 35% on tariff fears – Firm cuts 2025 GDP forecast to 1.5%, sees three Fed rate cuts as Trump’s reciprocal tariffs risk global slowdown (Reuters)

February construction spending rises 0.7% MoM to $2.2T – Gains led by 1.3% increase in residential activity, while public and nonresidential sectors posted modest growth (Census)

US factory activity dips in March on tariff worries – ISM index falls to 49 as firms brace for higher costs and slowing demand (WSJ)

US manufacturing stalls in March – S&P Global PMI slips to 50.2 as output falls, orders slow, and tariff-driven cost inflation spikes to 2.5-year high (S&PGlobal)

Policy & Industry Shifts

D.C. Council advances eviction reform bill – Legislation would ease landlord evictions amid $147M in unpaid rent, while clarifying ERAP responsibilities and limiting tenant delays (CommercialObserver)

Trump pilots federal coworking platform – GSA taps LiquidSpace and DHC to test shared office model across agencies to cut space and costs (Bisnow)

Residential

The U.S. residential market remains competitive, with high home prices, limited inventory due to the lock-in effect, and a record rise in multigenerational homebuying, while key metros like San Francisco and Manhattan see increased competition and price growth despite affordability challenges

82% of US mortgages carry sub-6% rates – Lock-in effect persists as 54% hold rates under 4%, limiting resale inventory and fueling competition despite high prices (Realtor.com)

Multigenerational homebuying hits record 17% in 2024 – Buyers cite cost savings, caregiving needs as inflation and high housing costs push families under one roof (Bloomberg)

Bay Area, NYC lead homebuyer competition rebound – San Francisco, Nassau see biggest rise in homes selling above list price (Redfin)

Manhattan home sales jump 29% YoY in Q1 – Buyers seize on rate dips, pushing median price to $1.165M as mortgage-backed deals rise and luxury market tightens with 19% price growth (Bloomberg)

SoCal metros see sharpest pricing pressure – San Diego, Anaheim lead in homes selling below list amid rising inventory (Redfin)

Office

Amazon's office return has revived foot traffic in Seattle, boosting local businesses despite a 30% downtown office vacancy, while D.C. office vacancies rise to 22.6% as federal leasing pullbacks are offset by demand for premium space, driving up rents in Trophy and A+ buildings.

Amazon’s office return revives Seattle foot traffic – Five-day mandate boosts HQ-area activity to post-pandemic highs, aiding local businesses even as downtown office vacancy holds at 30% (CoStar)

D.C. office vacancy ticks up to 22.6% in Q1 – Federal leasing pullbacks offset law firm demand, while Trophy and A+ space tighten with rents up 9.1% and 8.5% YoY, respectively (CBRE)

Industrial

March supply chain activity slowed with a drop in the Logistics Managers’ Index, while rising auto tariffs could drive inflation and impact investment, as SmartStop Self Storage REIT raised $810M to expand its portfolio across the U.S. and Canada.

March supply chain activity tumbles – Logistics Managers’ Index drops to 57.1 as tariff-driven inventory pull-forward ends and transportation prices see steepest decline since 2022 (FreightWaves)

SmartStop Self Storage REIT raises $810M in US IPO – California-based firm is valued at $1.5B as it expands its 200+ facility portfolio across the US and Canada (Bloomberg)

Wholesaler group warns tariffs may spur inflation – National Association of Wholesaler-Distributors says auto tariffs could raise costs and strain business investment (FreightWaves)

Market Mix

Cap rate compression expected to drive CRE investment in 2025 – CBRE sees pricing stability as rates settle and policy clarifies, with potential for stronger activity in H2 if bond yields fall further (GlobeSt)

Gen AI surge fuels San Francisco co-living revival – $1,000 shared “tech dorms” attract global AI talent as firms rapidly expand amid VC boom (GlobeSt)

Midwest cold storage tight despite aging stock – Vacancy under 4% as demand rises, with new deliveries fueling investor interest in high-rent speculative and build-to-suit space (CBRE)

Financings

Hudson Pacific lands $475M refi for West Coast offices – Goldman-led CMBS loan repays Element LA debt and credit facility ahead of $600M in maturities (TheRealDeal)

PMG, partners land $215M loan for Miami Airbnb condo – 659-unit tower is 99% pre-sold, with completion expected in 2028 (TheRealDeal)

Nortco secures $170M loan for NYC luxury condo – Northwind and BHI back 36-unit Upper West Side project with large units and outdoor space at former Mermaid Inn site (TheRealDeal)

M&A

Company M&A

Brookfield acquires 50.1% stake in non-qualified mortgage lender Angel Oak – $18B portfolio joins Brookfield’s $317B credit platform as firm expands private credit exposure (Bisnow)

Building & Portfolio M&A

DWS lists SF office for $95M – Mortgage-free landlord targets $300 psf for 505 Montgomery, down from $119M 2005 purchase, as lease talks with anchor tenant continue (TheRealDeal)