The Brick Breakdown

🌍 EU offers trade boost as U.S. manufacturing softens

The European Union proposed a $56.5B increase in U.S. purchases, including LNG and agricultural goods, while urging Washington to cut 10% tariffs. The offer comes as U.S. manufacturing contracts again and business sentiment hits a 10-month low amid rising input costs and policy uncertainty.

🍔 Spending slowdown hits McDonald's and hotel operators
McDonald's reported a 3.6% drop in same-store sales, its worst since COVID, as lower and middle-income consumers pulled back. Host Hotels & Resorts also lowered its full-year revenue outlook despite beating Q1 earnings, citing a weaker-than-expected travel season.

🏢 Big-ticket deals highlight strategic repositioning in real estate

Blackstone is the lead bidder for 590 Madison Avenue in a potential $1.1B deal, while Kite Realty and GIC acquired the $785M Legacy West center in Dallas. Metro Loft is also close to securing a $700M loan for the largest office-to-residential conversion in U.S. history.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.83% (+2 bps)
10Y Treasury Yield: 4.23% (+4 bps)
FTSE NAREIT Index: 763.59 (+0.80%)
30-day SOFR Average: 4.35%

Market Pulse

Tariff uncertainty continues to weigh on business sentiment and manufacturing output, even as the EU's $56.5B trade offer and steady construction spending signal opportunities for near-term stabilization

Europe offers $56.5B trade boost to US – EU negotiator discusses potential increase in US purchases, including LNG and agricultural products, but warns against maintaining 10% tariffs (FT)

US manufacturing contracts marginally in April – PMI at 48.7% signals contraction amid weak new orders, production, and confidence, while S&P PMI at 50.2% shows slight growth despite rising input prices, with sentiment at a ten-month low due to tariffs and uncertainty (ISM, S&PGlobal)

March 2025 construction spending totaled $2.2T – 2.8% higher YoY but down 0.5% from February 2025 (Census)

Policy & Industry Shifts

Fannie Mae shuts down ESG team – Mortgage giant terminates 30-person department amid layoffs and leadership shakeups (TheRealDeal)

Residential

Housing affordability remains under pressure as inventory climbs and incomes lag behind rising costs, while rent hikes and shrinking unit sizes point to continued strain for both renters and buyers in major markets

Inventory up 30.6% YoY in April – Pending sales down 3.2% YoY due to rising mortgage rates and economic uncertainty, with new listings up 9.2% and homes taking 50 days to sell (Realtor.com)

Americans need to earn $114K annually to afford a median-priced home – up 70.1% from $67K six years ago, with signs of a shifting market in favor of buyers (IREI)

Average size of new rental apartments shrinks 22 sq. ft. since 2015 – Proliferation of smaller units driven by demand from young singles and high interest rates (NYT)

Zillow’s StreetEasy to block tools for NYC agents not complying with new listing standards – Agents must submit listings within one day or lose access to key Zillow programs (RisMedia)

Rent Guidelines Board proposes NYC rent hikes of 1.75%-4.25% for one-year leases and 4.75%-7.75% for two-year leases – Landlords express concerns over rising costs and building distress (Bisnow)

Massachusetts faces shortage of affordable housing – 441K low-income households lack access to affordable rentals, with only 32% served by current supply (ConnectCRE)

Office

Office demand recovers in March, up 4.6% YoY – Despite a slowdown in January and February, demand for office space rebounded in March, with New York City and Los Angeles as exceptions (ConnectCRE)

Manhattan leasing demand up 23% YoY – Availability tightens to 15.7%, with average asking rent at $74.37/SF: down 0.2% MoM, up 0.4% YoY (Colliers)

Industrial

Amazon to invest $4B to triple rural delivery network – Expansion to over 200 facilities will create 100K jobs and speed up deliveries in less populated areas amid tariff uncertainty (CoStar)

Market Mix

Data center operator DartPoints receives $250M investment from Nova Infrastructure and Orion Capital – Nova takes majority control as Dart plans expansion into Tier 2 and 3 markets (CommercialObserver)

Earnings & Real Estate Impact

Economic uncertainty and tariff pressures are weighing on consumer spending and travel, prompting Host Hotels to lower its outlook and McDonald's to report its biggest domestic sales drop since COVID. Amid the broader freeze in capital markets, Blackstone ramped up lending activity in Q1 as many traditional players pulled back

Host Hotels & Resorts, the largest US hotel REIT, beat Q1 earnings expectations but lowered its full-year revenue growth expectations due to a slower than expected travel season amid macroeconomic uncertainty (Bisnow)

McDonald’s exceeded Q1 earnings expectations but missed revenue forecasts, reporting a larger-than-expected 3.6% decline in same-store sales, the biggest domestic drop since COVID, as lower and middle-income consumers reduced spending amid economic uncertainty (CNBC)

Blackstone Mortgage Trust, Blackstone's lending arm, originated $1.6B in new commercial property loans in Q1 2025, its highest quarterly level in over two years amid economic uncertainty, with $2B more in originations pending (CoStar)

Financings

Loans

​​Metro Loft and David Werner's near–$700M financing for the Pfizer HQ conversion highlights growing momentum for large-scale office-to-residential redevelopments as cities adapt to post-pandemic demand shifts

Metro Loft and David Werner near $700M record loan for NYC Pfizer HQ conversion – Loan supports 1,600-unit office-to-residential redevelopment, the largest such project in U.S. history (TheRealDeal)

Glacier Credit Strategies lends $50M to Buccini Pollin Group to build University of Delaware apartments – Development includes market-rate units, retail space, and amenities (CommercialObserver)

M&A

Building & Portfolio M&A

Major institutional players are returning to large-scale acquisitions, with Blackstone eyeing a $1.1B NYC office tower and Kite Realty and GIC buying a $785M Dallas mixed-use center, signaling selective confidence despite broader market volatility

Blackstone in the lead to acquire NYC office tower from the State Teachers Retirement System of Ohio for $1.1B – Potential sale of 590 Madison Avenue could set NYC's highest office deal in years (TheRealDeal)

Brookfield spins off Houston Center to Stream Realty Partners and Australian Superfund – Acquired for $875M in 2017, the 4.6M SF campus includes office and retail spaces (ConnectCRE)

Kite Realty Group and GIC acquire Legacy West lifestyle center in Dallas for $785M – JV  targets luxury retail, office, and multifamily assets, with plans for future growth (CoStar)

RFR sells fully entitled Brooklyn development site to Tavros and Charney for $160M – Site to support 1M SF, 1,000-unit residential project as part of Gowanus Wharf development (ConnectCRE)

Fenway Capital Advisors pays $126M for 347K SF office building in LA’s Silicon Beach – Lincoln Property Company retains minority stake and continues as property manager (CommercialObserver)

South Korean logistics providers LX Pantos and Hyundai Glovis acquire two Georgia distribution warehouses for $116.5M – Properties located near active manufacturing hubs for solar panels and flooring (CoStar)

PCCP buys eight Oakland apartment complexes from Veritas Partners for $62.8M – Deal averages $186K per unit, 40% below assessed value, amid Veritas' financial distress (TheRealDeal)

Canadian pension fund CDPQ to sell Chicago tower for $60M – Building has 63% occupancy and is selling at a 59% discount from its 2017 purchase price (Bloomberg)

Distress Watch

BKM Capital Partners and Kayne Anderson form JV to invest $1.5B in discounted industrial assets – Targeting mid and small bay properties with low rents, high vacancies, and value-add opportunities (GlobeSt)

Proptech & Innovation

Aurora’s autonomous trucking launch in Texas signals growing innovation in logistics, with potential to reduce long-term industrial transportation costs and reshape demand for distribution hubs along major freight corridors

Aurora launches driverless trucking in Texas – Partnering with Uber Freight and Hirschbach, the company completes 1,200 miles of autonomous driving between Dallas and Houston (FreightWaves)