Hello Brick Brief readers, 

Happy Friday! Today we’re seeing rising inflation numbers, a widening office market split, and a housing market tilting toward buyers. 

💸 Inflation and Layoffs Cloud Outlook
Inflation picked up in June as tariffs pushed goods prices higher, leading to the largest monthly increase in PCE since January and keeping the Fed cautious on rate cuts. At the same time, July job cuts jumped 29% as economic uncertainty from AI disruption and government austerity hit hiring across key sectors.

🏢 Office Market Split Widens
The U.S. office market posted its fifth straight quarter of positive net absorption, but demand is increasingly flowing to high-growth secondary markets and mid-sized spaces. While Class A buildings in cities like Chicago and San Francisco are rebounding, mid-tier Sunbelt offices are being left behind, prompting strategic review by office REIT Franklin Street

🏠 Housing Market Tilts Toward Buyers
Condo prices fell 1.4% YoY as inventory surged to a 10-year high, with new Florida regulations and rising insurance adding extra pressure. More than 1 in 4 homes saw a price cut in June, especially in the South and West, as rising listings shift negotiating power to buyers.

30Y Mortgage: 6.75%

10Y Treasury Yield: 4.36% (+2 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 755.05 (-1.50%) 

30-day SOFR Average: 4.35%

Tariffs are reigniting inflation and weighing on the job market, with goods prices rising and layoffs climbing 29% in July as businesses brace for uncertainty

Trump sets 10% minimum global tariff – Canada 35%, India 25%, South Korea 15%, Taiwan 20%, South Africa 30%, Switzerland 39%, most others 10–41% (Bloomberg & Bloomberg)

U.S. inflation heats up in June as tariffs lift goods prices – PCE index rises 0.3% MoM with strongest goods price gain since January, fueling Fed caution on rate cuts and adding pressure to consumer spending (Reuters)

Insight: Tariffs are pushing up prices on durable goods, with furniture up 1.3% in June and recreational products up 0.9%, their biggest monthly gains in over a year. Powell is absolutely right to wait and see how tariffs affect inflation. 

Jobless claims rise slightly as labor market cools – Initial claims hit 218K for the week ending July 26, reflecting stable layoffs but slower re-hiring amid tariff-driven uncertainty (Reuters)

July job cuts spike 29% MoM to 62,075 – Layoffs surged YoY as AI, tariffs, and federal budget cuts drove sharp workforce reductions across tech, retail, and nonprofits (Challenger)

 $171M-listed office REIT Franklin Street Properties is exploring a full or partial sale as weak leasing, heavy losses, and exposure to struggling mid-tier offices continue to pressure performance and valuation.

• The company owns roughly 5 million square feet across 15 properties, primarily Class B office buildings in Denver, Minneapolis, Dallas, Houston, and Indianapolis
• Many buildings are located in central business districts and infill markets but lack the premium amenities and locations that keep Class A assets competitive
• Major holdings include 1999 Broadway in Denver, which remains heavily vacant, and 2345 Grand in Kansas City, with several other buildings seeing long-term vacancies
• Occupancy has dropped from 83% to below 70% since 2020, with 15% of leases set to expire by the end of 2026
• Franklin Street has reported net losses in each of the last three years, including $29.3 million in the first half of 2025
• The firm has reduced debt by selling over $1.1 billion in properties since 2020, but recent sales triggered steep write-downs, such as a $12.9 million loss on its $6 million sale of Monument Circle in Indianapolis
• The company continues to market existing vacancies while evaluating options that include asset sales, refinancing, or a full exit
• The struggles mirror broader weakness among Sunbelt-focused office REITs, where demand for non-trophy space remains soft and recovery prospects are limited, and just last week, City Office REIT agreed to a $1.1B take-private deal with Elliott Investment Management after similar performance issues
• These challenges underscore the flight to quality across the sector, where investor and tenant preference is consolidating around top-tier, amenity-rich assets in high-demand locations

Takeaway: Franklin Street’s strategic review highlights how far mid-tier Sunbelt offices have fallen out of favor. In a market dominated by flight to quality, these buildings are struggling to compete with Class A properties in core markets, facing both limited leasing traction and declining investor interest.

Federal board considers selling three major downtown Boston office buildings – Low occupancy and high costs spark calls for consolidation (Bisnow)

Sunbelt and Western markets are leading the housing cooldown as rising inventory, steep price cuts, and fading buyer urgency erode seller leverage

Condo prices fall 1.4% YoY – Supply hits 10-year high, days on market climb, and Florida faces extra pressure from new safety rules and soaring insurance (WSJ)

U.S. housing inventory up 25% YoY in July – Active listings exceed 1.1 million for third month, but still sit 13% below pre-pandemic levels as pace of growth slows (Realtor.com)

Home prices fall in 14 major metros – Oakland down 6.8% YoY, West Palm Beach 4.9%, Jacksonville 3.1%, Austin 2.9%, Houston 2.8%, as high costs and rising supply shift power to buyers (Redfin)

More than 1 in 4 U.S. home listings saw a price cut in June – Denver leads at 38%, with pandemic boomtowns like Raleigh, Nashville, Dallas, and Phoenix all topping 35% as market power shifts to buyers (Zillow)

List prices drop in 33 of the top 50 metros – Biggest declines in Austin (-4.9%), Miami (-4.7%), Chicago (-4.4%), and Los Angeles (-4.2%), with the sharpest slowdowns concentrated in the South and West (Realtor.com)

Multifamily vacancy drops to 4.1% in Q2 2025 – Net absorption hits record 188,200 units, up 47% YoY, as demand outpaces new supply in all 69 tracked markets (CBRE)

Q2 effective rent growth rises to 1.2% YoY – Multifamily investment volume climbs 7.1% to $32.9B, with completions steady at 83,000 units and fewer deliveries expected ahead (CBRE)

Semi-urban multifamily demand rises 25.5% in the past decade – Sector now accounts for 43% of U.S. multifamily households, outpacing urban (23.7%) and suburban (15%) growth (GlobeSt)

Subletting fraud is rising in multifamily – Scammers use fake IDs to lease units, re-rent on platforms like Airbnb, or vanish with rent, leading to lost income and legal headaches for property managers (GlobeSt)

Office demand is stabilizing with five straight quarters of net absorption, but the recovery remains uneven as secondary markets and prime assets outperform while non-prime space lags behind

U.S. office market posts fifth straight quarter of positive net absorption – Overall vacancy holds at 19% as leasing shifts to high-growth secondary markets and mid-size spaces dominate activity (CBRE)

Construction pipeline shrinks to 21M sq. ft. – 2025 set for lowest completions in over a decade, aiding gradual supply-demand rebalancing and supporting future recovery (CBRE)

Prime office vacancy drops to 14.5% in Q2 – Non-prime vacancy rises to 19.4%, while average asking rent edges up 1.1% YoY to $36.21 per sq. ft., though real rents remain 18% below pre-pandemic after inflation (CBRE)

Office demand rose 11% YoY nationally in Q2 – Chicago up 60% YoY and 35% QoQ, San Francisco up 27% YoY and 40% QoQ, while DC demand fell 26% and Boston posted its worst quarter since the pandemic (ConnectCRE)

Latham & Watkins signs 120K SF, 12-year office lease in Midtown NYC – RXR owns the 39-story Class A tower, home to tenants like Mizuho, Ropes & Gray, and UBS (CommercialObserver)

Brex leases 100K sf at 270 Brannan St. in San Francisco, CA – Company reverses remote-first stance as tech and AI firms drive new office demand across the Bay Area (TheRealDeal)

Industrial rents and demand set to rise along rail corridors – Union Pacific–Norfolk Southern merger will shift logistics nodes and drive investor interest in properties with rail access and outdoor storage (GlobeSt)

Tariffs threaten U.S. manufacturing and construction – New duties could raise input costs 2%–4.5% for manufacturers, slow commercial and industrial projects, and drive up rents (GlobeSt)

iDC Logistics leases 844K SF San Bernardino, CA industrial warehouse owned by Alere Property Group – Second-largest Inland Empire lease of 2025 (CommercialObserver)

iDC leases 260K SF City of Industry, CA,industrial warehouse owned by Principal Financial Group – Facility serves as electronics manufacturing hub producing up to 15,000 units weekly (CommercialObserver)

U.S. commercial real estate investment sales up 25% YoY in H1 2025 – Dallas-Fort Worth leads with $13.5B, driven by an 89% surge as multifamily and office deals rebound (Bisnow)

Insight: Multifamily is surging in Dallas-Fort Worth as rapid population growth, strong job creation, and slowing construction combine to tighten supply and lift rents. Meanwhile, office sales in New York, LA, and DC are increasingly driven by end users placing long-term bets on market recovery and future space needs. Unfortunately for D.C. office acquirers, however, demand for the region’s office fell 26% YoY in Q2.

First Watch visits up 13.7% YoY in Q2 2025 – Applebee’s up 2.7%, Denny’s traffic consolidates, and value-focused chains see highest monthly visitor loyalty in lower-income areas (Placer.ai)

Microsoft to spend $30B on data centers this quarter – $368B contracted backlog drives record investment as AI and cloud demand surge (CoStar)

Bushburg secures $320M loan for FiDi conversion in NYC – Developer to deliver 713 apartments at 80 Pine St. after acquiring from Rudin family for $160M (TheRealDeal)

Satya secures $255M loan for St. Regis condo tower in Houston, TX – International Bank of Commerce finances 38-story, 90-unit project in River Oaks as demand for luxury condos rises (TheRealDeal)

Merchants Capital provides $237M bridge loan for Staten Island, NY affordable housing – Delshah Capital plans comprehensive rehab of the 1,117-unit Park Hill Apartments complex (CoStar)

Pacific Development and PGIM Real Estate secure $97M construction loan for 396-unit mixed-housing project in Santa Rosa, CA – Financing provided by Comerica Bank, California Bank & Trust, and First Hawaiian Bank (IREI)

Forté Development secures $60M construction loan from Kriss Capital for 17-unit Forté Luxe townhome project in Jupiter, FL – New financing replaces last year’s $47.5M loan (TheRealDeal)

Wells Fargo provides $249M Freddie Mac refinance for Global Holdings’ 50-story Manhattan multifamily tower – NoMad property was acquired for $380M in 2020 (CommercialObserver)

Mesa West Capital provides $57M refinance for Easton Riverview in Tampa, FL – Cross Lake Partners, GreenPointe Holdings, and Rivers Residential secure loan for their 300-unit garden-style community (CommercialObserver)

Ashford Hospitality Trust extends $1.1B portfolio mortgage loan on 18 hotels – Extension to January 2026 provides runway for refinancing as asset sales and debt repayment continue (CoStar)

$171M-listed Franklin Street Properties explores sale amid portfolio struggles – Office REIT considers selling the firm or assets after occupancy drops below 70% and posts $29.3M net loss in H1 2025 (CoStar)

Tishman Speyer sells LA office Maple Plaza for $200M+ – 300K SF CA property trades as local office vacancy hits 24.6% and leasing activity shifts toward retail and entertainment tenants (TheRealDeal)

Ventas acquires 148-unit senior living complex in Everett, WA for $54.7M – Artemis Real Estate Partners sold the property after MorningStar boosted occupancy (ConnectCRE)

J.P. Morgan REIT acquires 16-property industrial outdoor storage portfolio for $95.2M – Sale-leaseback deal includes assets in seven states and expands JPMREIT’s logistics footprint (IREI)

Osso Capital lists 730-unit Woodlands of Crest Hill Apartments near Chicago for sale – Firm acquired the complex for $95M in 2023; current asking price is undisclosed (CoStar)

Metro Loft completes $345M recap of 180 Water Street in Manhattan after missing loan payoff – 60 Guilders, Sentry Realty buy 49% stake and Deutsche Bank provides $280M CMBS refi, ending pre-foreclosure risk (CommercialObserver)

The Line LA hotel trades hands for $68M after Yucaipa Companies defaults on a $100M loan – Corten Real Estate Partners emerges as the new owner in L.A.’s largest hotel sale of 2025 (CommercialObserver)