Hello Brick Brief readers, 

Happy Friday. In recent news, AI fears are weighing on real estate brokerages and office REITs, existing-home sales plunged in January, and value retail continued driving retail leasing strength.

🤖 AI Scare Trade Hits Office and Brokerage Stocks
Commercial real estate brokerages continued their selloff today over disintermediation fears, while office REITs like SL Green and Kilroy also slid on worries AI could weaken office demand through white-collar job losses. Office landlords face direct demand risk, so the threat feels more tangible, but if AI ever drives mass white-collar unemployment, office occupancy will be the least of the economy’s worries.

🏡 Existing-Home Sales Drop, Prices Hold Firm
Existing-home sales in January fell 8.4%, the biggest monthly drop since 2022, as snowstorms and high home prices cooled momentum after late-2025 gains. Home prices still rose 1.3% YoY in January, led by the Northeast and Midwest, but Homes.com sees inventory normalizing and a more balanced buyer-seller market that could drive a more active spring season.

🛍️ Value Retail Drives Leasing Strength
Retail sales rose 3.8% YoY in December 2025, the strongest growth since 2022, as deal-driven holiday demand stayed resilient and core retail climbed 4.3%. US retail net absorption hit 11.9M SF in Q4 2025 as discount and value chains expanded, with foot traffic surging at Hobby Lobby (+17.6%) and Dollar Tree (+10.9%) as consumers leaned into budget-focused spending.

US jobless claims fall to 227K – Applications dropped by 5K from the prior week while continuing claims climbed to 1.86M (Bloomberg)

NY Fed finds Americans bear ~90% of Trump’s tariff costs as import taxes jump to 13% – The report shows foreign exporters cut prices little, pushing most of the burden onto US consumers and businesses (Reuters & NYFed)

The New York Fed argues Americans end up paying most tariffs because foreign exporters rarely cut prices, leaving higher import costs to be absorbed by U.S. firms and consumers. These pressures have not fully shown up in CPI because companies have shifted sourcing toward Mexico and Vietnam and absorbed some costs through margins rather than raising retail prices across the board.

Fed’s Miran says policy is tighter than thought, urges more rate cuts – He argues inflation is not a problem, pointing to low shelter inflation and downside risks to growth (Reuters)

AI scare trade drags CRE stocks lower as office demand fears spread – CBRE and JLL sank as much as 20% over two days; office REITs SL Green and Kilroy also slid on worries AI could weaken office demand (Bloomberg)

Office REITs sold off as investors priced in AI-driven white-collar job losses that could reduce long-term office leasing demand and pressure rents and occupancy.

This selloff, however, feels slightly more warranted than the brokerage drop, since office landlords face direct demand risk and the threat to white-collar employment is more tangible. If AI ever drives mass unemployment, office occupancy will be the least of the economy’s worries.

Banks reported construction loan demand turned positive at +8.9% in early 2026 as spreads tightened – The Fed’s lender survey showed large banks leading the shift, with median construction spreads down to ~238 bps (Trepp)

Net-lease investment sales rebound in Q4 2025 as annual volume hits $51.4B – Industrial led activity at 55% (ConnectCRE)

Trump’s corporate SFR ban exempts build-to-rent communities – BTR operators are moving ahead with new projects, while the order targets large investors buying scattered single-family homes (Bisnow)

Existing-home sales fall 8.4% in January, biggest monthly drop since 2022 – Sales slipped to a 3.91M annual pace as snowstorms and high home prices cooled momentum after late-2025 gains (WSJ)

Home prices rose 1.3% YoY in January as Northeast and Midwest metros lead gains while Sun Belt markets cool – Inventory is normalizing after the pandemic boom, and a more balanced buyer-seller market could drive a more active spring season (Homes.com)

U.S. pending home sales fall 5.1% YoY in four weeks ending Feb. 8 as buyers slow down and negotiating power shifts further their way – Homes now take 66 days to go under contract and inventory has climbed to 5.5 months of supply, the highest in seven years (Redfin)

Single Americans face widening housing affordability gap as 64% struggle with rent or mortgage payments – Single condo owners pay annual “singles tax” of ~$18K in Washington, DC and $41.7K in San Francisco as double-income advantages shape who can move or buy (Redfin)

Builders ramp up price cuts in 2025Q4 as median new-construction listing price holds at $451K – New builds now see 19.3% of listings with reductions versus 18% for existing homes as builders work through elevated inventory and keep demand moving (Realtor.com)

San Francisco remains lone major metro where homes sell above ask – Q4 sale-to-list ratio hit 104.7% as median prices rose 3.6% YoY to $1.5M and sales climbed ~12%, while most top markets shifted firmly toward buyers (TheRealDeal)

Multifamily REITs warn NOI could fall in 2026 as expenses outpace rent growth – Mid-America expects same-store NOI down 0.75% with costs up 2.7%, even as new supply deliveries drop more than 60% from the peak (Bisnow)

Cushman’s portfolio shows leasing demand improving into year-end, with contacts, visits, and applications up 5% YoY in December – Early funnel strength signals spring momentum starting sooner than normal (CushmanWakefield)

Cushman’s 144,000-unit portfolio sees Class A occupancy firming by 25 bps YoY despite heavy new supply – Renters are filtering up as income growth has outpaced rent growth since 2023 (CushmanWakefield)

Cushman’s portfolio data shows concession pressure easing, with Class A concessions falling 40 bps in December – Trade-outs stabilized as owners prioritized occupancy through a seasonally soft Q4 (CushmanWakefield)

U.S. office demand rebounded to +18.6M SF net absorption in 2025, the strongest year since 2019 – Six straight quarters of positive absorption reflected stronger leasing as return-to-office mandates spread (Colliers)

Vacancy ended 2025 at 18.2%, but it declined for three consecutive quarters – ~100M SF of obsolete space was removed through conversions, helping tighten market conditions (Colliers)

Office construction pipeline shrank to 25.8M SF under construction in Q4 2025, down from 158M SF at end-2019 – Deliveries totaled just 18.8M SF in 2025, the lowest annual new supply in more than a decade (Colliers)

US retail enters 2026 on firmer footing after turbulent 2025 – Limited new supply is helping offset elevated store closings and space vacated across the sector (CoStar)

US retail net absorption hits 11.9M SF in Q4 2025 as discount and value chains expand – Leasing demand doubled from Q3, even as tight supply and weak new construction constrain growth (CommercialObserver)

Retail sales rose 3.8% YoY in December 2025, the strongest growth since 2022 – Core retail climbed 4.3%, while online sales jumped 6.7% as deal-driven holiday demand stayed resilient (Colliers)

Apparel sales increased 5.4% in December 2025 as clothing foot traffic grew 3.27% – Holiday gifting supported steady in-store engagement, with dwell times holding near 40 minutes (Colliers)

Value-oriented retailers led foot traffic gains in December 2025, with Hobby Lobby up 17.6% and Dollar Tree up 10.9% – Discount and grocery visits also rose 6.15% and 4.41%, showing consumers kept leaning into budget-friendly spending (Colliers)

Burger King US same-store sales increased 2.6% in Q4, as value deals target pressured consumers – Traffic held up better among middle and higher income diners, while lower income demand stayed weak (Reuters)

Wingstop turns to AI “Smart Kitchens” to speed up service as same-store traffic stays soft – Dallas locations using the system saw 44.5% of visits under 10 minutes vs 40.8% nationally in Q4 2025 (Placerai)

Super Bowl week events drove massive foot traffic spikes across San Francisco’s downtown core – Ferry Building evening visits surged 479% above average, with spillover to Pier 39, Moscone Center, and nearby shopping corridors (Placerai)

US utilities boost grid spending to meet surging data center power demand – AEP expands its capital plan beyond $72B, as regulators face growing pressure to limit bill increases tied to AI-driven load growth (Reuters)

Nvidia to lease 200MW Nevada data center funded by $3.8B junk bond sale – Tract Capital secured Nvidia on a ~16-year lease; data center builders increasingly rely on high-yield debt to fund AI expansion (Bloomberg)

Compass Datacenters wins first AAA rating for data center ABS with $830M deal – Moody’s rated $500M Aaa, citing long hyperscaler leases and low ~31.5% LTV as AI infrastructure debt surges (Bloomberg)

CBRE sees leasing and facilities demand accelerating as AI-driven data center buildout lifts CRE activity – The firm points to strong US sales and leasing momentum, with building operations revenue up 14.6% in Q4 (CBRE)