The Brick Breakdown

🌐 China retaliates as Powell warns on tariffs

China escalated the trade war with retaliatory tariffs, export controls, and a WTO challenge, sending markets lower amid growing global tension. Fed Chair Powell warned that the new tariffs are likely to boost inflation and slow growth, creating more uncertainty around future rate moves.

💸 Mortgage rates fall but housing stocks diverge

Mortgage rates dropped to 6.55% and the 10-year Treasury yield slid to 3.93%, expanding buyer purchasing power by roughly $25,000 since January. Despite the tailwind from lower rates, mortgage stocks closed mixed, with loanDepot and Rocket surging while Fannie and Freddie sank, reflecting uncertainty around credit risk and investor sentiment. The divergence highlights how lower rates drive higher loan volume for originators like loanDepot and Rocket, while GSEs like Fannie and Freddie face pressure amid concerns about credit quality and long-term exposure. 

🏢 Office sector shows signs of resilience

U.S. office leasing bounced back in Q1 2025, hitting a five-year high with strong activity in Century City and Los Angeles returning to pre-pandemic levels. Even as inflation drives fit-out costs higher, large leases and rising asking rents in markets like D.C. point to steady demand in top-tier segments.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.55% (-8 bps)
10Y Treasury Yield: 3.93% (-7 bps)
FTSE NAREIT Index: 725.29 (-4.42%)
30-day SOFR Average: 4.34%

Market Pulse

Markets reeled as China retaliated against U.S. tariffs and Powell warned of inflation and growth risks, while strong payroll gains and mixed housing stock performance highlighted growing uncertainty across sectors

Powell warns tariffs likely to boost inflation, slow growth – Fed waits for clarity on economic effects before adjusting policy, with uncertainty around inflation and growth risks (Reuters)

China imposes 34% tax on U.S. imports in retaliation for Trump’s tariffs – Stock market plunged on Friday as Beijing responded with tariffs, export controls, and a WTO lawsuit (AP)

U.S. payrolls rise by 228,000 in March – Unemployment rate increases to 4.2%, while health care leads job growth with 54,000 new positions (CNBC) 

Housing stocks see mixed results amid market selloff – loanDepot and Rocket rose 16.8% and 11.4%, while Freddie Mac and Fannie Mae dropped over 12% and 8%, respectively (NationalMortgageNews)

Policy & Industry Shifts

DOE advances data center development on federal land -- 16 potential sites identified for AI infrastructure and expedited energy permitting, supporting the AI push under Trump’s leadership (Bisnow)

Residential

Lower mortgage rates have boosted buyer purchasing power, but high home prices and rising rents continue to strain affordability, with relocation slowing and regional demand reshaping rental markets

Tariffs push mortgage rates to 6-month low – Homebuyers see a $25K increase in purchasing power since January, though housing costs remain near record highs (Redfin)

Retiree moving activity drops 23.8% in 2024 – Rising mortgage rates and home prices deter relocation, with Florida and Massachusetts remaining top destinations (HousingWire)

Atlanta apartments see largest rent increase in nearly two years – Surge in demand leads to higher rents, with expectations for continued growth in Q2 2025 (CoStar)

Office

Office demand is showing signs of recovery with leasing activity hitting a five-year high, even as inflation drives fit-out costs higher and vacancy levels stabilize in key markets like D.C. and Los Angeles.

U.S. office leasing bounces back in Q1 2025 – Activity surges to a five-year high, driven by increased leasing in Century City and a return to pre-pandemic levels in Los Angeles (CoStar)

Office fit-out costs surge amid inflation and material price increases -- North America leads globally with costs averaging $3,070 per sq meter, driven by supply shortages and rising materials (GlobeSt)

Q1 2025 DC office market sees stable vacancy – Despite negative absorption of 310K sq ft, larger leases like Freshfields' 117K sq ft and increased rental rates indicate resilient demand (Colliers)

Industrial

Higher tariffs and frontloaded imports are expected to cut Port of LA container volumes by 10 percent, signaling weaker near-term industrial demand as elevated inventories weigh on activity

Port of LA expects 10% drop in container volumes – Higher tariffs and frontloading lead to a weaker outlook, with import demand slowing as inventories are already stocked (FreightWaves)

Market Mix

Rising tariffs are driving up material and equipment costs for data centers, potentially delaying AI-driven infrastructure projects as tech firms reassess development timelines

Tariffs threaten data center development costs – Price hikes on materials and equipment could disrupt AI storage growth, with tech giants slowing projects amid higher tariffs (CoStar)

Financings

Affinius and Intervest lend $275M for Midtown South tower – Financing supports a 72-story residential project at 986 Sixth Avenue, set for completion in 2026 (CommercialObserver)

Affinius Capital refinances Boston apartments with $212M loan – Senior loan provided by Affinius and mezzanine debt supplied by Siguler Guff for the Overlook at St. Gabriels (CommercialObserver)

David Werner and Nathan Berman secure $90M for NYC office-to-rei conversion – Financing will convert 675 Third Ave. into 430 rental units (Bisnow)

Manulife Investment Management secures $68.3M loan -- Loan provided by an insurance company for cold storage facility acquisition in Jacksonville (REBusinessOnline)

M&A

Building & Portfolio M&A

Hines sells 11 Texas communities to Starwood for $800M – Deal includes over 16,000 lots across Austin, Dallas, and Houston, with plans to continue development (BizJournals)

Morgan Properties acquires 11 multifamily communities for $501M -- Deal adds 3,054 units across eight Midwest states, expanding Morgan's portfolio to over 100,000 units nationwide (GlobeSt)

Koret Foundation sells The Village in Cupertino, California for $207M — Sold to Boston-based Rockpoint Group for a $157M profit (BizJournals)

Data center company EdgeConnex buys 270 acres in Ohio for $137M – Acquisition includes land in Johnstown and New Albany for data center development (BizJournals)

Easterly buys D.C. NoMa office for $119M – Acquisition includes Capitol Plaza I, leased by D.C. Public Schools and the Department of Energy (CommercialObserver)

Trinity Place Holdings sells Brooklyn apartment building for $68.5M – Sold to a partnership between Bluestone Investments and Shel Capital (REBusinessOnline)

California Landmark Group sells The BW in Los Angeles for $58.1M – Acquired by FAMH Group in the Brentwood neighborhood (REBusinessOnline)

Institutional Fundraising

SDS Capital launches $1B debt platform for affordable housing -- Half committed to 1,427 units, targeting moderate-income projects amid federal funding cuts (Bisnow)