The Brick Breakdown

💸 Yields fall as markets price in recession risk
The 10-year Treasury yield fell to 4.00 percent and mortgage rates dropped to 6.63 percent as markets responded to higher recession odds and tariff-related economic uncertainty. Traders are now assigning a 32.7 percent chance of a May Fed rate cut, up from just 10.6 percent two days ago. Expectations for lower rates, including mortgage and SOFR benchmarks, are rising, but elevated construction costs from new tariffs may keep housing prices high and pressure builder margins.

📉 Tariffs hammer real estate stocks
Real estate-linked stocks sank as Trump’s new tariffs raised cost concerns, with Lennar down 6 percent, Prologis 9.6 percent, and TopBuild 9 percent. Construction costs are expected to rise by about $6,400 per home, pressuring margins and investor sentiment across housing and logistics sectors.

🏘️ Housing activity remains muted despite buyer interest
Pending home sales are still low as record-high monthly payments and rising insurance costs limit affordability, even with new listings starting to pick up. With 68 percent of condos selling below list price and private credit firms stepping into home equity lending, the market is adjusting to persistent pricing pressure.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.63 (-9 bps)
10Y Treasury Yield: 4.00% (-6 bps)
FTSE NAREIT Index: 758.85 (-3.11%)
30-day SOFR Average: 4.34%

Market Pulse

Trump’s tariffs are reshaping market expectations, driving up recession risk and construction costs while pushing investors to price in earlier Fed rate cuts despite mixed labor signals

Property stocks slide as tariffs spike costs – Lennar fell 6%, Prologis 9.6%, and TopBuild 9% as Trump’s new tariffs are expected to raise construction costs by ~$6,400 per home (Bloomberg)

U.S. trade deficit narrows in February – Imports steady at $401.1B, while exports rose 2.9%, led by capital goods; economists caution data may be distorted by pre-tariff stockpiling (WSJ)

JPMorgan raises recession risk to 60% – Tariff hike and global disruptions increase likelihood of U.S. recession, with retaliatory tariffs and weak business sentiment worsening outlook (WSJ)

Expectations for a Fed rate cut rise to 32.7% for May – Driven by tariffs and heightened recession risks, up from 10.6% on April 2 (CMEFedWatch)

Initial jobless claims dip to 219K – Down from 225K the prior week and below forecasts, but continuing claims rose to 1.9M, the highest since 2021, ahead of Friday’s jobs report (WSJ)

Residential

High housing costs and rising insurance premiums continue to suppress sales activity, but increased buyer leverage in the condo market and growing private credit involvement signal a shifting dynamic in how demand is being met

Private credit firms target housing market – Expanding into home equity loans amid rising demand and banking retreat, with investor interest in mortgage bonds up 30% (Bloomberg)

68% of condos sold below list price in February – Highest share in five years, driven by rising insurance costs and high HOA fees, as buyers gain negotiating power (Redfin)

Record-high housing costs keep pending home sales down – Monthly payments hit $2,802 as sale prices rise 3.4%, though new listings and house hunters show signs of activity (Redfin)

Washington, D.C. remains top rental market in February– The Midwest ties with the South for most renter interest, with cities like San Jose and The Bronx climbing rapidly (RentCafe)

Home insurance rates rise for most policyholders – 67% saw increases in 2024, with 75% expecting higher rates in 2025 amid growing affordability concerns (HousingWire)

Office

Federal downsizing is expected to have a limited national impact on office markets, but concentrated exposure in D.C. could pressure some areas even as trophy rents surge on tight supply and sector-specific demand

Federal space cuts to have minimal impact – GSA leases 1.7% of U.S. inventory, with a 10% reduction raising vacancy by just 20bps, though D.C. and Northern Virginia may see higher effects (CBRE)

Trophy office rents soar in D.C. – Limited supply drives asking rents to $91.21/SF, with demand pushing achieved rents up 9.1% YoY (Bisnow) 

Industrial

Big-box industrial vacancies rise in 2024 – Slower construction and leasing as demand stabilizes in key markets (Colliers)

Market Mix

Coffee segment thrives despite challenges – Visits up 29.1% from 2019, with mid-sized and small chains growing market share, especially in the Midwest and South (Placer.ai)

Financings

Vornado secures $450M CMBS loan for Times Square property – The loan refinances a high-profile retail space at 1535 Broadway, home to a theater and retail stores (CoStar)

M&A

Company M&A

Stantec to acquire Page, becoming second-largest U.S. architecture firm – Deal expands Stantec’s workforce to 13,500, boosting its North American presence and market growth (Bisnow)

Building & Portfolio M&A

BlackRock sells Inland Empire California warehouse to Burlington for $257M – Sale nets $140M gain as Burlington, the sole tenant since 2019, continues expansion plans (LABusinessFirst)

Pfizer sells San Diego biotech campus to BioMed Realty for $255M – The deal highlights continued demand in San Diego’s biotech hub, despite broader cooling in life science space (CoStar)

Highline Hospitality acquires Hilton Atlanta Airport – The 510-room property, previously sold for $101M in 2019, joins Highline's growing portfolio in key markets (CoStar)

Institutional Fundraising

JPMorgan Asset Management targets $10B net lease platform – Rapid all-cash sale-leasebacks and AI-driven pricing accelerate $1B annual deal flow in a high-cap-rate market (GlobeSt)

Distress Watch

Lurin faces foreclosure on $383M in multifamily loans – Dallas-based landlord to lose 2,000+ units across 12 properties in the Florida Panhandle as interest rates rise (TheRealDeal)