Hello Brick Brief readers, 

Thank you for your continued support! Today we saw the Fed cut rates by 25 bps as expected, big tech ramp up spending on data centers and AI, and restaurant chains diverge as value becomes the key driver of performance.

Shortened edition today as I’m up against fast-moving deadlines. Normal programming returns soon.

🏦 Fed Cuts Spark Market Reversal
The Fed delivered its expected 25 bps rate cut to 3.75–4%, but Powell warned a December move remains “far from” certain as divisions widen among officials. His comments sent the 10-year yield up to 4.07% and mortgage rates up 14 bps to 6.27% as traders repriced forward rate cut expectations.

💻 Big Tech’s Capex Arms Race
AI spending is only continuing to accelerate as Microsoft, Alphabet, and Meta expand data center investments beyond expectations. Microsoft’s record $35B Q1 capex and Alphabet’s $91–93B annual plan reflect the scale of the buildout, though investors are increasingly wary of the long-term cost burden.

🌮 Value Wins in Fast Food
Chipotle stock dropped 17% after forecasting a same-store sales decline as younger consumers pull back on dining out. Yum! Brands’ value-driven promotions at Taco Bell, KFC, and Pizza Hut helped lift visits, proving affordability is driving traffic as middle-income consumers grow more price-sensitive and value-oriented. 

30Y Mortgage: 6.27% (+14 bps)

10Y Treasury Yield: 4.07% (+8 bps) 

WSJ Prime Rate: 7.25%

FTSE NAREIT Index: 753.17 (-2.27%) 

30-day SOFR Average: 4.20%

Fed cuts rates by 25 bps to 3.75–4% – Powell warned a December cut is “far from” certain as divisions widen between officials focused on jobs and those wary of inflation (Bloomberg)

US and South Korea sign $350B trade deal – Seoul will invest $350B in the US in exchange for lower auto tariffs cut from 25% to 15%, aligning Korean car exports with Japan’s (FT)

Thanks to the One Big Beautiful Bill Act, gas station and car wash sales up 27% since July – Reinstated 100% bonus depreciation has sparked a rush of year-end deals as investors seek major tax write-offs (Bisnow)

Case-Shiller home prices rose 0.2% MoM in August on a seasonally adjusted basis – Home price growth slowed to 1.5% YoY, led by New York, Chicago, and Cleveland while Tampa prices fell 3.3% (HousingWire)

Insight: This is a correction from yesterday, where I noted a 0.4% MoM gain; Case-Shiller data shows prices actually rose 0.2% MoM (when seasonally adjusted) as growth continues to cool across most markets.

30-year mortgage rate falls to 6.30%, a 13-month low – Declining Treasury yields and softer inflation boosted refi and purchase applications ahead of the Fed’s expected second rate cut (Reuters)

Newly built homes make up 26.8% of listings, a 4-year low – Rising existing inventory and slower builder starts are shrinking new-home supply, though incentives like rate buydowns and closing-cost credits remain widespread (Redfin)

Pending home sales index held at 74.8 in September – Contract signings stalled as job market concerns outweighed relief from easing mortgage rates (Bloomberg)

U.S. housing shortfall reaches 7.1M homes – Western and Sun Belt states face the deepest gaps as high borrowing costs push multifamily permits back to pre-pandemic levels despite record completions (GlobeSt)

U.S. apartment rents fell for the fourth straight month – National one-bedroom median slipped 0.4% to $1,511 as high supply and weaker job growth weigh on demand (GlobeSt)

Affordability remains top driver for renters – 54.5% rent out of necessity while 45.5% rent by choice, with long-term renting nearly doubling since 2011 as tighter lending and high home prices reshape renter behavior (GlobeSt)

U.S. office occupancy up 0.2 pts to 54.4% – Class A+ averaged 78.7% with a 96.1% Tuesday peak, while Austin led gains rising 1.5 pts to 71.8% (KastleSystems)

Foreign investment in U.S. office jumps sixfold YoY to $877M – Manhattan led cross-border spending as global buyers target top-tier assets amid a flight to quality, with San Francisco next in line due to AI-driven tech demand (Bisnow)

Therma leases 213K-SF industrial facility in San Jose, CA from Ares Real Estate – The HVAC contractor signed a full-building lease at 650 North King Road (TheRealDeal)

Yum! Brands visits up 0.3% in Q3 – Taco Bell remained the growth driver while KFC and Pizza Hut showed renewed momentum through value promotions and menu revamps (Placer.ai)

Restaurant Brands International traffic down 3.3% in Q3 – Burger King and Popeyes slowed while Firehouse Subs outperformed with 1.6% visit growth supported by higher-income customers (Placer.ai)

Fears of falling behind in the AI race are driving tech giants to continue ramping up capex

Microsoft Q1 capex hits record $35B – AI infrastructure spending is surging past expectations as Azure grows 40% YoY, fueling data center expansion but deepening investor concern over long-term costs (Reuters)

Alphabet boosts 2025 capex to $91–93B – AI-driven cloud and data center demand fueled the increase as Google Cloud revenue rose 34% YoY and backlog jumped $49B in three months (Reuters)

Meta raises 2025 capex outlook to $70–72B – Zuckerberg plans an aggressive AI data center buildout under the new Superintelligence Labs unit, with spending set to rise further in 2026 as Meta races to expand compute capacity (Reuters)

U.S. nuclear generation projected to rise 27% after 2035 – Wood Mackenzie says surging data center demand is driving tech giants like Microsoft and Google to secure zero-carbon power and invest in next-gen nuclear projects (Reuters)

Hotel loyalty program fees rose 3.9% in 2024 – Growth outpaced royalty, marketing, and reservation fees as loyalty members accounted for 52.8% of room nights and total memberships rose 14.5% to 676M (CBRE)

Chipotle shares plunged 17% after missing Q3 revenue expectations and forecasting full-year same-store sales to shrink by a low-single digit percentage in 2025 as inflation, high borrowing costs, and fading wage gains lead younger consumers, particularly ages 25 to 35, to cut back on dining out (CNBC)

Insight: As a Chipotle regular, their value proposition has unfortunately become so much less enticing. Portions are smaller and prices are higher, so I’ve been going less. They’ve forgotten what made the brand feel worth it in the first place. In an economy where buyers are focused on value, it’s clearly hurting their growth

UrbanStreet Group secures $94M construction loan for mixed-use project in Schaumburg, IL – Bank OZK provided financing for the first phase of the 225-acre Veridian redevelopment at the former Motorola campus, part of a $1B master plan (TheRealDeal)

Saca Development acquires One American Plaza office tower in San Diego, CA for $120M from Irvine Company – The 34-story, 650K-SF building sold for 60% less than its 2006 price as Irvine exits the market (CommercialObserver)

Concord Capital Partners acquires The View apartments in Los Angeles, CA for $52.1M from MWest Holdings – The 168-unit Koreatown property sold for 29% less than its 2018 price as Concord expands its L.A. multifamily portfolio (CommercialObserver)

Warburg Pincus and Madison International commit $300M for property secondaries – The venture targets discounted stakes in data centers, industrial, and residential assets through Warburg’s $4B Capital Solutions Founders Fund (Bloomberg)

Parkview Financial files for bankruptcy at $207M Hudson Hotel redevelopment site in New York, NY – The lender took control of the 24-story property at 353 West 57th Street and will proceed with its 400-unit apartment conversion (TheRealDeal)

RXR secures $200M recapitalization for 627K-SF office tower at 75 Rockefeller Plaza in New York, NY – Farallon Capital led the restructuring that split the property’s $260M debt into A and B notes, valuing the asset below its 2022 loan balance (TheRealDeal)

BXP and Moinian secure $108M refinancing for planned office tower at 3 Hudson Boulevard in New York, NY – JPMorgan Chase provided the loan after a maturity default, replacing an $80M mortgage and including a $50M mezzanine component from BXP (TheRealDeal)

Nitya Capital’s $66M multifamily loan for 1,001-unit portfolio in Dallas, TX and Houston, TX sent to special servicing – The CMBS loan backed by The Muse and Eden Pointe was transferred after Nitya missed its October payment (TheRealDeal)