The Brick Breakdown

Hello Brick Brief readers, 

Thank you for your continued support. In recent news, we’re seeing retail distress, slow activity in the residential market, and a divergence in hotel performance. 

🛍️ Retail distress rises as tariffs and costs mount
Rite Aid filed for its second Chapter 11 and discount retailer Gabe’s may cede control to lenders, highlighting growing strain on low-margin retailers facing weak liquidity and Trump-era tariff pressures. As CMBS delinquency rates rise across multifamily, office, and lodging, distress in retail underscores broadening vulnerability in consumer-facing sectors.

🏡 Residential market stagnates despite rising Gen Z share
High rates, tariffs, and federal job cuts slowed March home sales to the weakest pace since 2009, while multifamily permitting fell 27% from its pandemic peak. Still, first-time buyers made up a record 58% of agency loans in Q1 2025, driven by Gen Z’s entry into the market as repeat buyers pull back.

🏨 Hotel performance diverges as luxury leads
RLJ Lodging beat Q1 expectations on strong urban demand but cut its 2025 outlook due to softening fundamentals and shorter booking windows. Meanwhile, robust airline premium bookings hint at resilient luxury hotel demand, though main cabin softness may limit broader lodging recovery.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.90% (+4 bps)
10Y Treasury Yield: 4.35% (+4 bps)
FTSE NAREIT Index: 770.53 (+0.91%)
30-day SOFR Average: 4.35%

Market Pulse

April data shows uneven momentum across the economy, with consumer goods and services sectors rebounding modestly while tech and basic materials continue to contract, highlighting selective strength amid broader uncertainty

Consumer goods lead April sector growth -- Output surged past other industries, while tech and basic materials contracted for the month (S&PGlobal)

Services PMI rises to 51.6% in April — Modest rebound in new orders and supplier deliveries offset soft employment and slower business activity growth (ISM)

Policy & Industry Shifts

The White House’s proposal to eliminate Section 8 and cap housing aid at two years risks a major spike in homelessness, as shifting to state-run block grants would drastically reduce federal support for vulnerable renters

White House proposes eliminating Section 8 and capping aid at 2 years -- Shift to state-run block grants could trigger unprecedented homelessness, advocates warn (HousingWire)

Residential

The housing market continues to cool as high rates and tariffs stall sales and new construction, while affordability pressures push more first-time buyers into the market and leave nearly half of renters burdened by housing costs

Housing market stalls during peak season -- High mortgage rates, Trump’s tariffs, and federal job cuts drag sales to slowest March pace since 2009 (FT)

U.S. multifamily permits drop 27% from pandemic peak – Builders pulled 12.4 permits per 10K people over the past year, falling below pre-COVID levels as high rates and soft demand stall new starts (Redfin)

Nearly half of U.S. renter households are rent-burdened -- Black, Hispanic, female-led, and elderly households face the greatest strain, with marriage and education linked to lower rent burdens (Zillow)

First-time buyers make up record 58% of agency loans in Q1 2025 -- Gen Z gains market share as repeat buyers retreat amid high rates and affordability challenges (HousingWire)

Industrial

Pharma investment and diversified trade flows signal growing resilience in U.S. industrial markets, even as Los Angeles braces for near-term tariff disruptions due to its central role in container imports

Bristol Myers pledges $40B US investment -- Drugmaker joins peers boosting domestic spending as pharma braces for potential Trump-era tariffs (Bloomberg)

Tariff watch focuses on Los Angeles -- Intermodal volumes rising as 32% of U.S. container imports flow through region expected to feel trade impact first (FreightWaves)

Houston tops U.S. metros for 2024 exports at $181B – Onshoring gains and diversified trade partners position it to weather tariffs and global uncertainty (Bisnow)

Market Mix

performance, while student housing benefits from rising enrollment and constrained supply despite moderating rent growth

Hospitality

Airline earnings hint at strong luxury hotel demand this summer -- Robust premium cabin bookings signal resilient high-end travel, though main cabin softness may temper broader lodging growth (CoStar)

Student Housing

Student housing preleasing reaches 67.1% in March -- Rent growth slows to 2.5% as enrollment rises and new supply falls, with average advertised rent at $918 and 2024 sales volume exceeding pre-COVID norms (YardiMatrix)

Earnings & Real Estate Impact

RLJ Lodging's strong Q1 performance was driven by urban hotel demand, but the REIT lowered its 2025 outlook as economic uncertainty and weaker booking trends raise concerns about sustained hospitality recovery

Hotel REIT RLJ Lodging beat Q1 earnings expectations thanks to strength in its urban hotels but reduced its 2025 outlook due to increased macroeconomic uncertainty, softening fundamentals, and shortened booking windows (CoStar)

Financings

Loans

Goose lands $166M loan for Brooklyn Boerum Hill rentals -- Slate’s Scale Lending backs 367-unit, 4-building project designed to sidestep 485x wage rules (TheRealDeal)

Charney secures $135M loan for Brooklyn condo tower -- BH3 and Madison Realty Capital back 182-unit project at 95 Rockwell Place (TheRealDeal)

M&A

Company M&A

Ackman to invest $900M in master-planned community developer Howard Hughes, boosting stake to 47% – Pershing Square aims to turn the real estate firm into a Berkshire-style holding company (Bloomberg)

Building & Portfolio M&A

Amazon buys NoVA site for $195M -- Eyes 1.7M SF data center in Loudoun County despite global pause on lease deals, pending local development approvals (CommercialObserver)

Nvidia buys $123M, 10-building business park in Santa Clara, CA -- Expanding its Silicon Valley footprint as it ramps U.S. chip production and AI infrastructure investment (CoStar)

Institutional Fundraising

WNC raises $347M for affordable housing funds -- Capital supports over 2,600 LIHTC-backed units, including projects like Willow Creek Manor in Houston (CoStar)

Distress Watch

Retail bankruptcies and rising CMBS delinquencies underscore mounting distress across real estate, as inflation, tariffs, and soft consumer demand pressure both tenants and landlords

Rite Aid files for second Chapter 11 bankruptcy -- Aims to sell most of its 1,200 stores with interest from national and regional buyers amid continued financial struggles (CoStar)

Discount retailer Gabe’s in talks to cede control to lenders -- Warburg Pincus-backed chain faces weak liquidity and rising costs under Trump-era tariffs (WSJ)

CMBS delinquency rate hits 7.03% in April -- Multifamily jumps 113 bps to 6.57% as lodging and office delinquencies also climb (Trepp)

Metro Loft nears $335M recap of NYC’s 180 Water Street -- New debt and 50% equity stake from 60 Guilders and Sentry Realty to resolve CMBS loan distress (CommercialObserver)

Proptech & Innovation

Proptech firms are disrupting traditional real estate roles, with attorney-led broker alternatives and AI-driven appraisal platforms streamlining transactions 

Lawyer-led startups aim to cut agents from real estate deals -- Attorney-run firms like AgentFree and Realty Redone offer lower fees, legal expertise, and virtual services (RisMedia)

AppraisalVision unveils AI-powered appraisal system -- New Alpha7X tech enables full automation from order to delivery, cutting manual oversight and boosting compliance (HousingWire)