Hello Brick Brief readers, 

Thank you for your continued support! Today’s real estate landscape shows smaller office markets regaining momentum, PayPal teaming up with Bilt to expand rent payments, and apartment dynamics shifting as strong demand meets new supply.

🏘️ Apartment Market Balances Between Demand and Supply
Apartment demand remains steady as the cost of owning continues to climb, with Avison Young noting that the average mortgage payment now exceeds rent by $825. However, developers’ pandemic-fueled building spree has delivered a wave of new supply, and landlords now face slowing rent growth and record concessions as they compete for tenants.

🏢 Smaller Office Markets Regain Strength
Flight to quality is defining the office recovery as tenants prioritize modern Class A buildings with better layouts and amenities. However, limited new construction during the post-pandemic slump has made these high-quality spaces even more valuable in smaller markets like Nashville, Columbus, and Salt Lake City where supply remains tight and demand is steadily returning.

💳 PayPal and Bilt Expand Rent Payment Options
Bilt is deepening its reach into the U.S. housing market by partnering with PayPal to enable rent and mortgage payments through Venmo starting in early 2026. The integration connects its rewards network to 40,000 merchants and major property managers, expanding access to millions of renters and homeowners.

30Y Mortgage: 6.19%

10Y Treasury Yield: 3.98% (-4 bps) 

WSJ Prime Rate: 7.25%

FTSE NAREIT Index: 787.34 (+0.32%) 

30-day SOFR Average: 4.20%

US-China trade optimism lifts risk assets – Markets rally on hopes of a Trump-Xi deal as investors bet on rate cuts and stronger earnings despite unresolved tech and security tensions (Bloomberg)

Fed expected to cut rates by 25 bps to 3.75–4.00% – Policymakers aim to cushion labor market weakness as inflation holds near 3% and markets bet on more easing ahead (Reuters)

U.S. unemployment steady at 4.3% – Chicago Fed model shows little change in October, signaling a mildly cooling but stable job market (Reuters)

CRE investors grow more optimistic thanks to four fronts – Marcus & Millichap says cap rates are up 80–130 bps from 2022 creating value opportunities, while broad sector tailwinds, a favorable rate outlook, and stronger return potential are boosting sentiment (ConnectCRE)

US homebuilding remains inefficient and costly – Bloomberg highlights how fragmented construction, regulatory bottlenecks, and failed modular housing experiments keep costs high despite decades of innovation (Bloomberg)

Zillow survey shows renters gain leverage – 58% receive concessions like reduced rent or free months, median deposit is $795, most pay rent online, and 94% want all fees disclosed (Zillow)

U.S. luxury benchmark fell 0.5% MoM in September – The $1.24M threshold marks a fourth straight monthly dip as listings spend 79 days on market (Realtor.com)

Apartment demand rises as mortgage costs widen rent gap – Avison Young reports the average mortgage payment now exceeds rent by $825, the widest spread since before 2020 (GlobeSt)

Renters keep leverage as supply glut lingers – Apartment rents are rising at their slowest pace in years as new units flood the market and job insecurity among young renters weighs on demand, forcing landlords to offer record concessions through 2026 (WSJ)

Insight: These two pieces of news seem to contradict each other at first. How can affordability challenges be fueling apartment demand while renters are simultaneously gaining leverage? According to Avison Young, elevated mortgage rates and rising home prices have widened the rent to own gap, keeping many would-be homebuyers renting and supporting steady apartment absorption nationwide.

According to the Wall Street Journal, developers rushed to build during the pandemic, spurred by low borrowing costs and migration to the Sun Belt, creating the largest apartment construction boom in four decades. Now that wave of projects has been delivered, flooding the market with new supply that has outpaced demand and pushed landlords to offer concessions to stay competitive. 

Even with solid renter demand, the sheer volume of new deliveries and rising unemployment among recent college graduates have tipped the balance toward tenants.

Student housing rent averages $1,017 per bed, up 3.4% YoY – The sector remains resilient with 91.6% occupancy and $27B in valuations despite an 11% drop in international enrollment (CushmanWakefield)

Student housing draws 35% of 2025 institutional deal volume – Near-campus assets trade at a 33% premium while $12B in upcoming loan maturities add pressure to refinancing conditions (CushmanWakefield)

Colliers identifies smaller office markets as 2025 bright spots – Cities like Nashville, Columbus, Columbia, Salt Lake City, and San Diego saw leasing and rent gains in Q3 as tenants gravitated toward quality Class A space and limited new construction tightened vacancies (GlobeSt)

Insight: Flight to quality in office space is well known, as tenants obviously prefer newer Class A buildings with modern designs and amenities. However it’s important to note that limited new construction during the post-pandemic office slump has made these high-quality buildings even more valuable in smaller markets where supply remains tight and demand is steadily returning.

FGS Global leases 80K SF office space in New York, NY – The firm signed a 15-year lease at Vornado Realty Trust’s redeveloped Penn 2 tower above Penn Station, with asking rents at $115 per SF (CommercialObserver)

Retail demand turns positive in Q3 – Net absorption for U.S. store space returned to growth as strong backfilling of vacancies drove a rebound in occupancy (CoStar)

Google and NextEra partner to revive Iowa nuclear plant – The Duane Arnold facility will restart by 2029 under a 25-year power deal to fuel Google’s data centers (Bloomberg)

Fermi orders four large nuclear reactors for Texas data centers – The $14B REIT co-founded by Rick Perry will deploy Westinghouse AP1000 units with Doosan and Hyundai to power an AI-driven grid campus (Bloomberg)

Data centers are turning to fracking hubs for power – Tech firms are building gas-fueled campuses in Texas and Pennsylvania to meet AI energy demand, though scalability and latency concerns persist (Bisnow)

Government shutdown drives hotel occupancy decline in Washington, DC – The ongoing federal closure has reduced travel demand across the capital, with even World Bank and IMF meetings unable to offset losses (CoStar)

Alterra IOS secures $150M loan for industrial outdoor storage expansion – Blue Owl Capital provided the financing to help the firm acquire new IOS sites across 12 states (CommercialObserver)

Keystone Property Group secures $62M construction loan for office-to-residential conversion in Miami, FL – Arbor Realty provided the three-year financing for the 474K-SF, three-building Dadeland campus on South Dadeland Boulevard (CommercialObserver)

Sculptor Real Estate secures $76M acquisition loan for industrial facility in Columbus, OH – Affinius Capital provided the financing for the 1.3M-SF Scotts Midwest Distribution Center in Marysville leased to The Scotts Company (CommercialObserver)

TPG RE Finance Trust prices $1.1B managed CRE CLO – The TRTX 2025-FL7 deal provides $957M of term financing for its loan portfolio with a 30-month reinvestment period and Term SOFR + 1.67% pricing (ConnectCRE)

Kemmons Wilson Hospitality Partners and Ascendant Capital Partners acquire upscale REIT Sotherly Hotels for $46M – The deal values the 10-property hotel REIT at a 153% premium to its prior closing price (Bisnow)

Insight: Publicly traded stocks, REITs included, need to show growth to investors to trade at higher valuations. Unfortunately for Sotherly, in Q2 2025 its revenue fell to $48.8M from $50.7M a year earlier, while net income dropped to $1.5M from $4.6M. However, private buyers like Kemmons Wilson and Ascendant are taking advantage of these depressed valuations to acquire high-quality assets at attractive prices; they offered a significant premium to Sotherly’s public valuation, likely seeing value in its upscale hotel portfolio despite weak near-term performance. This year, the luxury hotel segment has continued to outperform the broader hospitality market, even as consumer spending softens and travel demand shows signs of cooling.

Bridge Investment Group acquires Silver Reef apartments in Denver, CO for $100M – Inland Real Estate Group sold the 419-unit 1984-built complex in Lakewood (ConnectCRE)

Mesirow acquires 1105 Town Brookhaven Apartments in Atlanta, GA for $87M – Wafra sold the 299-unit 2014-built community located within the 50-acre Town Brookhaven mixed-use development (ConnectCRE)

Davis Companies and Tribeca Investment Group acquire Midtown office tower in New York, NY for $66M – ATCO Properties sold a partial stake in 630 Third Avenue and will retain ownership while co-investing in a $50M renovation (CommercialObserver)

Self-storage investor SROA Capital surpassed its $750M target with a $1.1B Fund IX – The firm plans to acquire and develop self-storage assets across the U.S (IREI)

Centerbridge Partners and Reframe Holdings form $500M self-storage JV – The venture will target Class A and institutional-quality Class B assets in major U.S. metros (IREI)

Venture capital returns to proptech with AI-driven focus – CRETI reports $11.5B raised YTD, with 30–50% flowing to AI platforms that enhance leasing, underwriting, and asset performance across CRE sectors (CommercialObserver)

PayPal and Bilt partner to bring rent and mortgage payments to Venmo – The integration, launching early 2026, expands Bilt’s rewards network across 40,000 merchants and top U.S. property managers (Bloomberg)