Hello Brick Brief readers, 

Thank you for your continued support! Today’s trends show small retail spaces outperforming, importers moving inventory inland from ports, and MCR buying Soho House for steadier revenue.

🛍️ Retail: Small Spaces Win
Store openings outnumber closures in 2025 and net absorption remains -14.5M SF as big-box vacancies linger and speculative development stalls. Leasing concentrates in sub-5,000 SF spaces and mid-market department stores lose traffic while luxury banners gain.

🚢 Imports Up, Port Sheds Soften
July imports jumped as shippers front-ran tariffs and Los Angeles moved a record 1M TEU while H1 volumes rose 3.5% YoY. Operations stayed smooth and ocean rates eased while Los Angeles and Inland Empire industrial softened as inventories shifted inland to Chicago and Dallas.

🏨 MCR x Soho House: Subscription Play
MCR is taking Soho House private to add subscription-driven cash flow and diversify beyond franchised hotels. The move comes as hotel forecasts weaken in H2 2025 and gives MCR a global members club platform it can scale without quarterly pressure.

30Y Mortgage: 6.59% (+3 bps) 

10Y Treasury Yield: 4.33% (+2 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 750.59 (-0.88%) 

30-day SOFR Average: 4.35%

US Treasuries extend losses ahead of Powell’s Jackson Hole speech – 10Y yield rises to 4.34% as traders bet on September rate cut despite inflation spike (Bloomberg)

Insight: Economic news is light today, so it’s worth revisiting inflation and September rate cut implications. Inflation is a feedback loop: consumers expect higher prices and change their spending behavior by buying goods immediately, while businesses see peers raising prices (maybe due to one-time tariff passthroughs) and opportunistically follow with their own increases.

Now we seeing an acceleration of price gains and consumer inflation expectations rising: June core goods PPI rose 0.3% MoM, July goods prices climbed 0.7% MoM, July CPI ex-food and energy rose 0.3% MoM, and 1Y consumer inflation expectations rose to 4.9%. 

August economic data and Friday’s speech by Powell will be telling, and I believe that the market is overly confident on a September rate cut. The Fed has maintained a wait-and-see approach, as price acceleration may continue. The Fed knows from 2021 (transitory inflation rhetoric) that inflation is easier to rein in before momentum builds. The risk is that one-time tariff price hikes lead to a change in consumer and business behavior, which creates an inflationary feedback loop. Although the labor market is softening, unemployment remains at 4.2%, so price stability remains in focus. Current market probabilities do not reflect recent rhetoric from Fed officials.

MCR Hotels, one of the largest U.S. hotel owners, is leading a group of investors to take private members’ club operator Soho House off the public market.

• Shareholders will receive $9 a share in a deal that values Soho House at $1.8 billion equity and $2.7 billion including debt. Apollo is backing the deal with more than $700 million in equity and debt financing, while Ron Burkle will roll over his controlling stake.
• MCR owns more than 30,000 hotel rooms across the U.S., mostly select-service and extended-stay properties under Hilton, Marriott, IHG, and Hyatt flags. It also owns high-profile assets like the TWA Hotel at JFK, the Gramercy Park Hotel, and London’s BT Tower.
• The Soho House acquisition gives MCR a direct entry into the private members’ club market, a global hospitality niche built on recurring subscription revenue and cultural exclusivity.
• Soho House operates 46 clubs worldwide and has more than 200,000 members, with retention above 90%. Its model blends hospitality with subscription-driven cash flow, unlike MCR’s nightly room business.
• Although luxury continues to outerperform other segments, the broader hotel industry is expected to weaken in the second half of 2025, as recent forecasts from Marriott, CoStar, and CBRE all guide toward weaker performance. MCR is turning to a membership model that offers steadier and more predictable cash flow amid the travel industry’s current headwinds.
• By going private, Soho House avoids quarterly earnings pressure and can expand into new cities at a deliberate pace while preserving brand identity.
• MCR’s real estate discipline provides stability and growth capital for Soho House, which has often struggled with profitability under public scrutiny.

Takeaway: MCR is using Soho House to expand beyond franchised hotels into subscription-based hospitality. The move comes as hotel industry forecasts are being cut, and the deal gives MCR a steadier source of revenue through recurring membership dues while pairing its financial discipline with Soho House’s brand power.

Housing cools as builder sentiment sinks, sales slow, and rents diverge across regions while affordability pressures reshape demand between prime urban rentals and fringe ownership markets

Homebuilder sentiment falls to lowest since Dec. 2022 – Index slips to 32 as 37% cut prices and two-thirds offer incentives to attract buyers (Reuters)

Insight: The drop in builder sentiment connects with yesterday’s discussion of Buffett’s $1B homebuilder investment. He may see current conditions as the trough and expects the market to improve in the coming months.

Homes sell at slowest summer pace in a decade – July pending sales hit two-year low as listings fall and prices rise 1.4% YoY amid shrinking supply (Redfin)

Nationwide rents rose 2.6% YoY in July – But Phoenix, San Antonio, Denver and Austin saw declines while Dallas, Las Vegas and Orlando were flat as supply peaks and concessions surge (Zillow)

Home values split across U.S. metros – Prices rose in Midwest/Northeast cities like Cleveland and Hartford but fell in Southern and Western markets such as Tampa, Austin and Miami as affordability pressures push sellers to record price cuts (Zillow)

Urban rentals attract wealthier tenants as homeownership shifts outward – Affordability pressures keep renters in prime metros while ownership demand moves to fringe markets (GlobeSt)

JPMorgan opens $3B, 2.5M SF HQ at NYC’s 270 Park – NYC office market leads U.S. recovery with trophy leasing and finance-driven return-to-office mandates (WSJ)

Amazon signs 259K-SF office lease at 1440 Broadway in New York, NY – Tech giant expands with WeWork to 560K-SF total footprint across Manhattan (Bloomberg)

Flexible Finance leases 41K SF at 300 Park Avenue South in New York, NY – Fintech firm relocates from 33 Irving Place to Rockrose-owned Midtown South property (CommercialObserver)

Tempus AI leases 39.6K SF at 11 Madison Avenue in New York, NY – Health tech firm relocates from 230 Park Avenue in 10-year deal with SL Green (CommercialObserver)

Importers frontloaded shipments ahead of tariffs, driving record port volumes and a 3.5% YoY rise in H1 imports, while Los Angeles and Inland Empire industrial softened as inventories shifted inland to cheaper hubs like Chicago and Dallas

U.S. port imports rise 3.5% YoY in H1 2025 – Long Beach, Seattle-Tacoma and Savannah post strong gains as shippers frontload ahead of tariffs (CushmanWakefield)

Port-proximate industrial markets soften – Vacancy climbs and rents fall in Los Angeles and Inland Empire as occupiers shift inventory inland to Chicago and Dallas (CushmanWakefield)

Shippers consolidated imports ahead of tariffs – SC Codeworks data shows 32% YoY surge in shipped units with slower order counts and higher inventory levels in early 2025 (FreightWaves)

Port of Los Angeles handles record 1M containers in July – Importers frontloadded shipments ahead of tariff deadline, driving 8.5% YoY volume increase (FreightWaves)

Container rates slide despite record July volumes – Trans-Pacific spot rates fall below $2,100 per FEU as frontloading tempers demand (FreightWaves)

Port of LA-Long Beach keeps cargo moving despite record July surge – Truck dwell averaged 2.9 days and rail 5.2 days, showing stable capacity amid 1M TEU influx (FreightWaves)

Retail reflects the barbell theme we’ve been tracking, with spending strong at the high and low ends while mid-tier chains like Kohl’s and Macy’s see traffic decline. At the same time, big-box vacancies linger as new leasing concentrates in smaller spaces.

Retail openings outpace closures in 2025 – Net absorption remains negative at -14.5M SF as big-box vacancies linger and speculative development stalls (JLL)

New leases skew toward small spaces – 90% of Q2 leases were under 5,000 SF, leaving large-format vacancies harder to backfill despite strong demand from service and restaurant tenants (JLL)

Kohl’s and Macy’s see mid-market traffic slump – Kohl’s visits fell 3.4% YoY while Macy’s banner declines contrast with Bloomingdale’s and Bluemercury growth as luxury outperforms (Placer.ai)

Data center vacancy hits record low at 2.3% – JLL projects $1T investment by 2030 as tenants pre-lease capacity years in advance (CoStar)

Maxim Capital Group provides $108M construction loan to PMG for Denver, CO condos – Financing supports 37-unit Waldorf Astoria Residences Cherry Creek project (CommercialObserver)

BioMed Realty secures $1.3B refinancing for University Park at MIT in Cambridge, MA – Blackstone-owned 1.7M SF life sciences cluster is 96% leased to tenants including Takeda and Mass General Brigham (ConnectCRE)

Landesbank and Tishman Speyer provide $119M refinancing for Watertown, MA life sciences – Boylston Properties refinances 160K SF 500 Forge asset leased to Mariana Oncology and others (CommercialObserver)

Insight: Life sciences has struggled with funding and leasing slowdowns due to a supply glut, but refinancing of fully leased, high-quality clusters like BioMed’s University Park and Boylston’s 500 Forge shows that capital support still exists for top-tier assets.

Dwight Mortgage Trust provides $110M refinancing for Charleston, SC multifamily – Lifestyle Communities refinances 277-unit LC Line and Low with retail space near College of Charleston (CommercialObserver)

Soho House to go private in $1.8B deal – MCR Hotels leads investor group with Apollo providing $700M financing as Ron Burkle rolls over stake (WSJ)

City Office REIT sells six-building Phoenix portfolio for $266M – Sale paves way for $1.1B merger with MCME Carell, backed by Elliott Investment and Morning Calm (GlobeSt)

CUNY buys six floors at 569 Lexington Ave for $126M in New York, NY - Hawkins Way Capital sells 235-room former hotel for student housing conversion (CommercialObserver)

AvalonBay Communities acquires 270-unit Avalon Coconut Creek in Coconut Creek, FL for $98M – Bainbridge Companies and Rockwood Capital sell 2013-built garden-style complex for $364K per unit (TheRealDeal)

W. P. Carey completes $166M sale-leaseback of Chattanooga, TN food plant – 350K SF facility leased 25 years to Premium Brands subsidiary with 100% renewable energy (ConnectCRE)

Principal Real Estate acquires New Jersey warehouse for $74.5M – Hampshire Companies and Invesco sell Meadowlands facility for double 2023 price (CoStar)

LaSalle raises $700M for U.S. real estate debt strategy – Focused on floating-rate senior loans for multifamily and industrial assets in growth and gateway markets (IREI)

Yieldstreet real estate bets collapse – $78M in defaults reported as 4 projects go to zero and most others sit on watchlist, leaving retail investors with steep losses (CNBC)

Versity Investments delinquent on $83M loans for Chicago, IL student housing – Firm misses payments on The Buckingham and Tailor Lofts while facing broader legal disputes (TheRealDeal)