The Brick Breakdown

Hello Brick Brief readers, 

Thank you for your continued support! Today we’re seeing a mixed outlook across sectors as New York manufacturing sentiment improves, housing shifts toward buyers, and tariffs reshape the furniture retail landscape.

📊 NY Recovery Hopes Rise

Empire State manufacturing contracts further in June as the business conditions index falls to -16.0, with orders and shipments continuing to decline. Still, the future outlook turned positive for the first time since March, reflecting cautious business sentiment.

🏠 Buyer Power Rises

Homebuilder Lennar’s Q2 earnings miss shows how builders are sacrificing margins through rate buydowns and price cuts to sustain sales, even as affordability remains tight. With inventory up 20% and down payments falling, buyers are gaining leverage in a shifting market.

🪑 Tariffs Divide Furniture Retailers

At Home filed for Chapter 11 to shed nearly $2B in debt after tariffs on Chinese imports strained margins and sank demand, forcing the closure of 26 stores. In contrast, luxury furniture retailer RH beat earnings last week and is shifting 52% of production to the U.S. by year-end, highlighting a widening gap between discount and luxury furniture retailers amid trade uncertainty.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.91% (+2 bps)

10Y Treasury Yield: 4.45% (+3 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 767.75 (-0.10%) 

30-day SOFR Average: 4.30%

Market Pulse

Weaker manufacturing and steady inflation support the Fed’s cautious stance, reinforcing expectations for gradual rate cuts despite trade policy uncertainty

Empire State manufacturing contracts further in June – Business conditions index falls to -16.0 as orders and shipments decline, though future outlook turns positive for first time since March (NYFed)

Fed outlook remains steady despite policy turmoil – With tariffs stabilizing near 10% and inflation near target, the Fed is expected to stay patient as markets price in two rate cuts in 2025 (Axios)

Brick by Brick: A Tale of Two Furniture Retailers in a Tariff-Fueled Market

At Home filed for Chapter 11 this week, citing rising tariffs and heavy debt from its 2021 buyout by private equity firm Hellman & Friedman. Meanwhile, luxury rival RH jumped 15% after beating earnings expectations and outlining steps to dodge trade fallout. The divergence underscores how brand positioning, balance sheet discipline, and global supply strategies are reshaping fortunes in the home retail sector.

• At Home blamed unpredictable tariff policy for accelerating financial stress, particularly on goods sourced from China. The company took on nearly $2B in debt when the home decor company was acquired by PE firm Hellman & Friedman in 2021, much of which it now plans to restructure through bankruptcy. A $600M package will hand control to lenders including Redwood Capital and Farallon, with 26 stores set to close.

• RH, by contrast, is actively shifting production out of China. It expects only 2% of receipts to come from the country by Q4, with over 50% of upholstered goods made in the U.S. Shares rebounded after RH reaffirmed full-year revenue growth of 10–13% and announced plans to open its Paris flagship in September.

• The split highlights the risks of overreliance on Chinese imports, especially for brands with thin margins and PE-driven leverage. It also reinforces the value of pricing power, global sourcing flexibility, and premium positioning in navigating a volatile trade landscape.

Takeaway: RH serves a luxury customer base with pricing power and global sourcing flexibility, which helped it navigate the current trade environment. At Home Group’s bankruptcy was not just the result of the nearly $2 billion debt load from Hellman & Friedman’s 2021 buyout, but also a consequence of unpredictable U.S. tariffs on Chinese imports, where most of its inventory is sourced. Tariffs briefly surged to 145% before falling to 55%, creating major financial strain. Weaker consumer demand for discretionary goods compounded the pressure. Debt made At Home vulnerable, but trade policy and market shifts were the critical accelerators.

Residential

Softening prices, rising inventory, and increased FHA/VA usage signal a market shifting toward buyers and renters as affordability pressures reshape housing dynamics

Inventory jumps 20% YoY in May – Home sales rise as tariffs ease and rates dip, but price cuts grow and buyer competition hits record low for the month (Zillow)

Homebuyer down payments drop for first time in 2 years – Median slips 1% to $62K in April as buyers opt for cheaper homes, FHA and VA loans rise, and market tilts in their favor (Redfin)

Rent growth cools in May – Asking rents rose 0.4% MoM as inventory and concessions increase, mirroring the softened for-sale market and boosting renter leverage (Zillow)

Renters outnumber owners in 200+ U.S. suburbs – High home prices and near-7% mortgage rates shift suburban housing dynamics as renting grows across major metros (ConnectCRE)

Office

Cohen & Steers’ $300M investment signals renewed institutional confidence in the long-term recovery of office and studio space, even amid broader sector headwinds

Cohen & Steers invests $300M in West Coast office REIT Hudson Pacific Properties – Global asset manager acquires 43% of public offering to back office and studio-space recovery (Bisnow)

Industrial

Port of Los Angeles volume falls to 2-year low – May container traffic drops 5% YoY as tariffs end 10-month growth streak and hit both imports and exports (FreightWaves)

Earnings & Real Estate Impact

Lennar’s earnings miss despite strong revenue how builders are sacrificing margins through incentives to sustain demand in an affordability-constrained market

Lennar missed Q2 earnings expectations but beat on revenue thanks to homebuyer incentives such as mortgage rate buydowns, price cuts and cost adjustments. Its average home sales price fell 9% YoY from $426,000 to $389,000 as affordability for home buyers remains an issue (Reuters & WSJ)

Market Mix

Retail

Luxury apparel visits rise in April and May – Segment outperforms broader retail with 4%+ YoY growth as affluent suburban shoppers rushed to buy ahead of tariff-driven price hikes (Placer.ai)

Healthcare

Senior housing occupancy tops 89% in Q1 2025 – Net absorption outpaces supply 2.5 to 1 as rent growth holds at 3.9% and construction starts hit new lows, fueling long-term supply concerns (CushmanWakefield)

Financings

Loans

NYCHA secures $231M for NYC Bronx affordable housing renovation – Merchants Capital provides $221.7M Freddie Mac loan for 877-unit Eastchester Gardens upgrade (GlobeSt)

Refinancings

PSP refinances The Wharf in Washington, D.C. with $1B loan – Mixed-use waterfront project backed by 2.2M SF secures CMBS financing from Wells Fargo, Morgan Stanley, and Goldman Sachs (Bisnow)

Meridian arranges $173M multifamily refinance in Manhattan – Freddie Mac loan originated by NewPoint Capital marks firm's first agency deal since 2023 ban (CommercialObserver)

Lument provides $90.6M multifamily refinance in Chicago – Firm delivers Fannie Mae loans for 654-unit Lakeview portfolio owned by BJB Properties, replacing life company debt (REBusinessOnline)

Northmarq secures $68M multifamily refinance in Phoenix, AZ – Firm arranges floating-rate loan for 370-unit IMT Desert Ridge on behalf of IMT Capital (REBusinessOnline)

M&A

Building & Portfolio M&A

InvenTrust sells $306M SoCal retail portfolio – REIT exits California to refocus on high-growth Sun Belt markets like Atlanta and Phoenix (CoStar)

NFL’s Denver Broncos-linked entities buy $153M in land near Burnham Yard in Denver, CO – Walton-Penner group acquires 13 parcels amid speculation of a new stadium site south of downtown (TheRealDeal)

Griffis Residential acquires West Palm Beach, FL multifamily tower for $87M – Colorado-based firm buys 223-unit property from Woodfield Development and Northwestern Mutual, financing with $57.7M Fannie Mae loan (TheRealDeal)

Edens acquires Fairfax Court retail center in Northern Virginia for $52M – The 250K SF open-air plaza was purchased from WPG as strong fundamentals boost retail investment (CommercialObserver)

Institutional Fundraising

Walker & Dunlop closes $135M Fund VII – New discretionary fund targets middle-market multifamily and industrial assets nationwide with value-add and opportunistic strategies (IREI)

Distress Watch

At Home collapses under tariff-driven cost pressures, while Opendoor’s mass layoffs reflect a fundamental breakdown of the iBuyer model as it faces mounting losses and potential delisting

Furniture and home decor chain At Home files for bankruptcy amid tariff pressure – Retailer to shed $2B in debt and close 20 of 260 stores as supply chain costs and competition strain operations (Bisnow)

Opendoor lays off 40% of staff amid iBuying shift – Firm restructures sales team and faces Nasdaq delisting as losses mount and stock trades below $1 (TheRealDeal)