The Brick Breakdown

💬 Powell flags inflation-growth dilemma in post-tariff landscape

Fed Chair Jerome Powell warned the central bank faces a "challenging scenario," with tariffs threatening to raise both prices and unemployment simultaneously. This stagflation risk limits the Fed’s flexibility, signaling a potentially prolonged period of elevated rates and muted policy responses.

🏠 Tariffs squeeze construction, boost landlord pricing power

Tariff-driven material cost hikes have delayed over 500,000 apartment units, limiting new supply and allowing existing landlords to push rents higher—some targeting 5% annual increases. At the same time, rising mortgage rates are dampening purchase demand and pushing more buyers into adjustable-rate mortgages as affordability deteriorates.

⏳ Tariff uncertainty triggers leasing slowdown and development pullback

Prologis reported a 20% drop in leasing activity in early April and responded by slashing its development budget by over $1 billion, citing uncertainty from new tariffs. Brookfield also paused an $885M refinancing deal amid tightening credit conditions, signaling growing caution even among top-tier real estate players.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.89% (-3 bps)
10Y Treasury Yield: 4.31% (-2 bps)
FTSE NAREIT Index: 736.91
30-day SOFR Average: 4.35%

Market Pulse

A pre-tariff surge in retail sales and inventories masks deeper concerns, as Powell warns tariffs could trigger stagflation and economists anticipate weaker consumer spending and growth ahead

Powell warns Fed faces 'challenging scenario' – Tariffs risk pushing prices and unemployment higher simultaneously, limiting central bank’s ability to ease policy without fueling inflation (WSJ)

Pre-tariff surge fuels March retail sales – U.S. retail sales jumped 1.4% as consumers rushed to beat tariff hikes, but economists warn of spending slowdown ahead amid fading sentiment and rising uncertainty (Reuters)

February inventories inch up ahead of tariffs – U.S. business inventories rose 0.2% as retailers and wholesalers restocked amid preemptive buying, but Q1 growth remains weak (Reuters)

Policy & Industry Shifts

FHA accelerates wind-down of pandemic-era relief – Agency moves to end temporary borrower protections as mortgage performance improves (NationalMortgageNews)

Residential

Tariffs are inflating construction costs and delaying new supply, allowing landlords to raise rents, while surging mortgage rates and volatility are pushing more homebuyers toward adjustable-rate loans as affordability weakens

Builder confidence stays low as tariffs bite – NAHB index ticks up to 40 in April, but 60% of builders report material cost hikes and rising uncertainty (NAHB)

Tariffs drive up apartment construction costs and delay 500K+ units – Rising costs and supply chain stress are reshaping renter demand and squeezing multifamily developers (GlobeSt)

Developers benefit from pre-tariff building surge – Multifamily owners luck out as construction slowdowns and tariff pressures boost rents, with some landlords eyeing 5% annual increases (WSJ)

Mortgage rates surge 20 bps to 6.81% last week – Largest jump since October halts six-week rise in purchase apps, as trade war volatility rattles Treasury yields and dampens demand (Bloomberg)

Homebuyers turn to adjustable-rate mortgages as rates jump – ARM share hits 9.6%, highest since 2023, amid tariff-driven interest rate volatility (CNBC)

Office

D.C. office vacancy holds at 20.3% in Q1 – Net absorption fell by 310K SF as firms like Freshfields signed major leases; construction remains muted with just 400K SF underway and 320K SF set to break ground (Colliers)

Earnings & Real Estate Impact

Retail sales rebounded in March on tax refunds and pre-tariff buying, but declining travel and mixed foot traffic trends point to growing consumer caution amid economic and geopolitical uncertainty

Inbound travel drops 12% in March – Economists now expect full recovery by 2029 as tariffs, policy shifts, and global tensions weigh on tourism (CoStar)

Retail spending rebounds in March – 4.2% YoY sales growth driven by tax refunds and pre-tariff buying, but traffic trends suggest future volatility amid economic uncertainty (Colliers)

Home improvement and apparel foot traffic jumped 15%+ YoY – Consumers show strong in-store interest despite modest sales, while dining and fitness visits stay resilient (Colliers)

NFL’s Washington Commanders, D.C. near $3B RFK stadium deal – Team expected to cover majority of costs under pending agreement for new venue (BizJournals)

Earnings & Real Estate Impact

Prologis topped Q1 earnings expectations on strength in data centers and solar, but a 20% leasing slowdown in April and over $1B in development cuts reflect growing caution as new tariffs disrupt industrial demand and investment planning

Prologis beat Q1 earnings expectations thanks to strong leasing activity and growth in data centers and solar energy, but maintained its earnings guidance due to a 20% leasing slowdown in early April caused by uncertainty from new tariffs. The industrial REIT also reduced its development spending projections by over $1 billion, citing economic disruptions from the Trump administration's tariff policies. (CoStar & Bisnow)

Financings

Brookfield paused an $885M refinancing deal as tariff-driven credit volatility curbed investor demand, underscoring growing caution even in well-capitalized transactions

Brookfield delays $885M loan amid market volatility – Refinancing deal paused after tariff-driven credit turmoil slashed investor demand, despite wider pricing and deadline extension from Wells Fargo (Bloomberg)

DRA Advisors recapitalizes FL industrial portfolio in a $107.5M deal –Covers 10 assets totaling 900K SF across four metros, including Jacksonville and Orlando (REBusinessOnline)

M&A

Building & Portfolio M&A

Presidio Bay to acquire Menlo Park, CA federal campus for $137M – Wins bid for 17-acre, 413K sf USGS site in one of California’s largest public land sales this year (TheRealDeal)

Forge Development to buy Wells Fargo HQ for $54M – San Francisco site at 420 Montgomery may become city’s largest office-to-residential conversion (TheRealDeal)

Institutional Fundraising

Archway Capital launches $100M debt fund – Will invest in loans and distress across major CRE sectors nationwide (GlobeSt)

Distress Watch

WPG to liquidate remaining portfolio – Mall landlord plans to sell all assets and lay off 139 employees as it winds down operations, with $1.1B in CMBS debt coming due in 2025 (Bisnow)