The Brick Breakdown

Hello Brick Brief readers, 

Thank you for your continued support! I’m excited to be back from vacation and don’t anticipate taking another break for a long time. This edition is packed with the most important news and developments since our last update.

Since our last edition, the Fed held rates steady as inflation rose and growth slowed, while Trump’s tariff plans, falling consumer confidence, and weakening housing data pointed to rising economic strain. NYC real estate was shaken by Zohran Mamdani’s primary win, KB Home cut its full-year outlook, and data center investment surged with major moves by Meta, EdgeCore, and CoreWeave. Meanwhile, housing policy shifted as Fannie and Freddie were directed to explore crypto-backed risk models and the FHA rolled back key underwriting rules.

📉 Fed Holds, Consumers Fold
The Fed held rates steady despite rising inflation and falling GDP forecasts, while Trump’s July tariff plans and a 0.3% drop in consumer spending added pressure to a weakening economy. Consumer confidence fell 5.4 points in June as job concerns grew and home prices posted their first monthly decline since 2022.

🏙️ Mamdani Mayoral Panic
NYC REITs and developers are reeling as mayoral frontrunner Zohran Mamdani’s proposed rent freeze sparks a sharp selloff and panic across the real estate sector. With investors pulling back and landlords weighing exits, the city's property market is bracing for potential regulatory upheaval.

🪙 Uncle Sam Eyes Crypto Collateral
FHFA directed Fannie Mae and Freddie Mac to study how regulated crypto assets could be used in mortgage risk models. At the same time, FHA eased flood zone, appraisal, and underwriting rules to speed up approvals and lower housing costs.

🏡 KB Outlook Cut as Housing Cools
KB Home cut its full-year forecast after spring sales missed expectations, joining a broader slowdown marked by a 13.7% drop in May new-home sales and a 5-year low in housing starts. Home prices hit a record $396.5K, but growth slowed to 2.7% as 6.78% mortgage rates, rising inventory, and tariff uncertainty continue to strain affordability.

⚡ Data Center Demand Goes Parabolic
Meta seeks $29B to expand its U.S. data infrastructure, while EdgeCore will invest $17B in a 1.1 GW campus in Louisa County, VA. CoreWeave is also eyeing growth with a $3.7B bid for Core Scientific, as AI-driven tenants fuel record absorption, rising rents, and mounting pressure on a power grid expected to see demand surge 30x by 2035.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.78%

10Y Treasury Yield: 4.28% 

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 760.68 (+0.28%) 

30-day SOFR Average: 4.31%

Market Pulse

The Fed held rates at 4.25%–4.5% as inflation expectations rose and consumer confidence fell 5.4 points in June, with spending down 0.3% and home prices posting their first monthly decline since 2022

Trump’s plan to impose 20–50% unilateral tariffs after the July 9 trade pause, paired with Canada’s repeal of its tech tax to resume talks, has reignited global trade uncertainty

Fed holds rates at 4.25%-4.5% – FOMC still expects two cuts in 2025 despite inflation forecast rising to 3% and GDP outlook falling to 1.4% (CNBC)

Trump set to impose unilateral tariffs – With the global trade pause expiring July 9, Trump plans to bypass negotiations and assign 20–50% tariffs via letter, reigniting market uncertainty (Axios)

Canada rescinds tech tax to revive U.S. trade talks – Trump had halted negotiations over the levy, prompting Canada’s reversal ahead of July 21 deadline (Reuters & Reuters)

Consumer spending drops 0.3% in May – Muted inflation and falling income reflect growing uncertainty around tariffs and weaker demand for services (Bloomberg)

Consumer confidence falls 5.4 points in June – Weaker job outlook and tariff concerns drove broad declines across age and income groups, while inflation expectations eased and home prices posted first monthly dip in April since 2022 (Reuters)

Brick by Brick: Fortress faces refinancing squeeze on $2B Amazon warehouse bond

Fortress Investment Group is approaching a July 15 deadline to refinance $2B in bonds backed by Amazon-leased warehouses. Issued in 2020 with a 2% coupon, the debt now requires refinancing at much higher rates, putting pressure on cash flows and deal viability.

• Fortress informed bondholders it does not expect to close the refinancing by the deadline. This will trigger higher interest accrual but will not count as a default under the current terms.
• The underlying real estate remains stable, but the capital structure no longer fits the current rate environment. Most or all property income would be consumed by interest under a new deal.
• Fortress structured the bonds at the peak of low-rate optimism. Now, that structure is colliding with a very different financing landscape.

Takeaway: Fortress’s challenge highlights how low-rate debt structures from 2020 are falling apart as refinancing windows open. Logistics assets with Amazon leases may still look safe, but if the debt cannot adapt, the deal itself breaks.

Policy & Industry Shifts

The FHFA ordered Fannie and Freddie to explore using U.S.-regulated crypto in mortgage risk models, while the FHA eased appraisal, flood zone, and underwriting rules to lower housing costs and speed up approvals

Zohran Mamdani’s primary win and rent-freeze agenda triggered a sharp selloff in NYC REITs and panic among developers bracing for tighter regulation and investor retreat

FHFA orders Fannie Mae and Freddie Mac to explore crypto asset use – Bill Pulte directs both agencies to propose ways to count U.S.-regulated crypto in mortgage risk assessments (Bloomberg) 

Trump eases FHA rules – HUD drops flood zone, appraisal, and underwriting requirements to lower housing costs and speed loan approvals (Inman)

Mamdani rent-freeze plan hits NYC REITs – Democratic mayoral frontrunner’s progressive agenda sparks sector-wide selloff as investors fear tighter rent controls and landlord exits (Bloomberg)

Mamdani mayoral win sparks panic among NYC developers – Real estate leaders scramble to back rivals, fearing rent freeze and regulation under democratic socialist as firms weigh exits and contingency plans (WSJ)

HUD to relocate HQ from DC to Virginia – Trump administration move aims to cut costs and address safety issues, shifting 2,700 employees from aging HUD building to current NSF site in Alexandria (Bloomberg) 

Seattle bans RealPage and rent-setting software – City Council passes unanimous vote prohibiting algorithmic pricing tools for residential landlords, targeting anticompetitive practices (TheRealDeal)

Residential

The housing market continues to weaken as home-price growth slows to 2.7%, new-home sales plunge 13.7%, and housing starts hit a 5-year low, with high rates and tariff fears sidelining buyers despite record prices.

Compass escalated its fight with Zillow, suing over listing restrictions tied to new MLS timing rules in a broader battle over visibility and market access.

U.S. home-price growth slows to 2.7% – High mortgage rates and Trump’s tariff-driven uncertainty push buyers out, marking weakest gains since summer 2023 (Bloomberg)

U.S. home prices hit record $396.5K – Median sale price up 1% YoY despite weak demand, as buyer leverage grows with listings outpacing sales and homes selling below asking (Redfin)

New-home sales drop 13.7% MoM in May – Largest decline since 2022 as affordability worsens; prices rose 3% YoY while inventory hit highest level since 2007 (Bloomberg)

Existing-home sales edge up 0.8% MoM in May – Market stays sluggish with slowest May pace since 2009, as high prices and 6.5%+ mortgage rates keep buyers sidelined despite rising inventory (WSJ)

Pending sales fall 2.3% YoY as prices hit record – New listings lose momentum amid buyer-favoring market and economic uncertainty, with sellers holding off despite slight demand uptick (Redfin)

May housing starts hit 5-year low at 1.26M – Multifamily construction plunges 30% as permits drop and builders slow activity despite easing rates and rising resale inventory  (Zillow)

Compass sues Zillow over listing restrictions – Brokerage alleges anticompetitive tactics tied to new policy blocking listings marketed >24 hours before MLS posting, escalating industry battle over access and visibility (Bloomberg) 

Multifamily

Multifamily stays resilient despite policy jitters – Delinquencies and restructurings rise as buyers hesitate, but strong renter fundamentals, solid absorption, and cautious lending keep sector steady (GlobeSt)

Regional

Silverstein adds 2,000-apartment pledge to NYC casino bid – Developer proposes office-to-residential conversions with 500 affordable units to boost chances for Avenir project license on Manhattan’s west side (Bloomberg)

Office

Office tenants are shifting from downsizing to expansion, with average lease sizes up 13% as rising attendance and capacity needs drive modest leasing gains despite slow job growth.

Office tenants shift from downsizing to growth – Cushman & Wakefield survey finds 13% lease size increase as RTO and capacity needs drive proactive expansions, ending era of mass space cuts (GlobeSt)

Office leasing edges up as usage rises – Increased in-person attendance is sustaining leasing momentum in 2025, even as job growth in key office-using sectors remains sluggish (CoStar)

AI leasing boosts SF office rebound – Bay Area vacancy fell 70 bps in Q2 to 35.1% as AI firms signed over 800K SF in new leases, fueling the strongest net absorption since 2018 (Bisnow)

Leasing

L.E.K. Consulting signs 54K SF lease in Midtown NYC – The firm will relocate to 1166 Avenue of the Americas, a tower owned by Edward J. Minskoff Equities and Marsh McLennan (CommercialObserver)

Warren Equity Partners signs 24K SF lease in NYC – The private equity firm will relocate its HQ to Rockrose’s 11 East 26th Street in a 13.5-year deal with asking rent of $145 PSF (CommercialObserver)

Industrial

Port of NY-NJ leads in May cargo – Handled most TEUs nationwide as tariffs slowed LA/LB traffic and diversions boosted East Coast volumes (FreightWaves)

Market Mix

Tenant retreat drives CRE value drop – Investment-grade assets led 50.9M SF in Q2 vacancies, pushing high-end prices down 3.5% since March (CoStar)

Retail

Retail sales rose 3.1% in May, driven by strong gains in furniture, apparel, and entertainment, while growth in fine dining and coffee came from new store openings rather than increased foot traffic per location

Fine dining and coffee grow via expansion – Total visits rose 1.3% and 2.6% YoY respectively, but visits per location fell 0.8% and 1.8%, as growth came from new openings rather than busier stores (Placer.ai)

Retail sales rise 3.1% YoY in May – Core retail up 3.9% as furniture (+8.8%) and apparel (+5.8%) lead growth; store visits climbed 6.71% for clothing and 6.11% for furniture (Colliers)

Entertainment and dining lift retail – Theater visits jumped 55.7% YoY with 140-min dwell times, while restaurant traffic rose 0.85% and food sales climbed 6.4% (Colliers)

Data Centers

Data center demand is soaring as Meta seeks $29B in financing, EdgeCore plans a $17B Virginia campus, and AI-driven growth pushes inventory up 43% year-over-year amid mounting grid constraints and a projected 30x power demand surge by 2035

Meta seeks $29B for AI data center buildout – Company eyes $3B in equity and $26B in debt from Apollo, Brookfield, PIMCO, and others to finance its U.S. data infrastructure push (FT)

EdgeCore to build $17B data center campus in Louisa County, VA – 1.1 GW project will span 697 acres and serve cloud and AI tenants amid regional boom (Bisnow)

U.S. data center demand surges despite power constraints – Northern Virginia, Atlanta, Phoenix, and Chicago lead 43% YoY inventory growth, with record-high absorption and rising rents driven by AI and hyperscale tenants (CBRE)

Deloitte warns of 30x surge in AI data center power demand by 2035 – U.S. grid faces mounting capacity constraints as usage rises from 4 GW to 123 GW (IREI)

Earnings & Real Estate Impact

KB Home’s outlook cut signals that even top-performing builders are struggling to convert long-term housing demand into sales, as high mortgage rates and economic uncertainty continue to suppress buyer confidence

KB Home beat Q2 earnings and revenue expectations but cut its FY outlook due to consumer uncertainty. The homebuilder cited a weaker-than-expected spring selling season, noting that while long-term housing demand remains strong due to demographics and supply constraints, short-term buyer confidence has been shaken by high mortgage rates and broader economic uncertainty (Investopedia)

Financings & Debt Deals

Structured Finance

Atlantic Union sells $2B CRE loan portfolio to Blackstone – Performing loans from Sandy Spring Bank offloaded to Blackstone Real Estate Debt Strategies following April merger (IREI)

Loans

NYC office-to-resi conversion lands $575M loan – RXR, SL Green, and Apollo secure financing for 5 Times Square, aiming to convert the 38-story tower into 1,250 apartments with 25% affordable units (TheRealDeal)

BFC secures $250M loan for Brooklyn multifamily – Citi Community Capital is financing the 420-unit final phase of BFC’s 1,242-unit affordable housing project in Coney Island (CommercialObserver)

Refinancings

Brookfield-owned NYC multifamily towers land $400M refi – JPMorgan and Citibank refinance the 745-unit Eagle + West project in Greenpoint, replacing a prior loan from Blackstone (TheRealDeal)

M&A

Company M&A

CoreWeave in talks to buy $3.7B bitcoin miner Core Scientific – AI cloud firm aims to expand data center footprint through acquisition of longtime infrastructure partner (WSJ)

Nontraded REIT Cottonwood agrees to acquire apartment operator RealSource in $2.8B multifamily deal – The merger expands Cottonwood’s portfolio to 48 properties across 13 states (Bisnow)

Building & Portfolio M&A

Simon Property Group buys Miami, FL retail mall for $512M – Swire Properties sells Brickell City Centre retail and parking assets to fund new Mandarin Oriental condo tower (Bloomberg) 

JRK buys apartments in LA and DC for $315M – Firm acquires 684 units through its Platform 5 fund, including the 283-unit WestEnd25 in Washington’s West End submarket (IREI)

Apple buys Cupertino, CA office complex for $167M – Tech giant acquires 220K sf from PGIM after leasing the space, continuing trend of converting leased offices to owned assets (TheRealDeal)

Institutional Fundraising

Faropoint launches $1B Industrial Value Fund IV – Fund focused on urban logistics secures $225M in seed capital from Texas Teachers’ Retirement System (IREI)

Brazil’s Votorantim targets $1B in U.S. real estate – Billionaire family’s Altre unit plans to double U.S. exposure via acquisitions, development, and co-investments across major metros (Bloomberg)

Distress Watch

Fortress may miss July refinance on $2B warehouse bond – Amazon-leased portfolio faces steep interest hike as 2020-era low-rate debt strains under today’s higher borrowing costs (Bloomberg)

Trump Organization repays $114M loan on troubled NYC tower to Ladder Capital – 40 Wall Street is now debt-free after liquidity boost from post-election income and licensing deals (Bloomberg)

Proptech & Innovation

Multifamily firms are rolling out agentic AI tools – Cortland, JLL, and others adopt autonomous leasing tech to boost conversions and cut costs across 78K+ units (Bisnow)