The Brick Breakdown

Hello Brick Brief readers, 

Thank you for your continued support! In recent news: U.S. trade talks with China and the UK progress, May rate cuts are off the table, and Brookfield raises $5.9B in Q1, bringing its distressed real estate fund to $16B.

🇨🇳 Trade Talks Advance

New rounds of U.S.-China and UK-U.S. negotiations aim to ease Trump-era tariffs, while Canada remains excluded as Trump upholds 25% duties on autos and metals. Policy direction remains mixed, with pharma reshoring efforts advancing even as allies push for tariff relief.

📉 Rate Cuts Off the Table for May

Markets now price in a 97% chance the Fed holds rates steady today, as optimism wanes and tariff-driven inflation pressures stall rate cut bets. Earnings calls reflect caution, but firms like Colliers and Vornado still project recovery in the back half of 2025.

🏦 Brookfield Bets on Distress

Brookfield raised $5.9B in Q1 for its fifth distressed real estate fund, bringing Strategic Partners V to $16B as it positions for long-term deployment. The raise reflects strong institutional demand for discounted assets amid rate volatility and tightening credit.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.91% (+1 bps)
10Y Treasury Yield: 4.31% (-4 bps)
FTSE NAREIT Index: 766.01 (-0.59%)
30-day SOFR Average: 4.35%

Market Pulse

Rising tariffs and stalled rate cut expectations are compounding economic uncertainty, weighing on consumer sentiment and clouding the outlook for growth

Markets price in 97% chance Fed holds rates at 4.25%–4.50% on May 7 -- Rate cut odds dropped sharply from 33% a month ago to just 3.1% as of May 6 (CMEFedWatch)

U.S. trade deficit hits record $140.5B in March -- Pharma stockpiling and consumer front-loading ahead of Trump tariffs drove 41% import surge, weighing on Q1 GDP (AP)

RCM/TIPP Economic Optimism Index dips to 47.9 in May -- Consumer confidence declines for third straight month amid tariff fears and rising financial stress (RCM)

U.S. and China to hold initial trade talks in Switzerland this weekend -- Treasury and USTR officials aim to de-escalate tensions after mutual tariff hikes halted most bilateral trade (WSJ)

Trump refuses to lift tariffs on Canadian goods -- 25% duties on imports remain despite summit with PM Carney, as U.S. prioritizes domestic auto and metals industries (FreightWaves)

UK and US in talks to ease Trump-era tariffs -- Negotiations focus on lowering duties on cars and steel as UK weighs cutting digital services tax to secure deal (Bloomberg)

Policy & Industry Shifts

The revised D.C. eviction reform signals a policy shift toward landlord interests, potentially accelerating displacement risks as rent debt remains historically high

D.C. Council passes revised eviction reform bill backed by landlords -- Measure speeds up evictions, limits rent-delay tactics, and awaits mayor’s signature amid record $147M in unpaid rent (Bisnow)

Residential

Property taxes rose 10.4% nationwide from 2021 to 2023 – LendingTree finds steepest hikes in Tampa, Indianapolis, and Dallas, with median bills now nearing $3K and long-term affordability increasingly strained (NationalMortgageProfessional)

Office

Manhattan office leasing hits 2.47M SF in April, 45% above average -- Availability dips to 17.7% as net absorption tops 1.34M SF and rents hold steady (CBRE)

Industrial

Tariff-driven cost pressures and policy incentives are reshaping industrial demand, slowing new construction while selectively boosting reshoring in strategic sectors like pharmaceuticals

Industrial construction drops 62% from peak – Tariffs drive higher costs, shorter leases, and rent cuts, reshoring remains limited (CommercialObserver)

Trump pushes pharma reshoring ahead of 25% import tariffs – Executive order cuts FDA red tape, prompting new U.S. factory investments by Merck and Eli Lilly despite industry pushback (Bisnow)

Market Mix

Improving credit conditions and selective investor confidence are reviving CRE deal flow, with capital flowing into resilient sectors, high-demand markets, and value-add reuse opportunities despite broader economic uncertainty

CRE investment hits $88B in Q1, up 14% YoY -- Lending momentum jumps 90% as banks lead originations and spreads tighten across asset classes (CBRE)

U.S. hotel sales hit $2.8B in Q1 across 83 deals -- Transaction volume rose 25% YoY as investors targeted Florida, California, and gateway markets amid economic volatility (GlobeSt)

Class-B malls emerge as prime adaptive reuse targets -- Developers eye mixed-use conversions as retail construction slows and underused assets offer strong community and investment upside (Placer.ai)

San Francisco CMBS originations rise to $550M in Q1 – Marking the second-highest total since 2022, with loans spanning multiple property types (CoStar)

Earnings & Real Estate Impact

Despite beating Q1 expectations, major real estate and hospitality firms are bracing for uneven performance ahead, as tariff-related volatility and softening domestic demand temper otherwise resilient leasing and revenue trends

Colliers beat Q1 revenue expectations with strong engineering growth, while executives maintained a cautious outlook due to tariff and rate volatility but anticipate improved conditions in the second half of 2025 (CoStar)

Vornado Realty Trust beat Q1 earnings expectations on strong leasing, a $350M Uniqlo property sale, and a $935M prepaid lease deal with NYU; the NYC office REIT maintained a positive outlook despite tariff-driven uncertainty (CommercialObserver)

Marriott beat Q1 earnings expectations with 4.1% revenue per available room (RevPAR) growth and strong international results but lowered its full-year outlook slightly due to softening U.S. demand, especially in select-service and government bookings (CoStar)

Financings

Refinancings

MF1 Capital provides $160M refinance loan for Brooklyn multifamily– Clipper Equity’s 240-unit Crown Heights project replaces prior construction debt as lease-up begins under 421a tax abatement (CommercialObserver)

Witkoff and Access Real Estate refinance West Palm Beach, FL resort with $100M from Apollo – The loan covers the Belgrove Resort & Spa and golf club, with condo development plans underway (CommercialObserver)

M&A

Building & Portfolio M&A

Tishman Speyer to buy NYC SoHo office building for $108M – First Manhattan office deal since 2019, with tenants including General Catalyst and WeWork (CommercialObserver)

Institutional Fundraising

Brookfield’s successful fundraising signals strong institutional appetite for distressed real estate, with investors betting on long-term upside as tariff-induced market dislocations create discounted buying opportunities

Brookfield raises $5.9B in Q1 for distressed real estate fund, bringing total to $16B -- Strategic Partners V targets discounted assets as firm positions for long-term deployment amid tariff-driven volatility (Bisnow)

Proptech & Innovation

Generative AI is accelerating innovation in retail real estate by enhancing decision-making, streamlining operations, and enabling more adaptive, data-driven leasing and design strategies

GenAI reshapes retail property strategy -- From financial modeling to tenant mix optimization, AI is driving faster decisions, predictive insights, and immersive consumer experiences (GlobeSt)