Hello Brick Brief readers, 

Happy Monday. Today we’re seeing a new housing proposal take shape, retail fundamentals strengthen in Q4 2025, and Big Tech step up its defense of data center expansion.

🏡 401(k) Proposal Risks Price Pressure
Trump extended his affordability push with a new proposal to allow 401(k) funds for housing down payments, which could unlock new pools of capital for first-time buyers as affordability remains strained. $200B in GSE purchases could briefly lower 30-year mortgage rates, while added buying power could strengthen demand, which in a supply-constrained market may push home prices higher and dilute the affordability impact.

🛍️ Retail Holds as Supply Stays Tight
Retail vacancies held at 4.3% in Q4 as distress faded, while resilient demand and limited supply pushed average asking rents up 1.8% YoY alongside 11.1 MSF of net absorption. Retail construction fell to 50.1 MSF, the lowest level since 2021, as high construction and financing costs, rising tariffs, and higher cap rates kept developers sidelined.

⚡ Big Tech Defends Data Center Growth
Tech giants are ramping up advertising and community outreach to blunt local backlash tied to power costs, water use, and limited job creation from data center expansion. Additionally, tech companies such as Microsoft have been open to paying for their own power, as long-term power commitments lock in uptime and costs and ease both grid and political constraints.

J.P. Morgan expects the Fed to hold rates through 2026 – A stabilizing labor market will keep the funds rate at 3.5–3.75%; a 25 bps hike in Q3 2027 is expected to lift the upper bound back to 4% (JPMorgan)

Americans shoulder ~96% of U.S. tariff costs, not foreign exporters – Kiel Institute research finds that tariffs function as a consumption tax; higher prices and thinner importer margins absorb the burden as foreign producers cut volumes instead of prices (WSJ)

So why has CPI remained subdued? There may be three explanations for that: 1. historical precedent from the 2018–2019 U.S.–China tariffs shows consumer inflation stayed muted at first, and price increases showed up 9–18 months later as inventories cleared and contracts reset; 2. many companies stockpiled inventory 6–12 months ahead of tariff implementation, creating a temporary buffer that is slowly running out; 3. importers and businesses fear that passing price hikes to an already weak consumer could crush sales volumes, so they prefer to temporarily absorb costs through thinner margins instead. This backdrop helps explain JPMorgan’s expectation for rates in 2026.

That being said, this piece was written by a German think tank, and it is always important to recognize potential motivations that may influence certain findings. 

Fed’s Jefferson says policy is well positioned at 3.50%–3.75% -- Signals comfort leaving rates unchanged while assessing the timing and extent of future moves based on incoming data and risks (Reuters)

Fed’s Bowman says cuts remain on the table at 3.50%–3.75% -- A fragile job market that could deteriorate quickly means the Fed should remain ready to cut again and avoid signaling a pause (Reuters)

Data-center construction jumps 23% in 2026, reaching >6% of nonresidential spend - Commercial builders are pulling back from offices, apartments, hotels, and warehouses as high rates, rising costs, and labor constraints curb activity elsewhere (WSJ)

Trump housing plan would allow 401(k) funds for down payments -- The administration says the move aims to ease affordability pressures; full details will be unveiled in Davos next week (Reuters)

Current rules allow first-time buyers to withdraw up to $10K from an IRA penalty-free, but 401(k) access is limited to loans; early 401(k) withdrawals typically trigger income taxes and a 10% penalty. The current administration is laser-focused on affordability (cost of housing, electricity bills/data centers), and expanding 401(k) access would allow homebuyers to unlock a much larger pool of capital for down payments. 

Housing supply, however, remains fundamentally constrained, especially in certain regions, due to zoning limits, land availability, and construction costs, and added capital risks lifting demand without increasing inventory. Slightly lower mortgage rates from the $200B MBS buying initiative and expanded 401(k) access could unlock a sizable surge in purchasing power/demand without a parallel increase in supply. It’s possible we see a bounceback in housing transactions later this year. 

Ro Khanna reintroduces bill to curb institutional homebuyers after Trump call – The proposal would strip tax benefits and bar Fannie Mae and Freddie Mac support for large single-family investors (CNBC)

U.S. homebuilder sentiment slips two points to 37 in January on affordability strain -- The National Association of Home Builders says high prices and mortgage rates continue to sideline buyers despite easing borrowing costs (Reuters)

White House MBS plan could trim mortgage rates but effect likely modest – $200B in GSE purchases may briefly lower 30-year mortgage rates but is too small relative to the $15T market to create a lasting impact (Homes.com)

Manufactured housing gains policy support as affordability tool but stigma persists – Regulatory reforms could lower costs by up to ~$10K per unit, yet NIMBY opposition and outdated perceptions still limit adoption (HousingWire)

Rental seasonality breaks down as leasing spreads across the calendar – Apartment List data shows rent growth now peaks in March instead of May and demand is more evenly distributed due to heavy post-2022 supply, remote work, and landlords smoothing lease expirations (GlobeSt)

Multifamily investors pushed beyond gateways in 2025 as yields compressed – Capital shifted toward Sun Belt and secondary metros like Dallas, Phoenix, Miami, and Atlanta where cap rates ran ~5.2–6.6% versus ~3.8–4.6% in core gateways despite similar financing costs (GlobeSt)

U.S. manufacturing output rises 0.2% in December, but contracts in Q4 - A primary metals surge offsets weaker autos, while tariffs and soft surveys keep the outlook uncertain (Reuters)

Retail vacancies hold at 4.3% in Q4 as distress fades -- Mall vacancy falls to 8.5% and shopping centers to 5.2%, both down 10 bps QoQ, as late-2024 and early-2025 bankruptcy impacts ease (Colliers)

Retail construction drops to 50.1 MSF, lowest since 2021 -- High construction and financing costs, rising tariffs, and higher cap rates keep new supply limited to build-to-suit projects and pad sites (Colliers)

Retail demand stays resilient with 11.1 MSF of net absorption -- Faster lease-up times under seven months and limited supply push average asking rents to $26.13/SF, up 0.56% QoQ and 1.80% YoY (Colliers)

Retail closures slow in early 2026 after rocky 2025 – U.S. retailers plan ~64% fewer closures and 22.5% more openings YoY as discount chains like Dollar General and Dollar Tree lead expansion despite continued pharmacy and department store stress (TheRealDeal)

IKEA prioritizes price stability amid tariff risk - Ingka Group flags selective U.S. price hikes tied to import exposure as shoppers prioritize predictability (Reuters)

Gym visit patterns diverge in 2026 as crowd timing and demographics vary by chain – LA Fitness and EoS see lighter mornings, Club Pilates and Orangetheory ease evening crowding, and Genesis, Crunch, and Life Time attract distinct member profiles (Placerai)

PJM rolls out reliability overhaul as data center demand surges – PJM Interconnection proposed faster data center hookups, revised capacity forecasting, and emergency backstop power procurement to curb blackout risk and rising electricity bills (Bloomberg)

Tech giants back paying for their own power – Long-term power commitments lock in uptime and costs and ease grid and political constraints (Bloomberg)

Big Tech launches PR blitz to defend data center expansion – Microsoft, Meta, and Amazon are spending heavily on ads and community messaging to blunt rising local backlash over power costs, water use, and limited job creation tied to AI-driven data center growth (Bloomberg)

International air travel to U.S. fell 4% in 2025 – Tighter border enforcement and global economic uncertainty pushed foreign travelers to stay closer to home even as outbound U.S. travel hit record levels (CoStar)

Cushman & Wakefield sees San Francisco hotel market turning the corner - 2025 RevPAR rose 7.6% YoY as conventions and tech demand returned; recent trades at 50–80% discounts create a valuation reset and new investor entry points (CushmanWakefield)

Sphere plans Washington-area expansion after Vegas success – Sphere Entertainment Co will build a 6,000-seat venue in National Harbor Maryland backed by ~$200M in incentives as it scales the high-grossing Sphere model beyond Las Vegas (Bloomberg)

Soho House secures ~$220M to revive $2.7B go-private deal -- Soho House lines up new backing from Morse Ventures and rollover equity; Apollo Global Management reduced its equity commitment (Bisnow)

Bain Capital closes $3.4B retail-focused real estate fund - Fund III targets open-air retail and alternative assets (CommercialObserver)

Singapore’s GIC backs $1.5B U.S. logistics venture - The fund will partner with Realty Income to build net-leased industrial properties as the REIT expands its private fund platform (PERE)

Office delinquencies understate embedded risk heading into 2026 – Extensions, workouts, and upcoming maturity cliffs keep stress out of headline CMBS data despite tighter real-world underwriting (GlobeSt)

Haitong forecloses on Oceanwide Center development site at First and Mission Streets in San Francisco, CA for $100M – The lender takes control via credit bid and is in talks to resell site to San Francisco Recovery Fund (TheRealDeal)