The Brick Breakdown

Hello Brick Brief readers, 

Thank you for your continued support! Today we’re seeing delayed Fed rate cuts, selective office market strength, hotel sector shifts, and persistent housing imbalances.

📉 Fed Holds Off as Inflation Lingers, Investors Eye H2 2025 Rebound

FOMC minutes confirmed most officials still expect rate cuts later in 2025, but persistent inflation and new tariff risks make a July cut extremely unlikely. With CRE dry powder topping $350B and firms like Blackstone holding $177B to deploy, dealmakers remain optimistic for a second-half rebound despite global uncertainty.

🏢 Offices Stabilize in Coastal Markets
Office visits rose 8.3% YoY in June 2025, with Miami and NYC nearing full recovery as major employers enforce stricter return-to-office mandates. Miami led with a 14.4% YoY rent increase despite 1.6M SF in new supply, underscoring strong demand in high-end submarkets.

🛎️ Hotels Cool While STRs Gain Ground
May 2025 hotel RevPAR held flat as ADR gains were offset by falling occupancy, with luxury outperforming while economy chains struggled. Short-term rentals gained share, with demand up 6% YoY and STRs now accounting for 13.9% of total lodging use.

🏠 Housing Activity Remains Mismatched
The U.S. housing shortage hit 4.7M units in 2023 as supply growth trailed household formation, with California metros facing the steepest deficits. June inventory rose 28.9% YoY, but soft demand in many regions led to more price cuts and delistings.

This Week in Real Estate: Key Events & Data

Quick Markets

30Y Mortgage: 6.77% (-4 bps) 

10Y Treasury Yield: 4.33% (-8 bps)

WSJ Prime Rate: 7.50%

FTSE NAREIT Index: 763.16 (-0.93%) 

30-day SOFR Average: 4.33%

Market Pulse & Rate Watch

​​Tariff-driven cost pressures and lingering inflation make near-term rate cuts less likely, keeping borrowing costs elevated for the real estate sector

Fed minutes reveal internal split on rate cuts – Most officials expect cuts later in 2025, but persistent inflation risks and tariff uncertainty keep July action unlikely (WSJ)

Trump expands tariff push to 21 nations – U.S. tariff rate hits 17.6%, highest since 1934, as EU trade deal nears and consumer costs rise amid global uncertainty (Reuters)

Brick by Brick: CoreWeave Buys Core Scientific in $9B AI Data Center Deal

CoreWeave, the Nvidia- and Microsoft-backed cloud provider, is acquiring Core Scientific in a $9 billion all-stock deal to secure long-term AI infrastructure, cut lease costs, and gain direct control of critical data center assets.

• The deal gives CoreWeave ownership of 1.3 gigawatts of capacity across 10 U.S. data center sites, eliminating more than $10 billion in lease obligations over the next 12 years
• Core Scientific’s sites, originally built for crypto mining, have been upgraded for high-performance computing and AI workloads, including a 70 MW expansion in Denton, Texas
• CoreWeave expects $500 million in annual savings by 2027 from operational efficiencies and control over real estate, power access, and site-level infrastructure
• The company plans to repurpose or sell Core Scientific’s remaining crypto business while deepening its footprint in strategic markets amid surging demand for AI capacity
• The deal highlights growing pressure on cloud providers to lock in scalable power and land in a market facing record-low vacancy and constrained grid access

Takeaway: CoreWeave’s acquisition shows how controlling the physical layer of AI infrastructure unlocks cost savings, efficiency, and long-term flexibility. As AI reshapes demand for space and power, the winners will be those with hard assets in the right locations. This strategy mirrors why hyperscalers like Meta and Google are investing hundreds of billions into owning and expanding their AI infrastructure footprint.

Policy & Industry Shifts

Trump megabill revives hope for GSE exit – Mphasis Digital Risk expects Fannie and Freddie to leave conservatorship within three years if explicit MBS guaranteesand adequate capital levels are secured (GlobeSt)

Residential

The U.S. faces a 4.7M unit housing shortage, yet asking rents have dipped for four straight months as rising inventory gives renters short-term leverage

U.S. housing deficit hits 4.7M in 2023 – Pandemic construction added 1.4M units but fell short of demand from 1.8M new families, with California metros leading shortages (Zillow)

Mortgage purchase applications hit 2-year high – MBA index jumped 9.4% last week despite rates holding at 6.77%, as buyers respond to slight cost relief (Bloomberg)

U.S. asking rents dip for fourth straight month – Still just $63 below the August 2022 record high as rising supply gives renters leverage (Redfin)

Inventory climbs 28.9% YoY in June 2025 – Listings top 1M for second month as sellers face slower sales, rising price cuts, and mounting delistings (Realtor.com)

Southern and Western markets lead inventory rebound – Northeast and Midwest lag behind as sellers in softer metros pull listings amid weak demand and peak-era price expectations (Realtor.com)

SFR and BTR investment remains key amid uncertainty – Lafayette CEO says housing shortage, high mortgage costs, and slowing construction make rental development a long-term opportunity (CommercialObserver)

Regional

Austin, Minneapolis lead rent declines – Median asking rent down 5%+ YoY in both markets, while Cincinnati and St. Louis post gains amid tight construction (Redfin)

Office

Office visits rose 8.3% YoY in June, with Miami and NYC leading a selective recovery as strong demand and new mandates drive localized office strength

Office visits rise in June 2025 – Nationwide foot traffic up 8.3% YoY as Miami and NYC near full recovery, driven by new RTO mandates across major employers (Placer.ai)

Office occupancy dipped ahead of July 4 – Kastle’s 10-city average fell to 50.5% last week, with San Jose, NYC, and Chicago seeing sharp midweek drops as holiday absences took hold (KastleSystems)

Office debt refi gap worsens for 2019-era loans – CBRE simulation shows new loans would cover just 65% of balances, with rising cap rates and weak NOI creating major equity shortfalls (GlobeSt)

Office conversions surge in D.C. – Adaptive reuse gains steam as 7M SF of projects planned amid high vacancy, strong housing demand, and new tax incentives (CBRE)

Miami office rents climb 14.4% YoY – Average asking rent hits $62.61/SF in Q2 despite 1.6M SF in new supply, with Brickell and Miami Beach leading gains (CommercialObserver)

Leasing

Foghorn Therapeutics signs 73K SF lease in Watertown, MA – Biotech firm relocates from Cambridge to Alexandria’s 99 Coolidge Ave. amid rising lab vacancy and tenant-favored market (Bisnow)

Industrial

U.S. warehouse vacancy rose to 7.1% in Q2, the highest since 2013, as tariff uncertainty and weak demand slowed leasing despite continued rent growth

U.S. warehouse vacancy hits 11-year high – Q2 rate climbs to 7.1% as tariff uncertainty, weak demand, and record sublease space stall leasing despite rising rents (WSJ)

U.S. port volumes rebound in June – Container imports rose 1.8% MoM as West Coast ports outpaced East and Gulf, led by 29% jump in Los Angeles traffic (FreightWaves)

Market Mix

Youth sports complexes spark $1B+ development wave – PE and cities pour into mixed-use megaprojects like The Dynasty in Ocoee, FL, fueling tourism, retail, and hotel growth (Bisnow)

Hospitality

Hotel demand softened in May as RevPAR held flat and short-term rentals gained share, while CMBS lending slowed and rising costs threaten future hotel development

Hotel RevPAR flat in May 2025 – 0.8% ADR growth offset by 0.7% occupancy drop, with luxury chains outperforming while economy chains lag (CBRE)

Short-term rentals gain share – STR demand rose 6% in May as hotel demand slipped 0.3%, with STRs now making up 13.9% of total lodging demand (CBRE)

CMBS hotel lending slows sharply – May issuance dropped to $0.9B from $2.6B YoY, with average loan size shrinking and profit margins under pressure (CBRE)

U.S. hotel openings rise in H1 2025 – Economy and midscale segments lead growth, but higher rates and construction costs may slow future pipeline (CoStar)

Financings

Loans

Office-to-resi specialist David Werner JV secures $61M for NYC office acquisition – 99c and Deutsche Bank fund purchase of 5 Hanover Square, with residential conversion planned for vacant space (CommercialObserver)

Refinancings

ATCO secures $66M refi for Charlotte, NC multifamily – Benefit Street Partners provided a three-year bridge loan for Kinship, a 301-unit project at Camp North End, now 35% leased (ConnectCRE)

M&A

Building & Portfolio M&A

Mixed-Use

George Kurtz buys Scottsdale mixed-use Quarter for $645M in Scottsdale, AZ – FalconEye Ventures acquires 750K SF property and plans $100M upgrade to boost tech and retail appeal (TheRealDeal)

NBA’s Philadelphia 76ers and Comcast buy $56M in Philly, PA Market East properties – JV acquires 112K SF for redevelopment, shifting focus from scrapped arena plan to revitalizing corridor (Bisnow)

Multifamily

Lakeside sells Chicago suburban apartments for $59M – Artemis Real Estate Partners acquires 242-unit Warrenville complex at $245K per unit, backed by $39M loan from Hartford (TheRealDeal)

Institutional Fundraising

CRE dry powder tops $350B as optimism returns – Blackstone leads with $177B to deploy, and investors eye alt assets like data centers amid tariff headwinds and deal pressure (CoStar)

Distress Watch

Silver Creek lands $71M refi for West Hollywood, CA project – Centennial Bank and Crestline Investors rescue 8550 Sunset after default (CommercialObserver)

Oakland, CA Marriott City Center foreclosed for $70.2M – Invesco Real Estate takes over East Bay’s largest hotel at half its 2017 sale price, highlighting ongoing Bay Area hospitality distress (CoStar)