President Donald Trump, trade wars and a potential ceasefire in the Russia-Ukraine war dominated the conversation at MIPIM, the 25,000-delegate real estate conference in Cannes in the south of France, last week.

The real estate industry is desperate to start investing again after a sluggish few years caused by spiking interest rates, Bisnow’s man on the ground in Cannes, Mark Faithfull, reported. And there are signs the investment market is starting to defrost — Savills predicts that after a good start to 2025, €50B of European real estate will be traded in Q1, up 28% YOY.

But the policy decisions toward Russia and Ukraine and Trump’s tariffs loom large in the thinking of investors — Faithfull is a veteran of 17 MIPIM conferences, and politics has never been so high on the agenda, he said.

The feeling was that even if real estate fundamentals are starting to improve, political uncertainty will temper any recovery as investors act with just a little more caution, particularly those from Asia and the U.S. When you’re in Singapore or San Francisco, the western border of Ukraine and the eastern border of Germany don’t look that far apart. 

The impact of tariffs on European growth is highly uncertain, but a trade war between the continent and the U.S. threatens $9.5T of business.

If you can put your money anywhere in the world, you might just ask yourself, is Europe a risk worth taking?

— Mike Phillips, Jay Rickey, Catie Dixon, Kayla Carmicheal and Mark F. Bonner

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CRE News Quiz

Service Properties Trust, Diversified Healthcare Trust, Office Properties Income Trust, Industrial Logistics Properties Trust and Seven Hills Realty Trust are all managed by this Massachusetts-based REIT. Which one is it?

(Answer at the bottom.)

On Our Radar

• DOGE is causing “pure chaos” for CRE owners and brokers. Property owners told Bisnow they don’t know if their leases are still on, reduced or canceled, and they can’t even figure out who to call for answers. A lease can be canceled one day, and the next the landlord is told, “Oops, never mind.” It’s a drastic shift from a process that has typically been smooth and predictable.

• Another data point of a weakening economy: Retail sales came in below expectations. Sales rose 0.2% month-over-month in February, a vast improvement from the revised-down 1.2% declines in January but below the 0.7% monthly increase expected. Retail sales are up 3.4% YOY, per the Census Bureau. Nonstore sales rose 2.4% MOM and 6.5% YOY, outperforming brick-and-mortar shopping.

• Construction materials costs rose 9% YOY in January and February — “far too hot,” according to the Associated Builders and Contractors. But even starker is looking back five years. Concrete is up 41.2% since 2020, fabricated structural metal is up more than 54%, and natural gas is up 101.3%. Tariffs are expected to push construction pricing up even further. Secretary of State Marco Rubio told CBS yesterday that the Trump administration is targeting “everyone” with tariffs in an attempt to bring manufacturing back to the U.S. and rebalance trade. 

• But manufacturing activity is falling. The Empire State Manufacturing Survey released this morning shows business conditions plunged 26 points to negative 20 (sharply below the negative 1.9 expected) as new orders and shipments fell. Factory activity is at its lowest in two years, while input pricing climbed at its fastest rate in that long. Census Bureau data also released today shows U.S. manufacturing shipments and trade sales down 0.8% month-over-month in January but up 3.5% YOY. Companies are still stockpiling to hedge against tariffs, and inventories rose 0.3% MOM and 2.3% YOY in January. The data is a shift from a few good years for factories. American manufacturing has been on the rise since the creation of the CHIPS Act, and its share of industrial space is skyrocketing. Despite that, Trump has said he wants to repeal the legislation. Congress isn’t biting so far.

• We want to be mad with you. Join the First Draft March Madness bracket! Sign up here and put your company name in there (it’s easiest to sign up with your last name as “Name, Company”) so we can see who we’re up against. We’ll call out the leaders as we go along, and the winner will get $250 in Bisnow event ticket credit, some Bisnow swag and a sweet trophy. Jay is on a hot streak of calling games lately, so good luck taking him down.

On The Charts: Office Demand

Key trends are pointed in the right direction for office, according to Avison Young: Office-using employment is rising, occupancy is increasing, and remote job postings are falling. “Together, these shifts suggest a growing preference for in-office work, which could drive higher office utilization and leasing activity throughout 2025,” the brokerage said.

This Morning’s News

DATA CENTERS — Are Data Centers 'Too Big To Fail'? (Bisnow): After DeepSeek’s AI model rang an alarm bell across the data center sector, industry leaders say its ability to train AI with less computing power and at a cheaper cost won’t kill data center demand. It does, however, represent a change in making AI computing more efficient and less costly. Read more here.

PEOPLE — Jackson-Shaw Founder Lewis Shaw Dies (Bisnow): Lewis Shaw was 82 and died following a brief illness. His firm has completed 63M SF of national industrial developments. Read more here.

HOUSING — Where Can Federal Land Help Housing? (WSJ): Trump has proposed building homes on federal land as a solution to housing shortages. About 7.3% of federal land is in areas that need more housing. Read more here.

OFFICE — Trump Vows To Cancel FBI Move To Maryland, Keep Headquarters In D.C. (Bisnow): During a press conference Friday, Trump proposed building a new FBI headquarters where it currently stands in D.C. Later, he said FBI Director Kash Patel told him the agency doesn’t need "that kind of room" and suggested taking a Department of Commerce building a quarter of the size of its current building. Read more here.

HOUSING — Markets Where Apartment Demand Surged Beyond New Supply (RealPage): About three-fourths of the 50 biggest U.S. apartment markets saw demand exceed supply in 2024. Five markets recorded excess demand of more than 3,000 units. Read more here.

MULTIFAMILY — Avanti Residential Launches Development Arm (Avanti Residential): Kyle Henderson will lead the newly established development arm. Avanti Residential's portfolio encompasses 9,363 units across 40 properties in seven states. Read more here.

PEOPLE — Steve Witkoff To Divest From CRE Firm (Bisnow): Witkoff, founder of luxury developer The Witkoff Group, is also divesting from crypto firm World Liberty Financial, which he founded with his sons. Witkoff was tapped as Trump’s special envoy to the Middle East and is involved in Russia-Ukraine negotiations. Read more here.

RETAIL — Starbucks Reinvents Store Design (QSR Magazine): The new store model has expanded seating options for work and socialization, more power outlets and a look that aims to make stores feel more inviting and community-oriented. Read more here.

LEGAL — Housing Groups Sue DOGE, HUD Over Funding Cuts (NYT): Organizations involved in the suit are among 66 nonprofits that were informed in February that funding used to fight evictions and seek redress for discrimination had been cut off. Read more here.

REITs — 26 U.S. REITs Increase Dividends (S&P Global): Hotel REIT DiamondRock announced the industry's largest dividend increase last month, raising its quarterly cash payout by 166.7%. First Industrial Realty Trust had the second-largest dividend increase, raising its quarterly dividend by more than 20%. Read more here.

INDUSTRIAL — PharmaCann Defaults On Leases With Innovative Industrial (Innovative Industrial Properties): PharmaCann has defaulted on its lease obligations with Innovative Industrial Properties. It owes $2.7M for nine leases in March. Read more here.

INDUSTRIAL — GM Eyeing $60B U.S. Manufacturing Investment (USA Today): Trump said he discussed a potential $60B U.S. investment with GM's CEO. Automakers have told the White House they need certainty on tariffs and emissions before they can make decisions on North American investment plans. Read more here.

HOTELS — American Hotel Income Properties Secures $126M For Portfolio Upgrades (American Hotel Income Properties): The REIT obtained a $126M loan to renovate 12 hotel properties totaling 1,233 rooms. The loan was provided by Access Point Financial. Read more here.

OFFICE — RTO Dynamics: Mandates, Flexibility, Evolving Needs (Colliers): CEOs are aligned on the need for in-person collaboration, so the question now shifts to execution. How much space do companies need, what should be done with that space, and how often do they expect employees to use it? Read more here.

HOTELS — Group Demand Is Rising (CoStar): Tech and healthcare industries are driving larger bookings at resorts and hotel properties, and construction and infrastructure activity is creating more group business at midscale and economy hotels. Read more here.

INVESTMENT — Investors Are Ready To Act (CBRE): The cost of debt remains higher than expected, but a majority of investors intend to buy more or at least as much real estate as they did in 2024, according to a CBRE investor survey. Read more here.

HOUSING — Settlement Hasn’t Changed Brokerage Commissions (NYT): Little has changed in the year since NAR agreed to change its rule on real estate commissions. Read more here.

***

So You’ve Come For An Answer

The RMR Group. 

Services Properties Trust is trying to offload 123 of its 206 hotels to pay down debt and boost its stock. The hospitality REIT is hoping to make $1.1B from the sales, which would cover all of its 2026 loan maturities.

***

The First Draft is produced by Director of Newsletters Jay Rickey, Managing Editor Catie Dixon, Editor-in-Chief Mark F. Bonner and Deputy Newsletter Editor Kayla Carmicheal, with an assist from AI. We’d love your feedback! Email us at firstdraft@bisnow.com.