Location Strategy Chartbook 04.12.25

WSJ: The dollar is under pressure as President Trump's tariff strategy erodes global investors' confidence in American assets. The currency has fallen about 2.5% this week against a basket of peers, on track for its worst week since November 2022. China's decision to raise tariffs on U.S. goods to 125% on Friday sparked a new wave of selling. "The question of a potential dollar confidence crisis has now been definitively answered—we are experiencing one in full force," wrote ING's Francesco Pesole.

Investors are dumping dollars not just to buy so-called havens such as the Swiss franc or Japanese yen. They have also poured into the euro, which has risen to a three-year high. One euro recently bought $1.14.

Riskier currencies like the Australian dollar, Czech koruna and Thai baht have also notched gains against the dollar this week. China and Mexico's currencies have weakened marginally against the dollar.

Bloomberg: The bond-market selloff unleashed by President Donald Trump’s trade war sent 10-year Treasury yields to the biggest weekly surge in over two decades as investors pulled back from US assets.

The scale of the move — with the benchmark’s rate jumping a half-percentage point over the past five days to 4.49% — threatens to deal another blow to the US economy by pushing up borrowing costs more broadly.

It also cast doubt on Treasuries’ status as the world’s safe haven as they slid along with the stock market for much of the week, sending investors into other assets like the Swiss franc, gold and the Japanese yen.

Investor sentiment turned sharply bearish this month, logging the bleakest views on the S&P 500, the US dollar, credit, and oil in the nearly 10-year history of the Marquee QuickPoll, which surveyed 792 institutional investors from April 4 to 8. Key findings include:

Recession on the horizon? Investors reassessed their recession probabilities for the next 12 months, which rose to around 50% on average this month from the mid-20s last month.

Time to get back into the Mag 7? Many investors reported reducing their holdings in the large US technology stocks known as the Magnificent 7, citing high valuations and potential tariff exposure. “But the current cheapness seems to be enticing a lot of investors to get back into the trade,” says Goldman Sachs' Oscar Ostlund, global head of Content Strategy, Market Analytics and Data Science for Marquee. He notes that the number of investors who said they were “looking to add” Magnificent 7 stocks to their portfolio doubled from January.

Sticky inflation. Meanwhile, inflation expectations have rebounded, with more than 80% of respondents expecting US core inflation to end the year above 3%.

FT: The speed and scale of the American public’s souring on Trump’s economic agenda are stunning. Last week, just before the tariff chaos, 63 per cent of Americans had a negative view of the government’s economic policy, comfortably the highest figure since records began almost 50 years ago.

All-time records were also shattered for the share of people who expect the economy to further deteriorate over the next year. Just 25 per cent of US adults said they expect their finances to look better in five years than today — lower even than at the nadir of the Great Recession.

Notably, these sharp deteriorations are being felt across the aisle. Even before “liberation day”, a third of Republicans disapproved of Trump’s actions on the economy, a remarkable feat given levels of partisan polarisation in America. A lot of people who thought they were an “us” have discovered they are a “them”.

If the US were a publicly traded company, it would probably need to issue the equivalent of a profit warning — or more accurately a deficit warning.

Just as Congress is getting closer to agree on trillions of dollars in tax cuts pledged by President Donald Trump during his campaign, projections for some sources of government revenue over the coming years are coming in lower than expected.

The largest shortfall by far is how much the US can expect to generate from tariffs, which Trump and his advisers are counting on to help pay for the tax cuts.

Estimates keep changing with tariffs announcements rolling in on a daily, if not hourly, basis. But overall forecasters agree that tariffs will bring in a lot less than the yearly $600 billion figure that has been floated. That’s in part because tariffs will likely lead to a drop in imports. Lower consumer spending and business activity as a result of trade wars would also eventually reduce revenue from taxes.

Seattle saw one of the largest jumps in industrial availability last quarter, with construction and shrinking demand contributing to the trend.

• Among large metropolitan areas across the country, the Emerald City came in second only to San Antonio for its quarterly rise in availability.

• At the end of the first quarter, the Puget Sound region’s industrial availability rate reached a record 11.4%. That represents a 110-basis point rise over the previous quarter and a 260-point jump from one year before

• The availability of logistics space was even higher, at 13.8%

• This trend toward higher availability rates varies significantly by box size. For spaces in the 100,000-square-foot to 499,999-square-foot range, the availability rate has been in double-digit territory for several quarters

• The largest box sizes have seen the biggest ramp-up in availability but have also seen strong demand compared to other size buckets. The smallest size segments remain tight, but have also seen availability increase in recent quarters.

• Logistics buildings of 500,000 square feet and larger saw the biggest bump in availability. That segment had an availability rate of 12.9% last quarter, up from 8.4% in the fourth quarter of 2024. This size segment has seen a significant shift since it reached record-low availability three years ago when essentially no space was available.

LS commentary: Imagine sitting in your car for 1-2 hours commuting in heavy Dallas or Houston traffic on a Friday afternoon.

Your family wants to go out and do something. Do you want to get in the car and drive and fight for parking after you just spent hours doing that?

Or would you rather pack up a cooler and head over to the event center your community has that is playing live music or has a movie. Nearby there are playgrounds for the kids who need a bit more activity. The adults can hang out with other adults, make new friends, find community who can help, support each other, hang out socially. Or maybe there is a coffee shop, a restaurant, a cafe, a craft beer or wine shop that you can pick up something for everyone.

All within walking distance of your home. Sure it might involve walking a bit but don't we all need to move more?

Brookewater MPC has incorporated many “amenities” to foster community, 3rd spaces, walkability and ease of use. Daycare and schools right in the community.

The urban concepts desired by many are not exclusive to cities. They can be adopted by developers and builders to attract demographics who desire this without sacrificing on offering more space, nature, and a different pace of life.

Costar & Hines: Houston-based Third Coast Bank has completed its first commercial mortgage-backed securitization, a $200 million loan it originated for Starwood Capital Group's acquisition of 11 master-planned housing developments.

The loan is secured by interests in a portfolio of single-family home sites Starwood acquired from Hines this month for about $800 million.

The developments include Wildflower Ranch, Creekside, Aster Park, Northspur, Myrtle Creek, Furst Ranch and Redden Farms in Dallas; Brookewater, Creekhaven and Wildrye in Houston; and Mirador in Austin.

Increasingly as I write market studies for ground up new development, I am noticing MPCs featuring "amenities" that include schools within the MPC, retail, walking trails, event center, dining, daycare

People want community. Community includes being able to organically meet your neighbors. It means walkability whether to school, daycare, or to pick up a coffee.

In MPCs who have fully embraced the mini city concept, it might involve an event center that hosts movie nights or live music and food.

Costar: The division of Miami-based 13th Floor Investments opened the new build-to-rent community at 14800 Cumberland Drive. The rental complex is just five miles west of downtown Delray Beach in Palm Beach County. The luxury community for those 55 and older includes 74 single-story villas ranging from 1,300 square feet to 1,450 square feet with two- and three-bedroom floorplans. Rental rates range from $3,400 to $4,000 a month.

The property is already over 50% leased, the company said in a statement.

Completing Solera at Avalon Trails represents a “significant step in meeting growing demand for high-quality 55-plus housing in South Florida,” said Mike Nunziata, division president at 13th Floor Homes, in the statement.

The villas come with impact-resistant windows and doors, shaker-style wood cabinetry, stainless steel appliances and quartz countertops.

The new community offers weekly resident programming organized by an in-house coordinator, alongside a clubhouse with a fitness center, card rooms, café, arts and crafts room, and theater. A resort-style pool and lap pool, alongside pickleball and tennis courts, are also available.

“With luxurious homes and a wide range of amenities, this community offers active adults a vibrant, carefree lifestyle,” said Nunziata.

Other recently completed build-to-rent projects from 13th Floor Homes include the 220-unit Villas of Torino and the 126-unit Tredici at Central Park in Port Saint Lucie. The developer also has 34 single-family homes for sale in Fort Lauderdale, with plans for another 335 homes in Tamarac.