The weekly note
April 7, 2025
This Week’s Developments in the US Economy
The Implications of a Potential Fed Pause and a Review of Key Indicators
During the most recent meeting of the Federal Open Market Committee (FOMC) on Tuesday, May 3, Federal Reserve Chair Powell signaled a potential pause in ongoing rate hikes. Mr. Powell acknowledged that the previous ten consecutive interest rate increases, combined with the impact of tightening credit conditions related to the collapse of regional banks in March and April, have brough policy to a sufficiently restrictive position needed to achieve a 2% target, albeit over some time. However, in acknowledging that it will take some time “for the full effects of monetary restraint to be realized, especially on inflation,” it seems clear that understanding whether policy is sufficiently restrictive—or perhaps overly restrictive—cannot be known until policy lags can be measured.
​
In order to gain a deeper understanding of the changes and momentum of crucial economic indicators that the Fed is likely monitoring for policy effects, we categorized a variety of indicators based on their impact areas (i.e. price, sentiment, and economic momentum) and assessed their annualized pace of change over three-, six- and twelve-month periods. To align with the Fed’s policy targets, for example, we view rates of change below 2% as “positive”, between 2% and the Fed’s year-end projection of 3.5% as “neutral”, and anything above 3.5% as “negative”. The results are illustrative of the potential for a long road ahead given the Fed’s repeated commitments to achieving a 2% target over time.
This Week’s Developments in the US Economy
Navigating Market Volatility: Why Private Real Estate Offers Stability Amid Public Market Turbulence
We believe volatile market and macro conditions warrant evaluation of private US real estate exposure, ensuring portfolios are effectively positioned to weather near-term volatility while capturing long-term value. The announcement of sweeping US tariffs, which surprised many market observers both in magnitude and breadth, created substantial public market volatility. While the long-term ramifications on US markets will not be known for some time (nor will the extent of retaliatory measures by trade partners), we focus on the implications and value proposition for private US real estate.
​
Clearly, the investment landscape has changed—US public equities are down 14% and 17% YTD for the S&P 500 and the Nasdaq, respectively, and investors have piled into US Treasuries, sending yields on the 10-year down nearly 60 bps since the start of the year.[i] Public real asset indices have fared better in the short term—a trend which we believe will continue—with home builders down approximately 11%, and US REITs showing better resilience overall, down 7-8% across our high conviction sectors (see accompanying visual).[ii]
​​
Much of this market dislocation occurred in the last couple of trading days, but we believe that the effects of US tariffs are likely to be long-lasting. The key areas of concern include persistent inflation, deteriorating consumer and business confidence and decelerating economic growth. While public real estate markets have exhibited volatility, we believe that private real estate should continue to show greater resilience on an absolute and relative basis. Private real estate has historically had lower correlation to public equities, and with flight-to-quality shifts to US Treasuries (which are typically benchmarks for fixed-rate real estate debt), we see the potential not only for asset values improving meaningfully but also increasing momentum from a deal volume perspective (see accompanying visual). Overall, we see declining yields as one of several points that underscore private US real estate’s ability to stabilize portfolios, providing the potential for current income and meaningful downside protection during turbulent periods.
​
Simply, we believe that tactical, near-term allocations of capital toward quality private real estate assets can achieve multiple benefits, including but not limited to: increased portfolio stability amid market turbulence; and the opportunity for attractive risk-adjusted returns as broader market conditions stabilize and opportunities emerge in the early innings of a new real estate cycle. (To view our generalized portfolio analysis pre-market volatility, please see our Private Markets 101 page at bridgeig.com/education)
Real Estate Investing Amid Volatility: Public vs. Private Markets
Public US real estate has proven acutely sensitive to daily fluctuations in market sentiment and broader equity volatility, which is true not only of the current period but extending through early COVID disruptions. This sensitivity stems from immediate liquidity pressures, investor redemptions (including in some non-publicly traded, open end REITs), and rapid repricing mechanisms in publicly traded markets. Particularly for US REITs, recent volatility in public equities has translated directly into increased price swings and valuation instability, resulting in asset values detached from underlying real estate fundamentals.
​
In contrast, private US real estate markets remain modestly insulated from daily equity market turbulence. A crucial difference between public and private real estate is that valuations in private markets are fundamentally driven by asset performance—such as occupancy rates, rental income stability, tenant quality, effective operations, and local supply-demand dynamics. Additionally, quarterly appraisal cycles provide a smoothing effect, limiting the effects of short-term volatility on asset values and shielding investor portfolios from irrational or liquidity-driven market movements.
​
We believe private US real estate provides attractive characteristics that are not present in public markets, which include but are not limited to income stability, tangible asset backing, and inherent inflation-hedging capabilities.
Our High Conviction Areas of Private US Real Estate Equity and Credit Strategies
​
Residential Rental: Persistent Demand and Resilient Fundamentals
Residential rental real estate (i.e., urban apartments, suburban multifamily, workforce and affordable housing, single family rentals, etc.) continues to benefit from long-term structural factors, notably a structural long-term shortage of US housing and persistent affordability challenges that support rental demand. Although declining consumer confidence may moderate short-term rent growth, the fundamental strength of residential rental properties includes: stabilizing and, in some markets, rising occupancy rates, which improved at the end of the year to finish at nearly 95% for stabilized properties;[iii] a limited pipeline of new developments due to elevated construction costs and financing challenges; and demand tailwinds characterized by strong employment growth and strengthening demographics.
​
Logistics Infrastructure (Industrial): Structural Strength Amid Moderating Growth
The attractiveness of US logistics real estate remains well-anchored by secular trends, including continued e-commerce adoption and ongoing supply chain optimization. Although moderating consumer spending poses a short-term headwind, industrial properties benefit from stable long-term tenant relationships and relatively inelastic demand for strategic locations, particularly urban infill last mile logistics. As tenant demands evolve, we see supply chain advancements as a net positive for the industry, occurring in a virtuous cycle: more efficient supply chains as a function of more efficient and quicker-to-customer deliveries, which leads to better margins and profitability, which in terms leads to more growth and demand for space.
​
We anticipate US tariffs to have a measurable but manageable effect on established supply chains and trade routes. We see the greatest likelihood for short-term disruptions (as opposed to longer-term issues) as US supply chains are better positioned than global trading peers to evolve around tariffs (see accompanying visual).[iv] Specifically, we see the potential shift away from Mexico/Canada—at least during the anticipated renegotiation of the USMCA—to ASEAN and India supplies, which is expected to put more pressure on occupiers to be in US Coastal Gateway markets. Coupled with dwindling supply, we expect superior fundamentals in these markets.
​
We believe industrial logistics infrastructure can provide inflation-limited income streams by seeking quality logistics assets near critical urban markets and established infrastructure corridors, which are essential to providing ongoing support to supply chains, which are expected to see moderate recalibration amid international trade turbulence.
Positioning for Stability and Future Opportunity
Amid heightened macroeconomic volatility, we believe that private US real estate can serve as a stabilizing force.
i Bloomberg as of April 5, 2025 (SPX and NDX Indices).
ii Bloomberg as of April 5, 2025. Reference indices are for homebuilders (SPDR S&P XHB US), MSCI US REITs (RMZ), Bloomberg Apartment REITS and Industrial/Warehouse REITs (BBREAPT and BBREINDW).
iii RealPage as of Q4 2024.
iv World Bank Group as of April 6, 2025.
Disclosures
© 2025 Bridge Investment Group Holdings LLC. “Bridge Investment Group” and certain logos contained herein are trademarks
owned by Bridge.
The information contained herein is for informational purposes only and is not intended to be relied upon as a forecast, research, investment advice or an investment recommendation. Reliance upon the information in this material is at the sole discretion of the reader. Past performance is not necessarily indicative of future performance or results.
This material has been prepared by the Research Department at Bridge Investment Group Holdings LLC (together with its affiliates, “Bridge”), which is responsible for providing market research and analytics internally to Bridge’s strategies. The Research Department does not issue any independent research, investment advice or investment recommendations to the general public. This material may have been discussed with or reviewed by persons outside of the Research Department.
This material does not constitute an offer to sell any securities or the solicitation of an offer to purchase any securities. This material discusses broad market, industry, or sector trends, or other general economic, market, social, legislative, or political conditions and has not been provided in a fiduciary capacity under ERISA.
Economic and market forecasts or estimated returns presented in this material reflect the Research Department’s judgement as of the date of this material and are subject to change without notice. Although certain information has been obtained from third-party sources and is believed to be reliable, Bridge does not guarantee its accuracy, completeness, or fairness. Bridge has relied upon and assumed without independent verification, the accuracy and completeness of all information available from third-party sources. Some of this information may not be freely available and may require a subscription or a payment. Any forecasts or return expectations are as of the date of material and are estimated and are based on market assumptions. These assumptions are subject to significant revision and may change materially as economic and market conditions change. Bridge has no obligation to provide updates or changes to these forecasts.
This material includes forward-looking statements that involve risk and uncertainty. Readers are cautioned not to place undue reliance on such forward-looking statements. Any reference to indices, benchmarks, or other measure of relative market performance over a specified period of time are provided for context and for your information only.​
​