Fed Beige Book Reveals Sluggish Growth, Uneven CRE Trends

Tepid Growth Persists

The Federal Reserve’s October Beige Book paints a cautious picture of the national economy, per GlobeSt. 

Half of the 12 Fed districts reported either no growth or a slight downturn, while just three saw modest improvements. Despite this, Fed Chair Jerome Powell noted that data collected before a potential government shutdown suggests a slightly stronger-than-expected growth trajectory.

Oxford Economics observed that employment remains mostly stable, but signs of stress are emerging—layoffs and attrition are increasing. Inflation remains a top concern, driven in part by rising tariffs. Comerica Wealth’s Eric Teal said about half the cost of tariffs has been passed to consumers, and the burden could grow as companies exhaust their capacity to absorb expenses.

A Mixed CRE Picture

Commercial real estate performance varied significantly by region:

• New York: Office sector outperformed other metros; industrial activity and CRE loan volumes declined slightly.
• Boston: Slight activity uptick, but office rents stagnant; operating costs up due to labor shortages and tariffs.
• Cleveland: Industrial expansion lifted demand, but hospitality and multifamily softened.
• Chicago: Office leasing improved, construction strong in healthcare and institutional sectors, but new multifamily and industrial builds slowed.
• Minneapolis & Kansas City: Activity largely flat or modestly weaker, with industrial subleasing up and construction employment down.
• Dallas: Steady apartment demand and improved office leasing signaled stability; retail rents were under pressure but held firm.
• San Francisco: Infrastructure spending supported the market, but commercial construction and rents weakened overall.

Overall, CRE conditions reflect both the strengths and vulnerabilities of local economies navigating inflation, rate uncertainty, and changing tenant demand.

Why It Matters

The uneven landscape across markets highlights the fragile state of the post-pandemic economy. With inflation lingering and employment dynamics shifting, the Fed continues to walk a fine line between maintaining growth and curbing price pressure. For CRE stakeholders, localized performance will remain key, as national trends offer little uniform guidance.

What’s Next

Expect cautious optimism in the short term. While no drastic changes in policy outlook were signaled by Powell, the Fed remains data-dependent. Bracing for more clarity on consumer strength, labor market shifts, and geopolitical tariff impacts will be crucial for investors and developers alike heading into 2026.