Fed Beige Book Shows CRE Fundamentals in the Doldrums

As reported by GlobeSt, some US regions are experiencing stabilization in commercial real estate activity. But the Federal Reserve’s Beige Book highlights subdued lending and persistent challenges across sectors.

Regional Highlights

Boston

CRE activity is flat, with industrial leasing slowing and rents modestly declining. Multifamily rents are moderately up, and planned construction is rising, though local resistance to new developments presents a hurdle.

New York City

CRE markets have steadied, with growing office demand driven by tenant focus on owner solvency. Commercial mortgage demand has also increased.

Philadelphia

The office market struggles for balance, while multifamily construction expands, offering renters more incentives.

Cleveland

Nonresidential construction is modestly increasing, with some stalled projects resuming.

Richmond

Prime office spaces reported lower vacancies, but lower-grade properties see increasing vacancies. Overall CRE activity remains flat.

Atlanta

Multifamily vacancies rose despite growing demand, prompting tenant concessions. Industrial activity is slow but stable, while non-bank lenders face rising delinquencies.

Chicago

CRE construction focuses on data centers and advanced manufacturing. Retail and office absorption remain low, halting new developments in these sectors.

St. Louis

CRE softened slightly due to economic uncertainty and rising costs.

Minneapolis

New project activity is limited, and large-scale space returns by corporations weigh on the market.

Kansas City

Investor sentiment improved, but loan demand remains low due to interest rate volatility.

Dallas

Apartment demand is steady but oversupply leads to concessions, while class A office leasing shows improvement.

San Francisco

Elevated office vacancies persist, with slow leasing in new developments. Retail and industrial demand remains strong.

What’s Next

As markets adjust to ongoing economic pressures, multifamily and industrial segments remain focal points of opportunity. CRE stabilization may improve further in regions showing consistent leasing growth, especially in high-grade office spaces. 

However, developers and investors will need to navigate challenges like tenant concessions, policy uncertainty, and high financing costs to maintain momentum.