Federal Reserve: CRE Markets Strengthen
The Federal Reserve received mostly positive feedback on commercial real estate nationwide since early September.
“Both the housing and commercial real estate markets improved since the last report,” the Fed said in its Beige Book. “Both residential rental markets and commercial real estate markets were mostly stronger. Commercial and residential multifamily construction showed further strength.”
Reports on the banking and finance sector also showed strength, the central bank said. “Loan demand or volume was reported to be growing in the Philadelphia, Cleveland, Richmond, Chicago, St. Louis, Dallas and San Francisco districts.” Lending activity in general increased, loan quality held steady or improved and lending standards changed little or eased somewhat.
“Commercial real estate markets have shown signs of strengthening in all twelve districts,” the Fed said. “Most districts noted improvement across all major segments, though [the] New York and St. Louis [districts] noted some increased slack in the market for retail space.”
The New York, Cleveland, Richmond and San Francisco districts reported strong multifamily construction and the Fed found stronger commercial construction in most districts. The Boston and St. Louis districts noted “brisk” construction in the health sector and the Cleveland district also indicated strong demand for senior living structures. “New York, on the other hand, noted some pullback in new commercial construction, though activity remained fairly brisk.”
Credit conditions showed mixed results but mostly improved. “Improved loan quality or declining delinquency rates were noted in New York, while Cleveland, Richmond and Kansas City [districts] reported little change,” the Beige Book noted. “Richmond and Chicago indicated some easing in lending standards, while New York, Kansas City and Dallas reported no change.”
