Federal Reserve: CRE Activity Improving
Economic and real estate activity generally expanded between mid-May and late June, the Federal Reserve reported yesterday in its Beige Book.
“Real estate activity continued to strengthen and banks reported overall increases in loan demand,” the Fed said.
The Fed reported a generally positive outlook among its contacts across the economic segments that drive commercial real estate, including retail sales and manufacturing. General retail sales activity remained mixed, with slight to modest declines reported in the Philadelphia, Cleveland and Richmond districts, mixed sales activity in the Atlanta and Chicago districts and modest to moderate growth in the Fed’s St. Louis, Minneapolis, Kansas City and San Francisco districts. Manufacturing also remained mixed but generally improved across districts.
Wage pressures remained modest to moderate in most of the country, but the Philadelphia, Cleveland and San Francisco districts saw construction industry wage pressure, the Fed said.
“Commercial sales and leasing activity remained stable or improved in almost all districts,” the Beige Book said. “Absorption rate and rent increases were documented in Atlanta and Kansas City. Improving industrial real estate markets were noted in New York, Richmond and Dallas. Several contacts in Richmond also reported robust retail leasing activity.”
The Fed reported mixed office market conditions among its districts.
Commercial construction activity grew modestly. “Construction activity picked up in New York, and Cleveland continued to report project pipelines are strong,” the Fed said. “Reports on multifamily construction were mixed in Richmond, Atlanta and Dallas. New York noted that multifamily construction has tapered off through most of the district.”
Demand for commercial real estate loans increased in the New York, Philadelphia, Richmond and Kansas City districts and plateaued in Dallas. Asset quality improved across districts except in Chicago and Kansas City, where it remained mostly unchanged.
The Fed noted unchanged lending standards in New York, Cleveland and Kansas City, while the Dallas district reported relaxed standards.
