Federal Reserve: CRE Activity Continues to Improve

U.S. economic and real estate activity generally expanded between late August and early October, the Federal Reserve’s Beige Book reported yesterday.

“Most districts indicated a modest or moderate pace of [economic] expansion,” the Beige Book said. “Outlooks were mostly positive, with growth expected to continue at a slight to moderate pace in several districts.”

Commercial real estate leasing activity generally improved and the Fed called outlooks “mostly optimistic,” although Fed contacts in several districts expressed concern about economic uncertainty surrounding the upcoming presidential election.

Commercial rents held steady or increased and vacancy rates generally remained low and/or declined in reporting districts, except in the Houston metro area where office vacancies increased further.

The Fed called commercial property sales “robust” in the Chicago, Minneapolis and San Francisco districts but noted softening in the greater Boston area.

Commercial construction increased on net, with contacts in the Cleveland and Atlanta districts reporting increased or high backlogs. Shortages of skilled labor remained a constraint on construction activity in some districts including Cleveland and San Francisco. “The Richmond, Dallas and San Francisco districts noted a lack of construction workers, with some contacts noting these shortages were constraining construction activity,” the report said.

The Fed said multifamily activity reports varied but remained positive on net. “Strength in the apartment market was noted by the Dallas district excluding the Houston metro area, while activity was mixed in the New York district. Growth in multifamily construction was positive in the Boston and Atlanta districts but was mixed in the Richmond (Va.) district and slowed further according to New York’s report.”

The Mortgage Bankers Association reported today that multifamily lending increased 28 percent year-over-year in 2015, reaching a record $249.8 billion.