The Signal

New supply tightens as construction spending slips again

Construction spending fell to $2.158T in July from $2.168T, a 0.47% decline. Building permits dropped to 1,394K from 1,433K, down 2.72%. Housing starts came in at 1,275K, off 2.60%. Read that as a supply brake. Less residential and general construction competing for concrete, steel doors, tilt-wall crews and site labor is a cost tailwind for anyone still building 490 to 1,080 sq ft suites with 20 ft clear and 14x14 doors. It also means fewer competing garage condo projects breaking ground in your trade area over the next 12 to 18 months.

The adjacent comp is self-storage capital, not self-storage demand. Basis Industrial closed a $24M construction loan in Wayne NJ and a $20.5M loan in Surprise AZ. Lenders will still write construction paper on storage-adjacent product with a credible sponsor. Industrial Production edged up to 102.99. Separately, $12.73B of industrial CMBS faces lease rollover risk, which is a large-bay single-tenant problem, not a 50-owner condo problem. Fragmented end-user ownership is the structural advantage here.

Hershey draws biggest opening crowd since 2021

First-day attendance at America's Largest RV Show in Hershey was the highest since 2021, per Pennsylvania Recreation Vehicle and Camping Association, and that happened through a downpour at the gates. Foot traffic at the largest consumer RV show in the country is the cleanest read available on whether the enthusiast is still shopping. He is. Total vehicle sales hit 17.19M SAAR in August, up 2.58% from 16.757M. Consumer sentiment rose to 55.2 from 49.5, an 11.52% jump. Real disposable income ticked to $18,122.5B. Unemployment flat at 4.1%.

The counterweight is real and you should not paper over it. Lightspeed's August dealer data says the RV industry is struggling, and Indiana Gov. Braun told WNDU that rising gas prices are a challenge for the sector. Durable goods spending fell to $2,380.1B from $2,404.7B, down 1.02%. So new unit sales are soft while the existing parked fleet keeps growing older and needs somewhere to sit. Storage demand tracks the installed base, not this month's shipment number. Product news like Coachmen's new Remote 8 Wide off-grid series signals OEMs still investing in the lifestyle buyer.

Five percent tens with tight credit spreads underneath

The 10-Year hit 5.00% on September 15, up from 4.97%. The 30-year mortgage moved to 6.95% from 6.76%, a 2.81% move in a week. SOFR eased slightly to 3.62%. That combination is unusual: the short end soft, the long end firm, and the 10Y-2Y spread down to 0.27 from 0.33. Floating-rate construction debt priced off SOFR is marginally cheaper. Take-out debt priced off the ten-year is not. If you are building garage condos to sell units, the 6.95% mortgage is what your buyer's HELOC or second-home comparison looks like.

Credit conditions are not the problem. High yield spreads tightened to 2.70% from 2.76%. CRE loan delinquency fell to 1.53% from 1.56%. Capital is active: Canadian investors spent $9B on U.S. assets, Hines and Rialto closed a $1.1B office credit fund, GTIS rebranded as Brightshore and launched a $250M debt platform, and a California buyer paid $86.5M for an Amazon warehouse. Money is deployable. It is just pricing duration risk harder than credit risk.

Opportunity Zone reporting rules get teeth this cycle

Treasury published proposed regulations on September 11 covering information reporting for Qualified Opportunity Funds. The mechanic: QOFs would have to file information returns with the IRS and furnish statements to investors who dispose of their interests, and qualified opportunity zone businesses would have to furnish statements to the funds that hold them. Plain language, if you hold a garage condo project inside a QOF structure, the paperwork burden moves up and the IRS gets a matching document on your disposition. That changes nothing about the underlying deferral or the ten-year basis step-up. It changes who can quietly get it wrong.

Why this touches small-bay flex specifically: garage condo sites often sit on secondary industrial parcels near residential growth corridors, which is exactly the geography OZ designations tend to cover. If you are contributing a site to a fund, get the census tract confirmed and the reporting chain documented before the first draw, not at year end. Also on the docket, proposed regs under Section 250(b)(3)(A)(i)(VII) touching depreciation treatment on certain dispositions, which is export-income specific and unlikely to reach a domestic garage condo owner. This is general information, not tax advice. Run every structure past your own CPA.

We map capital sources across private lenders, family offices and funds, and run cost segregation studies for owners of qualifying commercial property.