| STILLINGER CAPITAL | Small-Bay Flex & Garage Condo October 9, 2026 |
| Durable goods spending hit $2.4436 trillion in August, up $48B or 2.0% in a single month, while consumer sentiment fell to 51.7 and the 10-year sits at 5.28%. That split is the whole story for small-bay flex. The people buying $180K toy haulers and $120K center consoles are not the same people answering sentiment surveys. Garage condo demand tracks the first group. Your cost of capital tracks the second. Underwrite the gap: strong end-user purchase behavior, expensive debt, and a buyer pool that often pays cash or uses SBA. |
10-Yr UST 5.28 ↑0.01 | SOFR 3.87 ↓0.01 | 30-Yr Mtg 7.4 ↑0.12 |
HY Spread 3.15 ↑0.06 | Durable Gds 2443.6 ↑48.00 | Sentiment 51.7 ↓3.50 |
| THE ASSET |
Total construction spending printed $2.203 trillion in August, up 0.85% from $2.184 trillion. Housing starts went the other way, down 2.6% to 1.275 million, with permits off 2.09% to 1.403 million. For garage condo developers that mix is useful. Residential trades freeing up usually means subcontractor availability improves on tilt-up and pre-engineered metal shells, which is the core of a 490 to 1,080 sq ft suite with 20 ft clear and a 14x14 door.
The institutional comp is still industrial. BREIT is lining up a $1.7B CMBS loan against 19M sq ft, and Blackstone's UK industrial CMBS swelled to £1 billion on strong demand. That is big-box pricing, not small-bay. Nobody is securitizing 60-unit garage condo projects yet, which is exactly the inefficiency. Self-storage adjacency: a Miami-Dade self-storage project broke ground with a $20M construction loan, so lenders still fund storage-adjacent product. We do not have reliable national absorption or price-per-foot data specific to garage condos, and anyone quoting it is estimating.
| NEUTRAL | Costs manageable, trades loosening, but no transparent national pricing data for the niche. |
| THE DEMAND |
Durable goods spending added $48B month over month to $2.4436 trillion, a 2.0% move. That is the single cleanest demand proxy we have for this asset class, because garage condo users store things that show up in that line: RVs, boats, side-by-sides, collector cars, business inventory. Tiffin just completed its 1,000th Adventure Van build, and Alliance launched the ultra-luxury Aurum 38FB. Camping World's exec team is on record as optimistic heading into the Dealer Guide issue. U.S. fishing participation hit a record high.
The counterweight is real. Consumer sentiment dropped to 51.7 from 55.2, down 6.34%. Total vehicle sales fell 3.55% to 16.378 million annualized. Real disposable income slipped to $18,410.5B. Unemployment ticked to 4.2% from 4.1%. So the median consumer is strained while the high-net-worth toy buyer keeps spending. Garage condos sell to the second group. We have no current RVIA shipment or Hagerty collector index print in today's signals, so treat unit-level RV demand as unconfirmed.
| BULLISH | Durables up $48B and record fishing participation outweigh soft sentiment for this buyer cohort. |
| THE CAPITAL |
The 10-year printed 5.28%, up a tick from 5.27%. The 10Y-2Y spread compressed to 0.47 from 0.51, a 7.84% flattening. SOFR eased to 3.87%. The 30-year mortgage jumped to 7.40% from 7.28%. High yield spreads widened to 3.15% from 3.09%. Read that together: short money is cheap relative to long money, and the term premium is not rewarding you for duration. Construction floaters priced off SOFR still pencil. Ten-year fixed takeout at 5.28% plus spread does not, at the cap rates most sponsors modeled in 2023.
Credit quality is fine. CRE loan delinquency fell to 1.53% from 1.56%. Lenders are still writing: Hampshire closed a construction loan on a 41,000 sq ft Meadowlands industrial project, and a Miami-Dade self-storage deal got $20M. Equity raised for DSTs jumped 27% from 2025, which tells you 1031 money is actively hunting placement. Hines spent $170.5M in Dallas Bishop Arts. Capital exists. It is just expensive and selective.
| NEUTRAL | Delinquency falling and DST equity up 27%, but 5.28% tenor and flattening curve bite. |
| THE TAX ANGLE |
The Federal Register published a correction on September 28, 2026 covering Information Reporting Regarding Qualified Opportunity Zones and Updated Qualified Opportunity Fund Certification and Decertification Procedures. Plain language: the IRS is tightening how QOFs certify, report and get decertified. If a garage condo development sits in a designated zone and you are holding through a QOF, the compliance paperwork and the decertification risk just became a live diligence item, not a footnote. Ask your fund administrator which version of the certification procedure they are filing under.
Separately, the mechanic most garage condo owners underuse is cost segregation. A 20 ft clear suite is not one 39-year asset. The slab and shell are real property. The 14x14 overhead door opener, the dedicated electrical runs, the mezzanine framing, the site paving and exterior lighting can often be reclassified to 5, 7 or 15-year lives. On an owner-user suite, that reclassification is what moves the first-year deduction. Section 179 may also apply to qualifying improvements if you use the unit in a trade or business. This is general information, not tax advice. Run it with your CPA.
| BULLISH | Cost seg and QOZ structures both live; new reporting rule adds clarity, not restriction. |
| Buford, GA | No new site-level data. Gwinnett County Public Schools redistricting plan dated Sept 23 is the only local signal. |
| Fort Mill, SC | Moratorium ended Oct 1. A 270K sq ft project won approval Oct 7 over opposition. Entitlement window open. |
| Concord / Lake Norman, NC | Commissioners rejected a Lake Norman home rezoning; divided board backed townhomes near a future CATS rail station. |
| Forney, TX | No Forney-specific signal today. Hines paid $170.5M in Dallas Bishop Arts, confirming metro capital appetite. |
| Benton, KY | No new data today. Record U.S. fishing participation is the relevant demand read for Kentucky Lake boat storage. |
We map capital sources across private lenders, family offices and funds, and run cost segregation studies for owners of qualifying commercial property.
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