| STILLINGER CAPITAL | Small-Bay Flex & Garage Condo October 10, 2026 |
| Durable goods spending printed $2,443.6B in August, up $48B and 2.0% in a single month, while consumer sentiment fell to 51.7 and vehicle sales dropped to 16.38M annualized. That split matters. Sentiment surveys track how people feel; durable goods track what they actually bought and now have to park. Garage condo absorption follows the second number, not the first. Boats, campers, side-by-sides and collector cars bought in 2024 through 2026 are sitting in driveways under HOA covenants right now. The storage decision lags the purchase by 12 to 24 months. |
10-Yr UST 5.22 ↓0.06 | 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 |
Housing starts fell to 1,275K in August from 1,309K, down 2.6%. Permits fell to 1,403K from 1,433K, down 2.1%. Total construction spending still rose to $2.203 trillion, up 0.85%. Read those together and you get the condition that favors existing small-bay owners: fewer new shells going vertical, but hard costs still climbing. Concrete, steel, insulated panel and the 14x14 door hardware that defines this product are not getting cheaper.
The replacement cost math is the whole thesis. A 490 to 1,080 sq ft suite with 20 ft clear and a 14-foot door costs materially more per foot to build than flat-slab self-storage, because of the clear height and the door. That cost does not come back down when a cycle turns. What we do not have today is a published national absorption or price-per-foot series for garage condominiums. Nobody tracks it. Underwrite off your own comps and your own waitlist, not off an index.
| BULLISH | Costs up, permits down, replacement cost protects existing owners of 20-foot clear product. |
| THE DEMAND |
Durable goods spending at $2,443.6B in August, a $48B monthly gain. That is the cleanest proxy we have for the boats, campers, trailers and powersports units that fill these suites. Against that, consumer sentiment at 51.7 down from 55.2, total vehicle sales at 16.378M down 3.55%, real disposable income essentially flat at $18,410.5B, and unemployment up to 4.2%. The consumer feels worse but is still buying big objects.
The trade feeds confirm the product side is alive. Tiffin Motorhomes announced its 1,000th Adventure Van build. Camping World's exec team went on record optimistic in the RVBusiness Dealer Guide. Trade Only reported U.S. fishing participation at a record high and Seattle Boat Co. buying another dealership. Every one of those units needs a home with a tall door. We do not have current RVIA shipment totals or Hagerty collector car index prints in today's signals. Treat the demand case as supported by spending data and dealer behavior, not by registration counts we have not seen.
| BULLISH | Durables up 2% monthly; RV and marine dealers expanding despite 51.7 sentiment print. |
| THE CAPITAL |
The 10-year printed 5.22%, down six basis points from 5.28%. SOFR at 3.87%, down a tick. The 10Y-2Y spread compressed to 0.44 from 0.47. High yield spreads widened slightly to 3.15% from 3.09%. CRE loan delinquency at banks improved to 1.53% from 1.56%. The 30-year mortgage moved the wrong way, 7.40% from 7.28%, which pressures the retail buyer financing a suite on a residential-style note.
Institutional appetite for industrial credit is unmistakable. BREIT is lining up a $1.7B CMBS loan against a 19M SF industrial portfolio. Blackstone's industrial CMBS in the UK swelled to £1 billion on strong demand. Hines put $170.5M into Bishop Arts in Dallas. Hampshire landed a construction loan for a 41,000 SF Meadowlands industrial project. DST equity raised jumped 27% from 2025, which tells you 1031 capital is hunting. Small-bay sits in the slipstream of that industrial bid, but at a check size institutions will not chase.
| NEUTRAL | Rates easing slightly, credit open, but 7.40% mortgage still squeezes individual unit buyers. |
| THE TAX ANGLE |
The Federal Register published a correction on September 28, 2026 covering information reporting for Qualified Opportunity Zones plus updated QOF certification and decertification procedures. The practical read for a garage condo developer: if your site sits in a designated zone, the paperwork burden around certifying and maintaining QOF status just got more specific, and so did decertification. If you are sponsoring new ground-up small-bay in a zone, get the certification mechanics right before the first dollar moves, not after.
Separate and more universally useful: cost segregation. A garage condominium is not a house. A large share of the improvement basis sits in site work, paving, drainage, exterior lighting, fencing and the door and opener systems. A study can reclassify those into 5, 7 and 15 year lives instead of 39. That pulls deductions forward. The owner-user who runs a business out of the suite has a different analysis again, including potential Section 179 treatment on qualifying components. This is general information, not tax advice. Run it with your CPA against your actual facts.
| NEUTRAL | New QOZ reporting adds compliance work; cost seg mechanics unchanged and still favorable. |
| Buford, GA | Gwinnett County Public Schools published a redistricting plan September 23. Rooftop growth signal, no direct industrial zoning news today. |
| Fort Mill, SC | Development moratorium ended October 1. A 270K SF project won approval October 7 over resident opposition to warehouse use. |
| Concord / Lake Norman, NC | Commissioners rejected a residential rezoning near Lake Norman September 22. Housing supply constrained; parking-restricted rooftops keep forming elsewhere. |
| Forney, TX | No Forney-specific signal today. Dallas comp: Hines paid $170.5M for Bishop Arts mixed-use, October 7. |
| Benton, KY | No new data today. Nothing in the submarket feed touched Marshall County or the Kentucky Lake corridor. |
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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