| STILLINGER CAPITAL | Small-Bay Flex & Garage Condo October 12, 2026 |
| Durable goods spending hit $2,443.6B in August, up $48B or 2.0% in a single month, while consumer sentiment fell to 51.7 from 55.2. That split is the whole small-bay story. The people buying RVs, boats, side-by-sides and collector cars are not the median sentiment respondent. They are higher-income households with paid-off toys and no HOA-legal place to park them. Garage condo demand tracks the $2.44T durable goods line, not the 51.7 confidence print. Watch which number your underwriting actually keys off. |
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 |
Total construction spending printed $2,203,129M in August, up $18.65B or 0.85% from $2,184,474M. Meanwhile building permits fell to 1,403K from 1,433K and housing starts dropped to 1,275K from 1,309K, down 2.6%. Read that together. Vertical cost per square foot is not falling, but residential competition for trades, concrete and steel in the Southeast is easing. For a 490 to 1,080 sq ft suite with 20 ft clear and a 14x14 door, the shell is the cost. Slab, tilt or metal, door package, fire. Softer residential starts help the bid.
The adjacent industrial comp is still institutional. Blackstone's industrial CMBS in the UK swelled to £1 billion on strong demand, BREIT is nearing a $1.7B CMBS loan for an industrial portfolio, and industrial CMBS issuance gained share in 2026 led by SASB deals. None of that money is chasing 800 sq ft condo suites. That is the inefficiency. Big industrial capital validates the box type and ignores the unit size.
| NEUTRAL | Construction spend up 0.85%, permits down 2.1%. Cost relief is possible, not yet printed. |
| THE DEMAND |
Durable goods spending rose to $2,443.6B from $2,395.6B, a 2.0% monthly gain. Total vehicle sales went the other way, 16.378M in September versus 16.98M, down 3.55%. Unemployment ticked to 4.2% from 4.1%. Real disposable income was flat at $18,410.5B, down $4.9B. The buyer is still buying hard assets while the aggregate consumer wobbles. That is the garage condo customer profile in one data set.
The trade press backs it. Former Newmar president Matt Miller came out of seven years of retirement to launch Sage RV truck campers, showing product at the Elkhart Open House. Industry vets do not restart factories into a dying category. NMMA's Frank Hugelmeyer addressed a sold-out IBEX breakfast in Tampa. EMCO brought a 30,000 sq ft automated leaf spring plant online in Claremore, Oklahoma. U.S. fishing participation hit a record high. Unknown today: current RV wholesale shipment counts and collector car index levels. We do not have those prints and will not guess them.
| BULLISH | Durables up $48B monthly; RV and marine supply chains adding capacity, not cutting it. |
| THE CAPITAL |
The 10-year printed 5.22%, down from 5.28%. SOFR sits at 3.87%, down a basis point. The 10Y-2Y spread compressed to 0.44 from 0.47, down 6.4%. The 30-year mortgage went the wrong way, 7.40% from 7.28%. High yield spreads widened to 3.15% from 3.09%. So the long end eased a touch, credit got marginally more expensive, and the curve stayed stubbornly flat. Nobody is getting cheap fixed-rate takeout at these levels.
The constructive print is CRE loan delinquency at 1.53%, down from 1.56%. Banks are not choking on the book. Construction lending is clearing for small industrial. Hampshire landed a construction loan for a 41,000 sq ft Meadowlands industrial project per JLL, and a Miami-Dade self-storage project broke ground on a $20M construction loan. Those are the comps your regional lender will cite. Note the SEC collected $20.5M in penalties from Prime Group Holdings tied to a self-storage acquisition fund. Sponsor diligence is not optional.
| NEUTRAL | Long rates eased slightly, HY widened, delinquency improved. Mixed, financeable, not cheap. |
| THE TAX ANGLE |
On September 28, 2026 the Federal Register published a correction to "Information Reporting Regarding Qualified Opportunity Zones and Updated Qualified Opportunity Fund Certification and Decertification Procedures." That is the plumbing around how QOFs certify, decertify and report. If a garage condo development sits inside a designated zone and is held through a fund structure, the reporting burden and the decertification exposure just became more defined. Read the actual document before you assume your structure is fine.
Separate mechanic worth understanding: cost segregation on an owned suite. A garage condominium is not one depreciable item. The shell is 39-year real property. But the 14x14 overhead door opener, dedicated electrical, lighting, HVAC serving equipment, security systems, site paving and landscaping often reclassify into 5, 7 or 15-year lives. Shorter lives can be eligible for bonus depreciation depending on the year placed in service and current law. An owner-user running a business out of the suite may also look at Section 179 on qualifying property. This is general information, not tax advice. Engage your own CPA.
| NEUTRAL | New QOZ reporting correction adds clarity and compliance work. Cost seg mechanics unchanged. |
| Buford, GA | Gwinnett County Public Schools redistricting plan dated Sept 23 signals rooftop growth. TikTok warehouse lease shows Georgia industrial absorption is live. |
| Fort Mill, SC | Development moratorium ended Oct 1. A 270K sq ft project won approval Oct 7 despite opposition. Silfab Solar going full operations. |
| Concord / Lake Norman, NC | Commissioners rejected a rezoning for a proposed home community near Lake Norman on Sept 22. Residential supply stays constrained. |
| Forney, TX | No Forney-specific signal in today's feed. Nothing new to report. Do not read silence as either direction. |
| Benton, KY | No Benton or Marshall County signal today. Record U.S. fishing participation is the only adjacent read for Kentucky Lake demand. |
We map capital sources across private lenders, family offices and funds, and run cost segregation studies for owners of qualifying commercial property.
Start a conversation