| STILLINGER CAPITAL | Small-Bay Flex & Garage Condo October 13, 2026 |
| Durable goods spending printed $2,443.6B in August, up $48B and 2.0% month over month, while consumer sentiment fell to 51.7 from 55.2. That split is the whole story for garage condos. Households feel bad but are still buying big physical objects: boats, side-by-sides, trailers, project cars. Those objects need 14-foot doors and 20-foot clear, and HOAs will not allow them in the driveway. Sentiment drives the sales narrative. Durable goods drive the parking problem. The parking problem is what you underwrite. |
10-Yr UST 5.22 ↓0.06 | SOFR 3.87 | 30-Yr Mtg 7.4 ↑0.12 |
HY Spread 3.11 | Durable Gds 2443.6 ↑48.00 | Sentiment 51.7 ↓3.50 |
| THE ASSET |
Total construction spending hit $2.203T in August, up $18.7B from $2.184B prior. Hard costs are not falling. That matters because a 490 to 1,080 sq ft garage suite with 20 ft clear and a 14x14 door is a vertical-volume build, not a flat-slab build. Clear height is where the money goes. Every new competitor faces the same cost curve you did, which is the quiet moat on existing inventory.
Meanwhile capital keeps flowing to the opposite end of the size spectrum. Blackstone's industrial CMBS swelled to £1B on strong demand, BREIT is near a $1.7B CMBS loan on an industrial portfolio, and Bisnow is tracking a $3T manufacturing construction push. None of that institutional money buys 800 sq ft condos. Self-storage comps show the adjacent read only: a $20M construction loan broke ground in Miami-Dade and Northern NJ closed another. Different product, different buyer. We do not have a public price-per-foot index for garage condos. Anyone quoting one is guessing.
| NEUTRAL | Costs rising, institutional capital absent from small-bay, no transparent pricing index exists yet |
| THE DEMAND |
Durable goods spending rose to $2,443.6B from $2,395.6B, a 2.0% move. Total vehicle sales went the other way, 16.378M in September against 16.98M, down 3.55%. Unemployment ticked to 4.2% from 4.1%. Real disposable income was flat at $18,410.5B. Read that as a consumer who is stretched on the monthly payment but still accumulating toys and equipment. Toys and equipment are the tenant.
The trade press backs it. Awaken RV is adding production capacity with Patrick Industries while, in its own words, much of the RV industry pulls back. Go RVing drew over 35,000 people through its display at the Albuquerque Balloon Fiesta. National Powersport Auctions just marked 30 years. Seattle Boat Co. acquired another dealership. US fishing participation hit a record high. These are not boom headlines. They are durability headlines. The installed base of RVs, boats and powersports units already on the road is the demand pool, and it does not shrink when sentiment prints 51.7. It gets stored.
| BULLISH | Durable goods up 2%; installed recreational base is sticky regardless of weak sentiment |
| THE CAPITAL |
The 10-year printed 5.22%, down six basis points from 5.28%. SOFR held flat at 3.87%. The 10Y-2Y spread narrowed to 0.44 from 0.47. High yield spreads sat still at 3.11%, which is not a stress signal. CRE loan delinquency actually improved to 1.53% from 1.56%. Credit is open. It is just expensive at the long end, and the gap between a 3.87% floating base and a 5.22% ten-year tells you the curve is pricing duration risk, not default risk.
For a buyer, the 30-year mortgage at 7.40%, up from 7.28%, is the more relevant comp than the Treasury. Many garage condo purchases get financed personally or through a small business entity, not through institutional CRE debt. Construction lending appetite exists for the adjacent product: JLL placed a loan on a 41,000 sq ft Meadowlands industrial project and two separate self-storage construction loans closed. Small-bay developers are competing for that same regional bank attention with no index and no agency takeout.
| NEUTRAL | Credit healthy, delinquency falling, but long rates and mortgage costs remain elevated |
| 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." Plain language: the IRS is tightening how QOFs certify, decertify and report. If you are using a QOF structure to build or hold a garage condo project in a designated zone, your compliance paperwork just got more specific. The deferral mechanic is unchanged. The documentation burden is the part moving.
The more common mechanic for a single garage suite owner is cost segregation. A garage condominium is not one 39-year asset. An engineering study can break out the 14x14 overhead door operators, the interior electrical, the mezzanine framing, exterior site improvements and paving into 5, 7 and 15-year lives. On a flex building with high clear height and heavy site work, the short-life share is frequently meaningful. Business owners who buy a suite and use it for inventory may also look at Section 179 on qualifying equipment inside the bay. This is general information, not tax advice. Run it through your own CPA.
| BULLISH | Cost seg on high-clear flex is real; QOZ rules clarified, not restricted |
| Buford, GA | Gwinnett County Public Schools published a redistricting plan Sept 23. Watch household churn; TikTok's Georgia warehouse lease signals regional industrial absorption. |
| Fort Mill, SC | Development moratorium ended Oct 1. A 270K sq ft project won approval Oct 7 over opposition. Residents fighting a separate warehouse rezoning. |
| Concord / Lake Norman, NC | No new site-specific data today. Monitor Charlotte-region industrial absorption and HOA parking enforcement as the nearest proxies. |
| Forney, TX | No Forney-specific signal. TACO flags the 90th Texas Legislature convening Jan 12 with campground and RV priorities. |
| Benton, KY | No new data today. Record US fishing participation is the relevant lakes-region demand backdrop; verify locally before relying on it. |
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