The Signal

Construction spending climbs while housing permits keep sliding

Total construction spending hit $2.203T in August, up $18.7B or 0.85% from $2.184T. Building permits fell to 1,403K from 1,433K and housing starts dropped to 1,275K from 1,309K, down 2.6%. Read those together. Vertical construction dollars are still flowing, but they are flowing away from single-family and toward industrial, manufacturing and flex. Bisnow is covering a $3T national push for manufacturing construction. That is where the trade labor and the tilt-wall crews are going.

For a 490 to 1,080 sq ft garage suite, the cost stack is concrete, steel, a 14x14 door and a sprinkler head. Industrial Production ticked to 103.07, essentially flat. No material relief on input costs showing in these signals. The adjacent comps are real: Investcorp paid $76.5M for a Massachusetts industrial portfolio, Blackstone's industrial CMBS swelled to £1B, and BREIT is working a $1.7B industrial CMBS loan. Institutional money wants small-format industrial. Garage condos sit in that shadow with almost no institutional supply competing.

Durable goods up two percent, sentiment at 51.7

Durable goods spending rose to $2,443.6B from $2,395.6B, a 2.0% move. That is the cleanest read on garage condo demand we get monthly. It captures RVs, boats, powersports, trailers and shop equipment. Against that, consumer sentiment sagged to 51.7 from 55.2, real disposable income slipped to $18,410.5B, unemployment ticked to 4.2% from 4.1%, and total vehicle sales fell 3.55% to 16.38M SAAR. The mood is sour; the spending is not.

The RV channel is building infrastructure, not retrenching. Route 66 RV Network launched Route 66 Financial with Source One to finance dealer inventory. The RV Component Expo in Shipshewana nearly doubled to 100 exhibitors from roughly 60. Keystone redesigned the Montana fifth wheel for 2026 with a wider chassis and a 5-year structural warranty. Bigger rigs need taller boxes. On the water side, Seattle Boat Co. acquired a dealership and U.S. fishing participation hit a record high. We do not have current RV shipment or registration counts in today's signals. Say that plainly rather than guess.

Five point two one ten year, lenders still funding

The 10-Year sat flat at 5.21%. SOFR eased a tick to 3.88%. The 10Y-2Y spread compressed to 0.37 from 0.42, down 11.9%. High yield spreads widened to 3.25% from 3.16%. CRE loan delinquency at banks improved to 1.53% from 1.56%. Translation: the long end is expensive and sticky, the short end is cheaper, and credit quality is not the problem. The curve is doing the squeezing, not defaults.

Construction debt is still clearing for the right product. JLL placed a $20M construction loan on a Fort Lauderdale self-storage development and Hampshire landed construction financing on a 41,000 sq ft Meadowlands industrial project. Third Lake broke ground on self-storage in Pooler, GA. A downtown Aiken commercial property traded at a seven-figure price. Those are adjacent comps, not garage condo prints, and we should not pretend otherwise. What they tell you is that small-ticket industrial and storage-adjacent construction debt is available. The 30-year mortgage at 7.40%, up 12bps, matters mostly because it keeps homeowners in place and keeps the boat in the driveway.

Opportunity Zone reporting rules get a Federal Register correction

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." The headline is boring. The substance is not. QOF certification and decertification procedures are being tightened and the information reporting burden is being spelled out. If you are holding a garage condo development inside a QOF, your compliance file just got more specific. Read the actual document, not a summary.

Separately, the mechanic most garage condo buyers underuse is cost segregation. A garage suite is not one asset. It is a shell, plus a 14x14 overhead door and operator, plus site concrete, plus lighting, plus a mezzanine if you built one. A cost seg study reclassifies qualifying components into 5, 7 and 15-year lives instead of 39-year commercial real property. Land improvements like paving, drive aisles and striping commonly land in the 15-year bucket. That reclassification is what makes bonus depreciation worth running the study for. Today's signals contain no current bonus depreciation percentage, so confirm the live rate with your CPA. This is general information, not tax advice.

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