The Signal

Permits fall while flex supply stays structurally thin

Building permits printed 1,403K in August, down 2.1% from 1,433K, and housing starts fell 2.6% to 1,275K. Yet total construction spending rose 0.85% to $2.203T. Read that together: dollars are flowing to big-box industrial and manufacturing, not to small-format product. Bisnow's reporting on a $3T manufacturing construction push and Michelin's $151M Illinois buy tells you where general contractors are pointed. Nobody is building 490 to 1,080 sq ft suites at scale.

That matters because the garage condo unit mix cannot be replicated by converting a bulk warehouse. Twenty foot clear and a 14x14 door is a specific build, and the demising walls, separate metering and condo platting add cost per square foot versus a 200,000 sq ft shell. Self-storage comps show the capital is chasing the other product: a $20M Fort Lauderdale construction loan and an 891-unit Glen Rock project via JLL. Those are 50 to 100 sq ft climate units. Different customer, different clear height, different price per foot.

RV shipments flatten but durable goods keep climbing

RVIA's Fall 2026 RoadSigns puts 2026 wholesale shipments at approximately 290,000 units, range 284,600 to 295,400, then 285,000 in 2027 with a range of 274,700 to 295,300. Flat, not falling off a cliff. Lightspeed's September dealer report says sales off, parts up, service flat. Parts up is the tell. People are keeping and maintaining units they already own rather than trading up, and a maintained coach still needs a 20-foot-clear bay to sit in.

The macro is mixed and you should not pretend otherwise. Consumer sentiment at 51.7, down 6.3% from 55.2. Total vehicle sales down 3.55% to 16.378M. Real disposable income down marginally to $18,410.5B. Unemployment up to 4.2%. Against that, durable goods spending rose 2.0% to $2,443.6B. Marine shows the same split: Seattle Boat Co. acquiring a dealership and Yamaha launching the DockPoint pontoon alongside a $2M seed for Blue Water Index. Consolidation and product launches, not retreat. We have no collector car index or HOA ordinance count in today's signals. Unknown.

Five handle on the ten year bites small deals

The 10-year sits at 5.19%, down two basis points from 5.21%. SOFR at 3.89%, up a tick. That is an inverted-ish cost stack for anyone who thought floating was the cheap path. The 10Y-2Y spread compressed to 0.33 from 0.37, down 10.8%. High yield spreads at 3.23%, tight. Credit is open for quality, expensive for everything else. CRE loan delinquency at 1.53%, down from 1.56%, so the banking system is not forcing distress yet.

What is actually clearing is big and institutional. Blackstone's industrial CMBS swelled to £1B. BREIT is working a $1.7B industrial CMBS loan. Castlelake, Brookfield-backed, just did a $1.1B CRE CLO. Industrial CMBS issuance is gaining share with SASB deals leading. None of that paper is available to a 40-unit garage condo project. Small-bay sponsors are clearing on local and regional bank construction debt plus equity, and on condo pre-sales that retire basis before stabilization. That pre-sale mechanic is the real financing advantage of this format versus a hold-and-lease industrial build.

Opportunity zone reporting rules just got rewritten

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. In plain terms, Treasury is tightening what a QOF has to report and formalizing how a fund gets certified and, critically, decertified. If you are holding a garage condo development inside a QOF, decertification is the risk that matters. Lose certification and the deferral and the ten-year basis step-up go with it.

Separate mechanic worth understanding regardless of OZ status: cost segregation on a garage condo suite. A buyer who acquires a unit and uses it for a business purpose can have an engineer break the purchase price into land, 39-year building, and shorter-life components such as the overhead door operator, specialty electrical, site paving and lighting. Those shorter-life buckets are where accelerated and bonus depreciation apply. The 14x14 door hardware and the power drop for a lift are not generic building shell. A personal-use car collection does not qualify. Business use does. This is general information, not tax advice. Run it past your CPA.

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