| STILLINGER CAPITAL | Small-Bay Flex & Garage Condo October 20, 2026 |
| Durable goods spending printed $2,443.6B in August, up 2% from $2,395.6B, while consumer sentiment fell to 51.7 from 55.2. That split is the whole story for garage condos. The people buying RVs, boats and collector cars are not the median sentiment respondent. They are balance-sheet buyers who pay cash for the toy and then need 20 ft of clear height and a 14x14 door to park it. Sentiment measures mood. Durable goods measures what actually got bought. Only one of those shows up as a signed suite reservation. |
10-Yr UST 5.09 ↓0.01 | SOFR 3.87 ↓0.01 | 30-Yr Mtg 7.4 |
HY Spread 3.29 ↓0.02 | Durable Gds 2443.6 ↑48.00 | Sentiment 51.7 ↓3.50 |
| THE ASSET |
Prologis flagged a development and sales slowdown amid volatility on October 15. That is the bulk industrial bellwether telling you new supply is getting deferred. Housing starts fell 5.2% to 1.221M from 1.288M and permits slipped to 1,400K. Less vertical construction competing for concrete, steel and tilt crews is one of the few genuinely good inputs for a small-bay developer right now. Construction spending still rose 0.85% to $2.203T, so cost relief is not automatic.
The demand side of the supply equation is local and political. Fort Mill residents pushed back on a proposed warehouse distribution center, a 270K sq ft project cleared over opposition on October 7, and the town's development moratorium just ended. Municipalities that resist 270K sq ft boxes often wave through a 60,000 sq ft campus of 490 to 1,080 sq ft owner-occupied suites with no truck traffic and no dock doors. That entitlement asymmetry is real and underpriced.
| BULLISH | Big-box development slowing, housing starts down 5.2%, small-bay entitlements face less political resistance. |
| THE DEMAND |
Durable goods spending rose 2% to $2,443.6B. Total vehicle sales fell 3.55% to 16.378M. Consumer sentiment dropped 6.34% to 51.7. Real disposable income was essentially flat at $18,410.5B, down 0.03%. Unemployment ticked to 4.2% from 4.1%. Read together: the aggregate consumer is wobbly, but durable goods dollars kept climbing. Garage condo demand sits in that gap.
The supply chain is acting like it believes in 2027 and beyond. Freightliner Custom Chassis is targeting 2028 for a next-gen Class A gas chassis and planning a factory service center in Gaffney, SC, roughly 50 minutes from Fort Mill. Horizon Global is restarting North American towing and trailering shipments this fall. Jimbo & Company launches Jimbo Elite Transport January 1, 2027. Nobody builds chassis programs, service centers and carrier divisions for a shrinking fleet. On boats, Trade Only's seasonal transitions piece marks the fall storage pivot, the period when owners find out what their HOA actually allows.
| NEUTRAL | Durable goods and OEM investment strong; sentiment 51.7 and vehicle sales down 3.55% cap enthusiasm. |
| THE CAPITAL |
The 10-year sits at 5.09%, down one basis point. SOFR is 3.87%. The 10Y-2Y spread widened to 0.38 from 0.35. The 30-year mortgage is pinned at 7.40%. High yield spreads tightened to 3.29% from 3.31% and CRE loan delinquency fell to 1.53% from 1.56%. Credit markets are not stressed. The long end is simply expensive. A positively sloped curve with SOFR 122 bps below the 10Y means floating-rate construction paper prices better than permanent debt today.
Newmark counts $179B of CRE loans facing refinancing risk. That is the overhang. Meanwhile Ares and Invesco nontraded REITs raised nearly six times the capital redeemed in Q3, the first clean sign retail-channel capital is flowing into CRE again rather than out. For garage condo sponsors, the relevant capital is still largely family office and accredited buyer money, plus the end-user who finances their own suite. That buyer faces a 7.40% mortgage comp and is making a lifestyle and business decision, not a cap rate decision.
| NEUTRAL | Spreads tight, delinquency falling, but 5.09% ten-year and $179B refi wall constrain exits. |
| THE TAX ANGLE |
On September 28 the Federal Register published a correction to the rule on Information Reporting Regarding Qualified Opportunity Zones and Updated QOF Certification and Decertification Procedures. Plain language: Treasury is tightening the paperwork around who certifies as a Qualified Opportunity Fund, how they report, and how they get decertified. If any part of your garage condo development thesis runs through a QOF, the compliance burden is increasing, not decreasing. Read the correction before your next filing.
Separately, the mechanic most garage condo owners actually use is cost segregation. A 490 to 1,080 sq ft suite is not one 39-year asset. A study can carve out site work, paving, fencing, lighting, and specialty electrical into 5, 7 and 15-year lives. For an owner-user running a business out of the bay, Section 179 may also reach certain equipment and qualifying improvements. The split between what is structure and what is personal property drives the entire outcome. This is general information, not tax advice. Hire a CPA who has actually filed one.
| NEUTRAL | OZ reporting tightening adds compliance work; cost seg mechanics for small-bay remain fully intact. |
| Buford, GA | Gwinnett County celebrated 21 new homeowners via partnership program; GCPS redistricting plan dated Sept 23 signals continued household growth. |
| Fort Mill, SC | Moratorium ended Oct 1. 270K sq ft project approved Oct 7 over opposition. Warehouse pushback continues. Silfab Solar nearing full operations. |
| Concord / Lake Norman, NC | No Concord or Lake Norman specific signal in today's feed. Nothing new to report. |
| Forney, TX | No Forney or Kaufman County signal today. Watching Dallas-area industrial prints for read-through. |
| Benton, KY | No Marshall County or Kentucky Lake signal in today's feed. Boat storage seasonality is the relevant watch item. |
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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