The Signal

Construction spending climbs while housing starts crater

Total construction spending hit $2,203,129M in August, up 0.85% from $2,184,474M. Housing starts went the other way hard, 1,221K in September against 1,288K prior, down 5.2%. Permits flat at 1,400K. Read those together and you get the cost picture for a 490 to 1,080 sq ft suite with 20 ft clear and a 14x14 door. Vertical input costs are not deflating. Tilt-up concrete, steel joists and oversized sectional doors price off the same curve as the industrial box, and Prologis just told the market it sees a development and sales slowdown amid volatility.

That is the supply story and it is friendly to anyone already in the ground. Fewer new starts means the 2027 and 2028 delivery pipeline thins out. Self-storage is the adjacent comp and it is still getting funded, a $20M construction loan closed in Fort Lauderdale and Provident closed on an 891-unit project in Glen Rock. Different product, different buyer, but it confirms lenders still underwrite small-unit, many-door assets when the sponsor is credible.

Durable goods up two percent, sentiment down six

Durable goods spending at $2,443.6B, up $48B in a month. That is the single cleanest proxy for what fills a garage suite. RVs, boats, side-by-sides, trailers, collector cars. Against that, consumer sentiment at 51.7, real disposable income down fractionally to $18,410.5B, unemployment up to 4.2% from 4.1%, and total vehicle sales off 3.55% to 16.38M. The consumer is not uniformly strong. The durable goods buyer is a specific slice of him.

The RV channel is visibly working through excess. Dometic announced a restructuring targeting the Americas Land Vehicles segment to align capacity with current market conditions. Campers Inn's COO is on record discussing the supply chain bullwhip. RVshare launched a gas rebate program, $50 on trips five days or fewer booked Oct 17 to Nov 17, which tells you fuel is a live friction on usage. None of that changes the physical fact that the units already sold still need somewhere to park. Storage demand lags purchase demand by years.

Ten-year at 5.12 with high yield spreads tightening

10-Year Treasury printed 5.12% on Oct 20, down from 5.15%. SOFR flat at 3.88%. The curve is barely positive, 10Y-2Y at 0.32% and narrowing from 0.33%. 30-year mortgage at 7.32%, down 8bps. Translation: the long end is expensive, the short end is not, and anyone underwriting a garage condo project on floating construction debt pays roughly 388 over nothing while the permanent take-out prices off a 5-handle base.

Credit is not panicking. High yield spreads tightened to 3.27% from 3.33%. CRE loan delinquency at commercial banks sits at 1.53%, down from 1.56%. But distressed sales surged 26% on multifamily discounts, and that is where opportunistic family office money is looking. Capital is clearing in size for industrial. BREIT lined up $1.7B of CMBS against a 19M SF portfolio, Blackstone's UK industrial CMBS swelled to £1B, and EQT is buying Stockbridge for up to $550M. Institutional appetite for industrial-adjacent product is real. Small-bay flex sits inside that story.

Opportunity Zone reporting rules updated in Federal Register

The Federal Register published a correction on Sept 28, 2026 covering Information Reporting Regarding Qualified Opportunity Zones and updated QOF certification and decertification procedures. If you hold or are forming a Qualified Opportunity Fund, the compliance mechanics around annual information reporting and how a fund gets decertified just got refreshed. Worth pulling the actual document rather than a summary of it.

Here is the plain-language mechanic that matters more to most garage condo owners. When you buy a suite, you are not buying one asset. You are buying land, shell, and a pile of shorter-life components. A cost segregation study splits those out. Door operators, specialty electrical, interior finishes, site paving and landscaping commonly reclassify into 5, 7 and 15-year property instead of 39-year. That accelerates depreciation into the early hold years. If the suite is used in a trade or business rather than held passively, Section 179 may also be available on qualifying components. The interaction with passive activity loss rules is where most people get it wrong. This is general information, not tax advice. Run it with your CPA.

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