Rising Insurance Costs and New Policy Limitations Erode Commercial Real Estate Owners’ Margins The accelerated cost of insurance is impacting the commercial real estate sector on multiple fronts. Heightened premiums are raising overall apartment expenses for owners, making it more difficult for developers to underwrite projects. Cost spikes are also altering property valuations, impacting deal flow in states with higher environmental risk factors. Key Features Include:  Impact of rising insurance costs on apartment expenses, property… Read More

Thrifty consumers purchasing school supplies well in advance. Store-based retail sales, which exclude purchases made online and at restaurants and bars, rose 0.6 percent in July — the largest monthly gain since January. An earlier start to the back-to-school shopping season aided retailers last month, with combined spending across the…

Job growth returns to more familiar, positive territory. Employers added 187,000 new positions in July, the second-slowest month for employment growth since December 2020, when staff counts retracted. July’s hiring was nevertheless still 61,000 roles ahead of the monthly average going back to 1980. The drawback in job creation was not unexpected, as the 9.6 million open positions in June was the lowest in two years. Together, these statistics reflect a downshift in…

What’s driving the surge in confidence levels? Why Wall Street thinks the Fed will keep rates flat Are forces beginning to align to bolster CRE activity?

How does sales activity compare to the long-term norm? Which buyers are most active? What unique opportunities are being created?

U.S. economic growth accelerates. Real gross domestic product increased at an annualized rate of 2.4 percent in the second quarter of this year, outpacing consensus expectations for 1.5 percent growth. It also marked an acceleration from the 2.0 percent advance during the first three months of 2023. Gains in consumer spending, non-residential fixed investment, private inventory investment, as well as state, local and federal government spending, contributed to…

Hiatus short-lived as Fed re-commences rate hikes. On July 26, the Federal Open Market Committee announced the first fed funds rate increase in nearly three months, raising the metric by 25 basis points to a lower bound of 5.25 percent. This follows a pause in June during which the target rate remained flat, as the FOMC chose to observe the impact of previous rate hikes in order to calibrate policy moving forward. The Fed called… Read More

Consumers resilient, despite household budget headwinds. Core retail spending, which excludes vehicle and fuel sales, rose in real terms in June, even after factoring in inflation. This monthly increase indicates that above-average wage growth generated from a still-tight labor market is propping up households’ budgets during a period of record debt balances and higher interest rates. These latter factors, however, are making consumers more…

Inflation continuing to trend down. The headline consumer price index climbed by 3.0 percent year-over-year in June, the smallest increase since March 2021. A 16.7 percent decline in energy costs helped slow the overall inflation rate to a third of its June 2022 peak. However, prices for other categories of consumer goods and services, such as housing and medical care, continue to ascend. Core CPI inflation, which omits more volatile food and energy costs, rose… Read More

What investment opportunities are created by the realignment of savings with the pre-pandemic trend? Will reduced savings influence Federal Reserve rate policies? How will a burn-off of household savings affect different types of CRE?