CHICAGO, IL- The United States Federal Reserve Board released its “Beige Book” analysis of economic conditions yesterday and would not give the regional real estate market a thumbs-up or a thumbs-down.
In January, the Board stated in that month's book that “construction and real estate activity was mixed in late November and December.” And once again, the new report calls real estate activity “mixed” for the past two months.
The “Beige Book” does not present reams of hard data to pore over. Instead, Fed economists conduct a series of relatively informal talks with “key business contacts, economists, market experts, and others" in each sphere of economic activity and publish the somewhat anecdotal results eight times a year.
Most of the good news in yesterday's report gets hedged. The Fed analysts stated that “demand for residential construction continued to increase,” but much like in January's report, they called the increase slow. They do cite, however, the “ongoing strength” of multifamily construction as one true bright spot.
Their sense of commercial real estate remained largely unchanged, with slow declines in vacancy rates continuing and steady rents. But glimmers of real improvement have been seen. Late last year the pace of leasing and acquisitions began picking up, and increased demand since the first of the year has some manufacturers looking to expand, at least temporarily.
And, just as in January, the market for nonresidential construction remained “weak.” Although developers will soon break ground on some big projects, the Fed expects “growth in commercial and office space” will “remain below trend for some time.” Still, their “contacts did note that construction of private-practice facilities close to affiliated hospitals is an area of strength in this segment.”
Many of the Fed's contacts worry that the budget turmoil in Washington has been stopping the markets from reaching their full potential. A truly positive Beige Book might not arrive until that fighting subsides.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
