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Fed's Beige Book Says Too Much, Too Little About CRE

WASHINGTON, DC—From investment prices leveling off in Boston to weakening retail prices in New York, the Fed's Beige Book provides its usual insight into activity in the 12 Districts.

By Erika Morphy | erikamorphy | Updated on April 14, 2016

The Federal Reserve Bank in Washington DC The Federal Reserve Bank in Washington DC

WASHINGTON, DC—Construction and real estate activity continued to expand, according to the latest release of the Federal Reserve’s so-called Beige Book. The Fed, in fact, found that most of the economy’s sectors saw growth in most of the 12 Districts for the period of late February and March. Also, labor market conditions continued to strengthen and business spending generally expanded across most Districts, it said.

It wrote:

Multi-family construction remained strong in most Districts. Chicago, Cleveland, and St. Louis also noted some improvement in demand for single-family home construction, and a contact in San Francisco reported backlogs of more than six months for new single-family units. Commercial real estate activity generally increased, with leasing activity and rents rising in many Districts: particularly strong leasing was noted in retailing in Chicago and in the industrial sector in Dallas.

Without a doubt, the Beige Book is an interesting metric that captures recent economic activity in many different sectors, including commercial real estate. It serves admirably well as a 30,000-foot view of what is happening in the general industry. It also provides interesting insights and anecdotes about what is happening in a particular market. But, trying to spot whether a certain trend is emerging – such as whether the current commercial real estate cycle has peaked – that can be difficult. Certainly in this latest report, there were only a few sentences here and there that suggested the cycle be coming to an end, which we have put in bold face.

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