The Fed’s most current analysis of commercial real estate is encouraging for investors. Market conditions have either held steady or improved in almost all of its 12 districts over the past few weeks.
The districts are:
In Chicago, the news was mixed. Vacancy rates for office space remained high, which put a damper on demand for new construction projects. Office leasing was up slightly, and industrial construction numbers improved somewhat as well.
Vacancy rates fell in the New York, Minneapolis, Kansas City and Philadelphia markets. Commercial leasing increased in those cities.
In Boston, office rents rose in some sections of the city. Non-residential construction was up in Cleveland and Boston, while retail and industrial sectors in Atlanta were weak. Commercial construction was up in the St. Louis area, and demand for commercial property was stable in San Francisco.
Office leasing volumes were down in Richmond. In Washington, D.C., increased sales and construction were reported.
Banks reported that credit conditions had improved overall, noting that credit spreads had decreased and that competition for high-quality borrowers among lenders is on the rise. Some banks in Cleveland reported a moderate loosening of lending guidelines. Credit standards in Kansas City, St. Louis and New York remained unchanged.
Atlanta and Richmond Districts reported low demand for loans, although there were some pockets of growth in these areas. In Chicago, the growth in demand for business loans came from small and medium-sized businesses for refinancing, as opposed to taking out loans for financing capital expenditures.
San Francisco, Cleveland, and St. Louis reported strong demand for consumer credit. Demand for commercial and industrial loans was stable in Kansas City, but was softer in Dallas.
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