The Federal Reserve released its latest Beige Book yesterday with mixed results, revealing that the heavy winter storms in the East this winter did show impact on markets, and that commercial real estate and construction activity weakened or declined further. Beyond the “weather-related noise,” the report confirms that the United States is in a phase of “gradual expansion, rather than robust growth,” explained economist Zach Pandl of Nomura Securities in an article on The Globe and Mail.
The full commercial real estate excerpt from the report follows:
Commercial real estate conditions remained weak or declined further in most Districts, although some Districts noted slight stabilization or modest signs of improvement. Commercial real estate activity weakened in the Richmond, Minneapolis, Kansas City, Dallas, and San Francisco Districts, though Dallas noted that leasing fell at a slower rate and San Francisco cited increased leasing in some segments. Boston and Philadelphia said conditions remain weak, but both noted some improvement in sales of commercial space. New York reported softer activity in the New York City area but some steadying in vacancies and rents elsewhere, while St. Louis said activity remained weak throughout the District. Several Districts also noted that many tenants were pushing for, and in some cases receiving, concessions on rents. All Districts reporting on commercial construction said that activity remained weak or slow, except for some moderate boost from federal stimulus projects and other public construction. Credit for commercial development and transactions was still very difficult to obtain in several Districts, though San Francisco noted a slight improvement in financing availability.
“We’re in a kind of uncertain time,” said Michelle Meyer, a U.S. economist at Barclays Capital in The Washington Post. “The data is coming in mixed, but you can explain some of that because of the weather. The snow certainly confuses things.”
Keywords: Barclays Capital, Beige Book, commercial real estate, economy, Federal Reserve, Michelle Meyer, Nomura Securities, Zach Pandl
