Newest Fed Beige Book: Commercial Real Estate Improved Markedly

Cover of Federal Reserve Beige Book April 2013

Eight times annually the Fed’s Beige Book provides a helpful snapshot of anecdotal evidence of economic activity in the various Federal Reserve Districts across the country.   In the world of econometric publishing, it’s not the hardest data, collected somewhat informally and without the rigor of research studies such as NAR’s research department produces (consider our horn tooted).

Nonetheless, the Beige Book provides a useful way to take the quick temperature of various sectors and regions, particularly in contrast with each other.

Commercial Real Estate “Improved Markedly”

Nationally, demand for credit and services plus robust energy activity came with an improvement in commercial real estate:

Demand for nonfinancial services increased at a modest pace, and several Districts noted growth in freight and transportation services. Most Districts said residential and commercial real estate improved markedly since the last report. Home prices were rising in many areas of the country. Loan demand was steady to slightly up in most Districts. Reports on agricultural conditions were mixed, as drought or cold weather adversely impacted some Districts while others reported a strong agricultural sector. Oil and natural gas activity remained robust over the reporting period, with contacts in the Cleveland, Kansas City, and Dallas Districts expecting a rise in activity in coming months, while coal production continued to decline.

Employment conditions remained unchanged or improved somewhat, and reports of hiring were most prevalent in the manufacturing, residential construction, information technology, and professional services sectors. Wage pressures were generally contained, although several Districts cited upward pressures in occupations experiencing labor shortages, such as information technology, construction, and engineering. Aside from reports of increases in home prices and residential construction materials, price pressures remained mostly subdued across Districts.

Outlooks among respondents remained optimistic across sectors and Districts, with growth mostly expected to continue at the same or a slightly improved pace. Some uncertainty remained, primarily regarding fiscal policy and health care reform.


Commercial real estate and construction activity improved in most Districts. Office vacancy rates declined in the Boston District and contacts said the construction of mixed-use projects was picking up. The New York District reported that office vacancy rates continued to decline and rents rose in Manhattan. The Philadelphia District commented that there was not much change in nonresidential activity during the reporting period, but that contracts for repair work from Hurricane Sandy have yet to be approved. Contacts in the Richmond District cited a tight supply of class A office space and said there were several large projects under construction in the Washington D.C. area. Commercial construction saw widespread improvement with the New York, Atlanta, St. Louis, Minneapolis, and Kansas City Districts noting increases. Both commercial real estate development and leasing activity increased across the San Francisco District, mostly fueled by growth in the technology industry. Several Districts, including Boston, Richmond, Atlanta, and Kansas City said commercial property investment sales activity increased during the reporting period.

Contacts in the Philadelphia and Kansas City Districts were somewhat optimistic in their outlooks for the commercial real estate and construction markets in general, but contacts in the Cleveland District were cautious about near-term construction activity. Dallas District contacts said office and warehouse markets were improving, and Atlanta District respondents noted growing optimism for the office and industrial sectors.


To check out the full Beige Book for April 17, 2013, follow the link.



Enhanced by Zemanta

Leave a Reply