The Federal Reserve's October Beige Book, released Oct. 14, found that economic activity grew slightly or modestly across most districts, while commercial real estate conditions varied by region. Higher borrowing costs, tighter credit conditions, and rising construction expenses continued to weigh on investment and development. (Beige Book, Oct. 14 | GlobeSt., Oct. 16)

Regional CRE Trends

• New York: Commercial property sales slowed as rising interest rates reduced demand, despite strong Manhattan office leasing and industrial demand driven by data centers. Banks reported slightly tighter credit standards for commercial mortgages, with concerns over interest rate exposure and refinancing costs. (New York Fed)

• Chicago: Construction and real estate activity declined slightly, although commercial real estate activity remained unchanged overall. Financial conditions tightened modestly, while major development projects competed for construction capacity and electrical equipment needed for data centers. (Chicago Fed)

• National Outlook: Nine of the 12 Federal Reserve districts reported slight to moderate economic growth, while three reported little change. Businesses continued to face higher costs from energy, tariffs, and insurance, along with shortages of specialized technical and skilled-trade workers. (Federal Reserve)

Why It Matters

• Nationally, businesses continued to report higher input costs, including pressure from tariffs, insurance, and energy prices. Several districts also noted continued shortages of specialized technical and skilled-trade workers, which could affect construction costs and development timelines. (Federal Reserve, Oct. 14)

• Financing pressures and rising development costs remain key challenges for CRE investment. Higher borrowing costs and tighter lending standards can complicate refinancing and property transactions, while labor shortages and competition for construction materials and infrastructure capacity can delay new projects. 

Roundtable on the Road

• This week, RER President and CEO Jeffrey DeBoer joined Kristen Silverberg, Business Roundtable’s President and COO and incoming President and CEO, for a policy and business panel at Marriott International’s North America (MINA) Conference. The discussion focused on policy issues affecting the economy, job creation and investment.

• The panel also addressed the upcoming elections and next year's legislative outlook. DeBoer and Silverberg encouraged business leaders to engage with state and local officials, noting that nearly 50 members of Congress previously served as mayors or governors.

RER will release its Q4 2026 Sentiment Index Report in the coming weeks, providing an updated assessment of commercial real estate executives' views on market conditions, capital availability, and the outlook for the industry.