|The Federal Reserve Bank publishes the Beige Book eight times a year. Each report is a gathering of anecdotal information on current economic conditions from each of the banks districts. Bank and Branch directors conduct interviews with key business contacts, economists, market experts, and others in the business community. This tends to be real-time data and while the color might sound very boring, the report contains some good information!
Below is a synopsis and comments from the most recent edition of the Beige Book for the Seventh District, which includes Metropolitan Detroit:
Construction and Real Estate:
“Construction activity continued to increase at a slow but steady pace in July and early August. Multi-family construction remained an area of strength, and residential single-family construction increased slightly. Homebuilders noted that credit was still tight for residential projects, with lenders continuing to require large equity commitments before extending financing. Demand for nonresidential construction also continued to gradually increase. Industrial building and highway projects rose further. Elevated office and retail vacancy rates remained a drag on new commercial construction, but contacts indicated that demand for office space was slowly improving. That said, a commercial real estate broker noted that companies lack the confidence to make long-term real estate commitments, as many continue to negotiate for contracts with opt-out provisions after two to three years into their lease agreements.”
This is encouraging news for multi and single family builders as we have not seen much in the way of construction activity in the past several years. There still seems to be pent up demand for new homes that is yet to be satisfied. Automotive suppliers tend to be the bright spot in commercial construction and leasing activities. Continental Automotive Systems just announced plans to hire 300 new employees, mostly engineers, while expanding office and vehicle laboratory testing facilities.
Other notable information includes:
The information provided in the Beige Book is real-time information gathered by the Federal Reserve Bank from business people in various industries. It gives a real sense of business conditions in and around our area and hopefully will assist as a basis for decision making. To see the entire Beige Book report click here:
Matthew B. Fenster, CCIM, MCR