TAG Industrial Watch: May 18, 2024

Although the year-over-year increase in the Consumer Price Index only slowed down by 10 basis points in April to 3.4%, the report has been optimistically received by investors hoping for a Fed rate cut. While there is still a good chance that the Federal Reserve will cut interest rates on bank-to-bank loans before this year’s election, we should keep in mind that these cuts may not lead to lower commercial mortgage rates. During the first half of 2008 (when most experts denied that the economy was in recession), the Fed effectively cut its benchmark rate by 225 basis points down to 2.0%, however, 30-year fixed rate mortgage rates actually ticked up another 20 basis points to 6.3%.

This phenomenon happened because the economy was in the midst of a banking crisis centered around residential housing. Given how exposed small and regional banks are to the commercial real estate market, commercial mortgage rates could continue their march higher in the short term with or without Fed rate cuts. Industrial investors sitting on the sidelines waiting for lower rates should consider that rates may not be significantly lower in the future and potentially even higher.

I N D U S T R I A L   N E W S

Watch for These Signs of Recession
As the Fed Keeps Rates Elevated

GlobeSt.com – May 16, 2024
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Inflation Ticks Down, Keeping Hope
Alive For 2024 Rate Cuts

Bisnow – May 15, 2024
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Capitalization Rates Head for Higher Ground
CoStar – May 13, 2024
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Wholesale Prices Rose 0.5%
In April, More Than Expected

CNBC – May 14, 2024
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US Consumer Inflation Resumes Downward
Trend As Domestic Demand Cools

Reuters – May 15, 2024
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R E G I O N A L   N E W S

Amazon to Build $11B Indiana Data Center Campus
Connect CRE – April 25, 2024
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SAF Holland Group Preleases 255,672 SF
Industrial Building In Rowlett, Texas

REBusiness – May 8, 2024
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High Street Logistics Snaps Up Dallas Campus
Commercial Property Executive – May 14, 2024
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Hillwood Adding 4M SF Of
Industrial Space At AllianceTexas

GlobeSt.com – May 6, 2024
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Houston Industrial Park Lands California
Furniture Company As First Tenant

CoStar – April 26, 2024
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