American and overseas companies have committed nearly half a trillion dollars to build new factories for electric vehicles, semiconductors and other products in the U.S. Investors are planning to acquire or build warehouses, hotels, office buildings and apartments near coming factories across the Sunbelt and Rust Belt, where most of these so-called onshoring projects are under way, wagering that as new manufacturing hubs come online and create jobs they will produce a “multiplier effect,” with growing employment increasing demand for homes, shopping and more.
Bank CRE Loans
The delinquency ratio for CRE loans across banks rose 16 basis points in the second quarter, to 1.4% the seventh consecutive quarterly increase. Also year-over-year CRE loan growth across U.S. banks slowed to 2.2% in the second quarter, compared to 2.9% the prior quarter and down substantially from a recent peak of 12.1% in the third quarter of 2022.
September Drop
Going back to 1928, the S&P 500 has declined an average 1.2% in September, the weakest month of the year for stocks. The index ended lower 56% of the time over that stretch.
Megadeals
This year through late July, there have been 13 megadeals globally—defined as those valued at more than $5 billion—versus eight in all of 2023. Transaction value totaled $123.64 billion as of July, far more than the roughly $75 billion in megadeals struck in all of last year.
LIfe-Science to Office
Biotech and pharmaceutical buildings became one of the hottest investments in commercial property at the start of the pandemic. Now, the glut of life-sciences properties has gotten so bad that some developers are exploring the unthinkable: marketing the space for office use.
Apartment Construction
In July, the annual pace of multifamily-building starts was down 22% from the same month a year earlier, and down 41% from an April 2022 peak. Apartment starts fell to less than 61,000 units in the second quarter, the lowest level in the past decade.
Stock Allocation
U.S. households’ stock allocations have steadily inched up this year and recently accounted for around 42% of their total financial assets. That is the most on record in data going back to 1952.
Jobs
Job growth slowed sharply in July, with the national unemployment rate rising to its highest level since 2021. At the same time, the share of people holding more than one job ticked up to 5.3% in July from 5.2% in June. That is a significant increase from a pandemic low of 4% in April 2020 and average 4.94% average from 2010 through 2019.
Own v Rent
Owning a home was a record 47% more expensive than renting for the 12 months ending in June.
$1,000 Hotel Rooms
The number of U.S. hotels with an average daily rate of $1,000-plus in the first half of this year was 80, compared with 22 in 2019. In Europe, the number of places tripled, to 183.