Raleigh July 2023 Key Take Aways
Matt Martin of the Federal Reserve Bank of Richmond said we’ve had monetary tightening in last 16 months with 4 rapid basis hikes due to the onslaught of inflation, but the economy is healthy.
With GDP growth slowing down, supply can catch up with demand, and we could avoid recession.
Real Disposable Take Home Income is growing faster than spending; wage growth has not kept up with inflation, but the consumer is holding up well but with signs of slowing.
Housing market slowed with interest rate increase, but new home building is increasing sharply, especially in Carolinas. Home prices are rising again. Dependent on sector and geography, CRE prices decreased. Bank failures have impacted lending and higher interest rates impacted borrowing.
Core capital goods spending is moving sideways. Job growth is slowing, but only to pre-covid rates. Job openings and unemployment relationship is normalizing. Carolinas are leading the Southeast in employment recovery. Long-term payroll growth amongst NC + SC MSAs remains mostly positive. Employment growth is moderating, and wage growth is moderating in some industries.
Consumer inflation remains elevated with some improvement; expectations are for core to recede slowly with core inflation at 4% end of 2023 and 3% end of 2024. Both are still above target.
Markets think Feds will raise rates at next meeting. Economy will continue to slow and inflation will continue to recede if an unexpected event does not occur.
Matt thinks we have been amid a rolling recession with housing and manufacturing already having been in and out of recession. Worry should set in if consumer spending on services weakens.
Matt Phillips of AdVenture Development said Eastfield has signed a sporting goods store and big box retailer at Eastfield. State permits are holding up process.
Scott Hadley of Lee & Associates worked with AdVenture Development to bring Crystal Windows to Eastfield’s Industrial Park for a 46-acre site.
Lee-Moore Capital’s Kevin Scanlon said industrial activity is strong but prospects are not making decisions. LMCC has a 117K sq. ft. spec building in Lee County available. Lowes Food opened in Northwood Landing in Chatham County. Richard Oldham with Sanford Contractors is topping off the Hampton Inn & Suites at MOSAIC.
Marcus & Millichap’s John Daly said there’s overbuilding concern in multifamily. Buyers hope prices will drop, capital is challenging, and sellers’ expectations are unrealistic. Interest in value-add exists, but the Triangle is picked over.
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