release edition [090] read time [5 minutes] Welcome to The Multifamily Download, a weekly newsletter where I provide institutional insights to help you build an exceptional Multifamily career. Forwarded this email? Subscribe here. Today at a Glance:
Graphs & ChartsAs we begin Q4 2026, below are a few things that I'm thinking about outside of the usual Multifamily data, insights, and trends. First, what are the second and third order consequences of the AI CapEx buildout? Last week in TMD 089 I wrote about the ongoing hyperscaler build out, and how this infrastructure boom is creating competition with US Treasury yields. According to the graphic below, the current AI CapEx buildout is the highest annual infrastructure spending as a percentage of GDP ever in our country's 250 year history. Second, because of the hyperscaler AI CapEx buildout, why isn't the "everything else" of the economy being considered more carefully? From the graph below, non-data center private construction is falling, likely due to the one-two punch of elevated interest rates that are ultimately dampening consumer demand. Third, as manufacturing and advanced manufacturing are both being reshored into the U.S., how will this impact local economies that perhaps have never experienced growth drivers like these previously? For example, the Terafab buildout in Grimes County, Texas is going to add 3,000 jobs in a County with just ~30,000 current residents. As a Real Estate investor, I can't help but think about how to position around these infrastructure projects in the "path of progress" as a means of benefiting from outsized future growth. The graphs below show ISM US Manufacturing Activity at 54.5, which translates to 9 straight months of expansion. 2026 is looking very different than 2022-2025, when the ISM was sub-50 for a prolonged period of time. Fourth, where is the stock market headed, and how might that impact capital flows into CRE in the near- to mid-term? Based on the chart below, history would tell us that Q4 is likely going to be another positive quarter for the S&P 500. The underlying reality is that P/E multiples have been compressing in 2026, not expanding, and this reality, combined with no signs of market top euphoria (see AAII bulls-bears chart below), has kept investors engaged and investing in stocks. In closing, we know that data can tell many stories, and I'm not trying to angle towards a specific outcome or agenda. Rather, I just find the like these interesting to evaluate on an ongoing basis, especially against the backdrop of the Multifamily sector and the current CRE cycle. It's anyone's guess where interest rates, stocks, bonds, and the like go in Q4. But studying data and spending the time to triangulate what the data says, what it means, and how it might influence an investment thesis is what Multifamily investing is all about, in my opinion. If you don't already, I would encourage you to pay attention to what's occurring in the broader economy today, and more importantly, determine what you believe about it, and why you believe it. The ability to communicate a market perspective or investment thesis with conviction is a skill worth developing. "The Fed Is Hiking Into a Mirage"Jim Thorne, the Chief Market Strategist at Wellington-Altus, wrote the following on his X account [linked here]. I'm sharing this for two reasons: One, to challenge the conventional thinking that we all see on CNBC headlines, and two, to illuminate the broader macroeconomic forces that are driving the economy beyond the services based economy, or the Commercial Real Estate specific functions that we're all used to watching closely. Thorne writes: What exactly is the Fed tightening against? The Fed’s shifting standards, cutting 50 basis points before an election with trimmed-mean inflation at 2.81% (my note: and, when YoY wage growth was near 4% as shown below), then hiking with it at 2.28%, make its reaction function look political rather than principled. The Fed has raised rates on the premise that growth remains too strong and inflation risks are broadening. But the composition of the economy tells a different story. The construction boom is overwhelmingly an AI-and-power story. Data centers, grid capacity and related infrastructure are expanding rapidly; outside that complex, residential building, commercial real estate, manufacturing construction and ordinary private investment are weakening. The same is true more broadly: housing, consumer durables, small-business borrowing and credit-sensitive sectors are absorbing the force of restrictive financial conditions, while cash-rich hyperscalers continue to build regardless of a marginal increase in the funds rate. Meanwhile, the Dallas Fed’s trimmed-mean PCE measure, one of the cleanest gauges of persistent underlying inflation, has declined from 2.81% in August 2024, immediately before Powell’s 50-basis-point cut, to 2.28% today. Inflation expectations remain anchored. There is no persuasive evidence of a wage-price spiral, unanchored expectations, or broad second- and third-order inflation effects. The Fed cannot lower oil prices, reverse tariffs, create transformers, expand grid capacity, or alter other supply constraints by raising rates. It can only weaken domestic demand and it will do so most aggressively in sectors already under pressure. The relevant question is therefore not whether headline inflation remains above target. It is whether the Fed is mistaking concentrated, supply-expanding AI investment for generalized excess demand. If so, it is tightening into a negative growth shock, depressing the very rate-sensitive investment needed to broaden productive capacity, while leaving the AI buildout largely untouched. A central bank should not use broad demand destruction to solve relative-price shocks. The Fed needs to show evidence that inflation is propagating through wages, expectations and broad credit growth, not simply point to aggregate GDP inflated by data centers. Weekly ListenThis week's listen is the latest episode of TreppWire Podcast. In it, the team unpacks the latest economic data and what rising Treasury yields could mean for commercial real estate as the Fed weighs its next move. They also dig into Bain's estimate of a $4.2 trillion AI revenue gap and what it could mean for the data center boom, and much more. You can listen to the full episode here. Wrap UpThat's it for today. I hope you found this edition of The Multifamily Download insightful. Consider sharing this link to The Multifamily Download with a friend or colleague. Your feedback is appreciated, so feel free to reply anytime. Thanks for reading. See you next week! Forwarded this email? Sign up here. Join me on LinkedIn | Twitter | Website |
The Multifamily Download · October 3, 2026
Charts, Graphs, & An Inconsistent Fed
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