The Federal Reserve raised its policy rate on September 16 to a range of 3.75% to 4.00%, its first increase since July 2023. The 10 year Treasury stood at 5.01% that day, up 83 basis points on the year, and later touched 5.14%, a 19 year high. In the same week Blackstone took a $1.7 billion industrial loan to the bond market, a Canadian pension fund bought into a U.S. logistics platform, and two large infill portfolios traded.
Blackstone’s BREIT’s completed a financing of a single borrower CMBS deal, BX 2026-SUMT. The loan is $1.71 billion, floating rate and interest only, with a two year term and three one year extensions. It is secured by 76 assets totaling 19.0 million square feet in 18 states, 96.1% leased to 115 tenants, and more than half the pool by loan amount is bulk warehouse.
Ares And PSP Investments Established a Joint Venture To Invest Up To $2.4 Billion In U.S. Logistics Real Estate while Link Logistics, the industrial operator Blackstone established in 2019, bought four buildings totaling 697,276 square feet: three in Dallas Fort Worth and one in Suwanee, Georgia on the Northeast I-85 corridor.
In New Jersey, L&B Realty, an investment firm based in Dallas, bought 12 properties totaling 840,000 square feet from Corebridge Real Estate Investors and Kadima Industrial Partners. That averages 70,000 square feet a building.
An industry construction cost guide shows costs reaccelerating after a flat to lower year. Small projects average $144 per square foot, up 3.6%. Medium projects are $87, up 2.8%, and large projects $78, up 2.3%. Tariffs are contributing with copper is up 39% and steel 17% year over year. Construction wages rose 4.3% while hiring grew 0.6%.
Higher rates and higher construction costs are pushing in the same direction. Both make new buildings harder to pencil, and both raise the value of leased buildings in locations that cannot easily add supply.
