Banks Tighten on Every Kind of Commercial Property Loan

The 10-year Treasury yield, November 2025 to October 2026. The latest reading is 4.94 per cent, on Oct. 30, 2026.

Chart by the Intelligencer from figures by the Federal Reserve Board, via FRED

The 5-year Treasury yield, the base for many fixed-rate commercial loans, closed on Monday at 4.70 per cent, down from 4.71 on Friday, and the 10-year fell to 4.91 per cent from 4.94, according to the Treasury Department. The 5-year is about a third of a point below its Oct. 1 close of 5.01 and still nearly half a point above its July 1 level of 4.24.

The Institute for Supply Management's manufacturing index rose to 55.5 in October from 54.5 in September, its tenth month in a row above 50, the line between growth and shrinking. The prices manufacturers pay eased but stayed high, at 75.2 from 77.9.

The Dow rose 0.4 per cent to about 51,984, the S&P 500 fell 0.5 per cent to 7,541 and the Nasdaq fell 1.1 per cent.

The downtown Greenville skyline seen from the Main Street Bridge over the Reedy River.

Photograph by Spatms, CC BY-SA 4.0, via Wikimedia Commons

GREENVILLE, S.C., Oct. 20. Of the best office space in downtown Greenville, 2.2 per cent is empty. Of downtown as a whole, 13.3 per cent is, according to Cushman & Wakefield's report for the third quarter, and across the Greenville and Spartanburg market the older Class B buildings stand 19.6 per cent vacant, holding nearly 660,000 square feet, more than a third of all the empty space.

Cushman & Wakefield said that imbalance had created room for new building. Two projects totaling just over 100,000 square feet broke ground downtown in the quarter, with substantial space already committed, the firm said. A year earlier nothing was under construction anywhere in the market, and no new office space has been finished since 2024. The average asking rent reached $26.08 a square foot a year, a record for the market and 5.2 per cent above a year earlier.

Suburban offices are selling again. Five suburban office sales through September came to more than $101 million, more than five times the $18.3 million of all 2025, led by the $35.3 million purchase of Independence Corporate Park, seven buildings with more than 307,000 square feet along Pelham Road. That is about $115 a square foot.

NEW YORK, Nov. 2. Oil fell more than 7 per cent on Monday, American crude's biggest one-day drop since July 27, as American and Iranian leaders signaled openness to a diplomatic settlement, CNBC reported.

Talk to anybody who owns a building this fall and the word December comes up. The Fed raised its rate in September, held it last week, and wouldn't promise anything for its next meeting. Plenty of owners think one more increase would be the last straw.

Their case is strong. A floating-rate loan reprices the month the Fed moves. A quarter point on $5 million of floating debt is $12,500 a year, paid out of rents that haven't gone up. A builder borrowing to finish a building pays it at once. And a rate you were quoted isn't a rate you've locked: the 5-year yield climbed more than eight-tenths of a point between July and September.

But on Monday I read the Treasury's own table of yields, and it told me something the worriers leave out. The Fed's rate tops out at 4 per cent. The 2-year Treasury closed at 4.59 per cent and the 5-year at 4.70. A bank doesn't price a fixed loan off the Fed. It prices it off those yields, and they already sit well above the Fed's ceiling.

Some of that gap is the extra any lender wants for tying up money longer. But a 2-year yield more than half a point over the Fed's top rate reads to me like lenders charging for increases they expect. If one comes in December, the fixed-rate borrower will mostly have paid for it already.

And I'd want it to come if it's needed, because prices tell the truth, and the price of money is no exception. Consumer prices by the Fed's preferred gauge rose 3.6 per cent in the year to September. A saver earning 4 per cent on short money is ahead by less than half a point before taxes, and once federal income tax takes 12 per cent of his interest or more, he's behind.

We tried the gentle road once. The Fed's own historians date the Great Inflation from 1965 to 1982. Through the 1970s the Fed accommodated one pressure after another, and by March 1980 consumer prices were rising close to 15 per cent a year. The cure came in a recession that began in July 1981, lasted until November 1982 and left unemployment near 11 per cent.

I've never signed for an adjustable-rate loan, so discount my nerve accordingly. But if you're on a fixed loan or about to sign one, I don't think you need to fear December, and I'd rather the Fed raise the rate than leave the saver falling behind after taxes for another year.

"For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it? Lest haply, after he hath laid the foundation, and is not able to finish it, all that behold it begin to mock him, Saying, This man began to build, and was not able to finish." Luke 14:28-30.

Great crowds were following Jesus when He said this, and He turned and told them plainly what following Him would cost. The builder is His example of something every man in that crowd already knew: you don't break ground on a tower until you've sat down with the figures. He takes that prudence for granted and asks for the same seriousness about the greater matter.

I find it steadying that the Lord reached for a building site. He doesn't scorn the man with the plans and the ledger; He assumes him. The careful count is ordinary wisdom, and He builds on it.

So I carry two things into this week. Sit down first, before the foundation, while changing course costs only paper. And remember that the passage is about a whole life given, not a tower. The count He asks for is honest, not fearful, and the man who makes it can begin.

Dear Editor: My new automobile chimes when I unbuckle, chimes when I drift toward the line, chimes when a door is ajar and chimes, so far as I can tell, when it is disappointed in me. I drove for forty years without being corrected by a dashboard. I have now been corrected eleven times between my house and the post office. I do not ask the car to be quiet. I ask it to be right. [A chime that sounds for everything warns of nothing. ED.]

A Motorist, Pendleton Street

Mostly sunny on Tuesday with a high near 75 and a light east wind, the National Weather Service says, with clouds gathering at night and a low near 58. Showers are likely on Wednesday.