Location Strategy Chartbook 06.20.2026

Fed Chair Kevin Warsh’s “unambiguously hawkish” message yesterday surprised markets as he clearly prioritized fighting inflation in the short term, said Kay Haigh at Goldman Sachs Asset Management. Traders quickly piled into bets that policymakers will boost interest rates sooner than had been expected.

Investors now see the odds of a hike at the September meeting of the Federal Open Market Committee at more than 80%, and more than one move higher priced in for October, according to data compiled by Bloomberg. On Tuesday, before this week’s Fed meeting, traders didn’t see the likelihood of an increase until December.

Oil has declined since President Trump announced an interim deal with Iran to extend their ceasefire and gradually reopen the Strait of Hormuz. In the near term, even as the flow of oil through the Strait may increase meaningfully, markets probably already reflect the agreement, says Jerome Dortmans, co-head of Global Oil and Products Trading in Goldman Sachs Global Banking & Markets.

Brent oil has fallen to about $76 per barrel (as of June 18), from a high of around $118 in April during the war between Iran and the US and Israel.

The Census Bureau's latest Quarterly Financial Report, which covers retail corporations with at least $50 million in assets, showed that first-quarter after-tax profits grew at a meaningfully faster rate than sales.

Seasonally adjusted after-tax profits totaled $64.5 billion in the first quarter, up 7% from the fourth quarter of 2025 and nearly 40% above year-ago levels. Sales increased to $1.126 trillion, rising 1.1% quarter over quarter and 4.7% year over year. This divergence pushed after-tax profit margins to 5.73%, up from 5.41% in late 2025 and 4.31% one year earlier.

Profit growth is being driven largely by margin expansion, not growth in consumer demand. This means that, at least among larger retailers, the ability to scale operations and aggressively manage costs is translating into higher earnings per dollar of revenue.

Those expanding profits have now extended a multiyear recovery following a compression of margins in 2023 and early 2024. First-quarter margins were roughly 3.3% in 2024 and 3.25% in 2023, compared with nearly 5.7% in the latest quarter, representing a gain of more than 200 basis points over two years.

This improvement is not simply a rebound from a weak base. Profits have nearly doubled since early 2024, while sales have risen far more modestly, underscoring a structural shift in how larger retailers are managing inventory, pricing and operating expenses. Even after accounting for seasonality, first-quarter margins improved both sequentially and year over year, signaling strengthening profitability.

Small businesses continue to contribute to job growth, supported by strong hiring activity and external boosts such as FIFA World Cup 2026™ demand in select sectors. However, Bank of America data shows payrolls per small business client declined more than 2% year-over-year (YoY) in May, suggesting that recent hiring strength may be masking underlying softness.

Despite resilient consumer spending, small business profitability continues to wane, with the inflow-to-outflow ratio declining further in May, according to Bank of America small business account data. Cost pressures, including elevated fuel expenses, are
outpacing revenue growth, particularly for firms with <$500K in annual revenue, which are experiencing the largest drag on margins.

As profitability tightens, small businesses are increasingly adjusting prices and relying on credit to manage operations. National Federation of Independent Business (NFIB) data in May shows a rise in actual and planned price increases, reflecting efforts to offset higher costs. At the same time, utilization rates suggest firms still have some borrowing capacity.

Profitability pressures persist. In addition to hesitancy in hiring, small business margins remain squeezed. Plus, uncertainty around the economic outlook has underpinned the below average small business optimism reading in the NFIB report for many months now. Profitability growth, as measured by Bank of America small business accounts’ inflow to-outflow ratio, dropped further in May. This is despite consumer discretionary spending growth remaining resilient in Bank of America aggregated credit and debit card data

Insurance costs rose 65%, increasing from about $1 million to $1.65 million.

Utilities climbed 80%, jumping from $1.4 million to $2.5 million.

Repairs and maintenance more than doubled, rising from $625,000 to $1.3 million.

Overall operating expenses increased 3.4%, from $15.9 million to $16.4 million, while effective gross income slipped 3.9%, declining from $32 million to $31.2 million.

The 861,000-square-foot office tower at 26 Broadway in New York's Financial District has been transferred to special servicing after its borrower said it could no longer make loan payments

The 3000 Post Oak building in the city's Uptown district was foreclosed on in May and is scheduled to be auctioned this month after losing its sole tenant, according to CMBS commentary.

The 19-story property's decline accelerated after engineering firm Bechtel, which occupied nearly the entire building, vacated at lease expiration in October 2024. Its departure triggered an imminent default and pushed the loan into special servicing.

The ensuing drop in value underscores the depth of the distress. The most recent appraisal pegged the property at about $25.2 million, down sharply from $143.9 million at origination in 2019 — a roughly 80% decline.

DataBank has landed access to billions of dollars meant to help it expand its multi building data center campus in Red Oak, Texas, just south of Dallas, as it diversifies its capital partners.

Closing on $1.45 billion in new financing gives the Dallas-based data center developer with 76 data centers in 26 U.S. markets and in the United Kingdom an $800 million revolving credit facility and $650 million to boost its existing construction loan at its North Texas campus. The funds give DataBank the option to purchase land or to move quickly on an expansion, President and Chief Financial Officer Kevin Ooley told CoStar News.

"We filled this up," Ooley said, referencing the initial three data centers in its Red Oak campus on 292 acres with eight planned buildings expected to add 480 megawatts. "We're seeing enterprise workloads getting bigger."

The additional funding is expected to help DataBank add its fourth data center to the campus totaling 60 megawatts of capacity, Ooley said. The expanded funding comes after the company landed its biggest loan yet to build the site's initial three buildings. "The cycle time is compressing," he added. "We're selling faster and selling larger footprints.

In total, DataBank now has $2.65 million slated for new construction of the company's Red Oak campus. The added financing includes $400 million in bank financing secured by a group of banks led by MUFG Bank Ltd. The remaining $250 million is tied to notes in private placement — representing DataBank's first private placement transaction.

Beyond the expanded construction loan, the firm's revolving credit facility gives DataBank the financial bandwidth to move quickly on a potential development site at a time when speed to market remains key, Ooley said. The credit facility, earmarked for general corporate purposes, was arranged by a syndicate of banks led by Citizens Bank and matures in 2031.

Census released the annual data on the length of time from start to completion, and this showed residual construction delays impacting completions in 2025.

In 2020 and 2021, builders responded to strong demand for both owner occupied and rental units and started a large number of housing units. However, there were significant pandemic related delays in receiving materials. For example, in 2024, I spoke with a major window supplier about delivery delays. In early 2023, they were quoting 26 weeks for delivery. In 2024 they were quoting 4 to 5 weeks (back to normal).

In 2023, it took a record 8.6 months from start to completion for single family homes, in 2025, it took 7.5 months (still elevated, but returning to normal).

For 2+ unit buildings, it took a record 17.1 months for buildings with 2 or more units in 2023, and this declined to 16.5 months in 2025 (still very elevated).

Realtor.com: With a nationwide housing shortage that continues to hover near 4 million homes, affordability pressures remain for millions of Americans. In this updated edition of our state report cards for affordability and homebuilding, we revisit every state’s performance on the metrics that matter most: how affordable homes currently are for local earners, and how actively each state is building to meet future demand. This year’s refresh reveals a familiar regional divide, but also some notable shifts beneath the surface, with a new state at the top of the class and a handful of states whose grades moved dramatically in either direction.

2026 Housing Market Rankings: Key Takeaways
The Biggest Gainers
Delaware (+12 spots to No. 7, B): The year’s most improved state. Strong building activity and high median incomes ($87,667) helped offset a high median listing price of $486,044.

Utah (+12 spots to No. 17, C+): Aggressive homebuilding (1.82 permit-to-population ratio) and a low 4.7% new-construction premium drove its rise, though affordability remains a major hurdle.

Colorado (+9 spots to No. 18, C+): Powered by healthy construction activity, though buyers still face high price-to-income strains.

Kansas (+7 spots to No. 13, B): Exceptional affordability carried the state; a median home ($292,632) requires just 27% of the median income.

The Biggest Decliners
Alabama, Maryland, & New Jersey (-8 spots): Tied for the largest drops. Alabama suffered from slowing permit activity; Maryland (No. 31) lacked enough building; New Jersey (No. 43) struggled with flat construction and a steep 71.6% new-construction premium.

Louisiana & Wisconsin (-7 spots): Louisiana (No. 19) fell due to lower median incomes and trailing permit activity, while Wisconsin (No. 23) was dragged down by a high 38% new-construction premium.

Stagnant at the Bottom
Structural Gridlock: Connecticut (No. 46), California (No. 47), Hawaii (No. 48), Massachusetts (No. 50), and Oregon (No. 45) remained unchanged due to high costs, land constraints, and restrictive zoning.

New York (No. 51, F): Dropped to dead last. Driven by severe underbuilding (0.45 permit ratio) and a massive 73.9% premium on new builds, a median home now demands 55.2% of the median income.

The Deepening Regional Divide
South & Midwest Dominate: Every single 'A' and 'B' grade belongs to these two regions, both averaging a rank of No. 16. In the South, 13 of 16 states rank in the top half; in the Midwest, 10 of 12 are in the top 30.

West & Northeast Lag: Western states averaged a rank of No. 35, while the Northeast averaged No. 43. All six 'F' grades belong to these two regions.

Building Activity & Trends
The Big 7: Just seven states account for over half (51.2%) of all U.S. building permits, led by Texas (14.6%), Florida (12.3%), and California (7.3%).

Building Intensity Leaders: Idaho leads the nation with the highest permit-to-population ratio (2.10), followed by South Carolina, North Carolina, Utah, and Florida.

A Win for Buyers: In five states—South Carolina, Idaho, California, Florida, and North Carolina—new construction is actually cheaper than existing homes, offering a rare bright spot for affordability.