A Note from the Founder 10.3.2025

Zachary Urow October 28, 2025

Fed Rate Cuts Expected After Shutdown

  • Markets have priced in a 100% chance of a Fed rate cut in October and an 88% chance of another in December, both higher since the government shutdown began.
  • Evercore and Bank of America economists cite delayed labor data and the furlough of 750,000 federal workers as key risks prompting a “risk management” stance.
  • Economists also expect labor concerns and shutdown risks to outweigh inflation pressures heading into year-end.

Construction Costs Ease But Remain Elevated

  • The Engineering & Construction Cost Indicator fell to 58.6 in September, down from 63.0 in August (any reading above 50 signals rising costs).
  • Steel and copper pricing softened, with copper-based wire and cable showing the steepest drop, while redi-mix concrete and structural steel saw modest increases.
  • Subcontractor labor costs also declined for the month, though 6-month expectations remain high.

Our Thoughts

  • Lower interest rates would improve financing conditions and likely support stronger transaction activity in self-storage. Investors may find more opportunities to secure debt at favorable terms.
  • Easing material costs offer some relief for developers, while elevated labor expectations keep construction and expansions expensive. As a result, fewer facilities are likely to be built and existing properties benefit from limited competition.