What New Construction trends mean for investors?
Some Construction Costs Ease, While Others Climb
- The price of steel, lumber and shipping costs have retreated from historic highs
- At the same time, financing new development has become dramatically more difficult and expensive
New Development Likely To Ease After Current Supply Wave
- Projects that with financing in-place are still working through the pipeline, but the number of new projects are limited
- Record completions for multifamily and industrial are in the pipeline, but pressure from new builds should begin to ease as financing limits new starts
How Will Waning Supply Risk Impact Investors?
- Less competition from new construction will aid the owners of existing space across property types
- While there are no broad-based CRE shortages today, the reduced number of projects could fall well short of demand when the economy strengthens
Sources: Marcus & Millichap Research Services, BLS
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