slow but steady projecting headwinds on the horizon lumber shortage prices of softwood lumber construction and infrastructure projects persistent labor shortage labor crisis can't find workers Construction Lender Risk Management Roundtable Positive Trends:

  • A solid majority of construction lenders will continue with either the same or greater volume of deals, indicating robust stability in the CRE marketplace and continued opportunity for development in the foreseeable future.
  • Most lenders chose deals with the same or fewer risk factors, with only a very slight uptick in higher risk deals.
  • A supermajority of responders was either likely or very likely to invest in new technology, which showcases the continued growth and evolution of the construction space. Indeed, construction is the fastest growing area of CRE to adopt new disruptive technology.

Areas of Concern:

  • Almost two-thirds of responders saw projects running over budget either more often or much more often.
  • 87% of responders saw projects running behind schedule. If combined with going over budget, the risks of project defaults or unfinished sites rise considerably.
  • 77.5% of construction lenders experience occasional or frequent material and labor shortages. Worryingly, almost 50% of overall responders fell in the “frequent” category.
  • 90% of responders felt there would be either a modest or substantial increase in construction cost. This is borne out by data showing that construction costs are rising steadily in major urban markets, such as Los Angeles, San Francisco, New York, Denver and Chicago, where development has been most robust.

construction risk management contractor evaluations budget reviews document and cost reviews construction progress monitoring construction completion commitment


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Bill Tryon

As Director of Strategic Development, Bill Tryon focuses on advancing key risk management initiatives from an environmental, engineering and construction risk standpoint. Bill has a long track record of innovation, and hopes to educate the industry on best practices to control risks, reduce costs and create a competitive advantage. Through The Science of Real Estate forum, Bill will provide regular updates from across the CRE risk management world.