Everyone in commercial real estate—whether someone building a new project or a person calculating replacement costs for financials—wants to hear that construction costs will be coming down.
Marcus & Millichap seemed to recently say that. The firm's September 2022 look at housing said the following: "Material prices show signs of settling. In August, an index tracking construction costs across a variety of materials inched up less than 0.1 percent, about one-eighth of the average pace recorded from January through July. Lumber was the primary cause behind this weaker growth, with the cost index of this material falling 3 percent month-over-month and 30 percent from the 2022 peak back in March. This may aid development in some CRE sectors."
It sounds good, but practically may mean less than it seems.
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