Posts Tagged ‘new construction’

Green Buildings Prove Themselves Again

Wednesday, December 26th, 2012

According to the U.S. Green Building Council, the perceived cost benefits of green building include the following: Operating costs decrease of 13.6 percent for new construction and 8.5 percent for existing buildings; Building value increases 10.9 percent for new construction and 6.8 percent for existing buildings; Occupancy increases of 6.4 percent for new construction and 2.5 percent for existing buildings; Rent increases 6.1 percent for new construction and 1 percent for existing buildings.

So, where are the opportunities ahead? As of 2010, the total U.S. building stock is approximately 275 billion square feet, of which 60 billion is commercial space.  At 1.674 billion square feet of currently LEED-certified commercial space, today’s green buildings market is chump change compared to the opportunity coming down the pike over the next 2 decades.

During normal economic times, we tear down approximately 1.75 billion square feet of buildings each year. Every year, we renovate approximately 5 billion square feet, and we build new approximately 5 billion square feet. Unless the past does not presage the future, by the year 2035, approximately three-quarters (75%) of the built environment will be either new or renovated. Talk about a historic opportunity for the architecture and building community to avoid dangerous climate change by embracing the green revolution.

Construction-Loan Delinquencies on the Rise

Monday, June 30th, 2008

The surge in the construction-loan delinquency rate – both residential and commercial – suggests that lenders will remain reluctant to make loans for new construction.

Developers usually finance projects through short-term construction loans.  Once the project has stabilized, the developer seeks long-term debt.  With the current economic downturn, developers are finding it difficult to obtain capital.  This is compounded by a lack of liquidity in the mortgage market.  As a result, projects are worth less than they were a year or two ago.  Lenders also are more stringent in their underwriting standards, preferring highly stabilized projects with significant pre-leasing.

Short-term, the outlook is negative, as maturing loans may have problems refinancing if liquidity is non-existent.

The silver lining is that seasoned developers with strong lending relationships and leased portfolios are better positioned to develop product on an “as-needed-and-warranted” basis.