In the post of August 11th I warned of very aggressive material cost increases being announced for the Fall. This was not good for construction or development of new projects.
Now financing is continuing to tighten. Some Lenders are leaving the market. The Lenders that remain are asking for additional equity. Bottom line is new Development is being funded only for a rising price and under terms and conditions where they can greatly lower their risk.
What does it mean? The short term outlook for new construction and development is slow. Perhaps for 18 to 36 months. The outlook for Landlords is bullish. There will be little new space coming on the market for sale or lease. When supply lessens even if demand remains the same prices rise.
This makes properties like S Church St in Lowell and the Property in Kings Mountain attractive. The Kings Mountain Property is especially attractive because it has existing buildings for current income and undeveloped acreage for growth when the timing is right.
Friday, August 22, 2008
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