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Construction costs are not the only costs relating to development and redevelopment. Financing and project risk are also quite significant. Issues that push bac
by nickff 1y ago
Construction costs are not the only costs relating to development and redevelopment. Financing and project risk are also quite significant. Issues that push back the start of construction vastly increase financing costs, and increase construction costs. A delay in getting a permit, or a stop work order because of an environmental lawsuit runs up the interest payments on the loan used to purchase the real estate, as well as increasing the impact of inflation, delaying the revenue, and impacting trades’ schedules, all of which reduce the ROI of the project. These are just some of the issues caused by delays.
- jaggederest 1y agoBut how often do those things actually happen, and is it a substantial enough difference to actually affect the cost of building housing at a fundamental level? Remember that houses have more than tripled in cost this century in most places. A few percent is not going to substantially affect something that has increased in price 340%.
- _alternator_ 1y agoThat’s only a 5% rate of return over the last 25 years, which is pretty lackluster. Won’t cover the interest rate on a loan today.
- deleted 1y ago[deleted]