Commercial real estate development is not frozen, but the market is becoming less tolerant of weak assumptions, according to Ryan Severino, BGO’s chief economist.
Severino said the current development environment is increasingly defined by “buildability,” with projects needing a clear path through financing, labor, cost, power, entitlements and execution. While demand remains important, he noted that it is no longer enough to justify new development, as higher costs, elevated interest rates, selective construction financing, labor constraints and infrastructure limitations continue to shape what can move forward.
The current pipeline favors projects with committed demand, capital or infrastructure already in place, Severino said.
