At the Connect Midwest Multifamily and Adaptive Reuse Trends event held earlier this month in Chicago, development and finance experts gathered for a commercial real estate panel titled “Making the Numbers Work.” The panelists didn’t mince words when discussing current capital markets conditions. Cory Robertson, principal with Corwin Partners at Jameson Sotheby’s International Realty said that only deals at the top of the market are able to pencil out due to construction costs, affordable housing costs and other factors. Thomas Shanabruch, VP of investments & capital markets – residential at CRG noted that they were fortunate enough to close ground-up construction loans in December 2020 and January 2021 but when they went back in March/April on other projects their requests were denied 100%. Jerry Lumpkins from Valley National Bank shared his perspective as a lender saying there are many headwinds right now so most lenders aren’t looking into anything brand new currently; instead focusing on portfolio management & early stages of workouts again. Susan Tjarksen from Cushman & Wakefield pointed out an additional problem – construction pricing hasn’t come down which is offsetting interest rates, cap rates & rent growth making it difficult for deals to be made without being over budgeted or undervalued. However she also stated that if you have an experienced sponsor with a good project located in an ideal location then there is still potential for success despite these challenges presented by today’s market conditions
Reid Bennett moderated this discussion along with another one later titled “Operations And Design: Staying Ahead Of Trends” featuring experts from operations engineering architecture and construction sectors who discussed how best stay ahead of trends while building communities around properties since dollar per square foot can only go so high before tenants look elsewhere (i.e., friends living nearby). In two videos recorded during this conference further insights were shared regarding opportunities seen currently versus those found during more conventional times as well as any unique challenges faced due to today’s market environment
