{"id":1004729788,"date":"2024-09-23T01:40:58","date_gmt":"2024-09-23T09:40:58","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004729788"},"modified":"2024-09-27T07:30:48","modified_gmt":"2024-09-27T15:30:48","slug":"squeezed-margins-developers-builders-feel-the-pinch","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/squeezed-margins-developers-builders-feel-the-pinch\/","title":{"rendered":"Blueprint Special Report: Developers, Builders Feel the Pinch"},"content":{"rendered":"\n

<\/p>\n\n\n

\n
\"Blueprint<\/a>
L to R: Blueprint Conference panelists William Sankey, Northspyre;
Kabir Seth, Presidio Bay Ventures; Peter Chavkin, Biddle Real Estate Ventures & Sun Homes; Stephen Trapp, Columbia Property Trust; Jeff Dvorett, Midwood Investment and Development<\/figcaption><\/figure><\/div>\n\n\n

Beyond well-known hurdles such as interest rates and capital costs, developers are also being squeezed by rising costs\u2014from land acquisition, government regulations and building complexity to employee retention and operational scale. Builders feel some of that pressure, too. <\/p>\n\n\n\n

\u201cThe good news is that we know the next five years won\u2019t be as bad as the last five,\u201d Jeff Dvorett, president of Midwood Investment and Development, said last week at the Blueprint Conference in Las Vegas. \u201cWe seem to have finally caught a break in the second quarter, as property insurance costs fell for the first time in seven years\u2014by 0.94 percent, according to Aon.\u201d<\/p>\n\n\n\n

And indeed, at least one survey showed<\/a> construction costs were stabilizing. The national average increase was 1.12 percent over the previous quarter. The international property and construction cost consultancy firm Rider Levett Bucknall\u2019s latest quarterly cost report<\/a> shows that the U.S. national average increase in construction costs is approximately 5.41 percent year-over-year, compared to 5.85 percent year-over-year in the first quarter.<\/p>\n\n\n\n

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READ ALSO:<\/strong> Blueprint Conference ’24: Office Starts to See Momentum<\/a><\/p>\n\n\n\n

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Land costs grew about 10 percent annually from 2012 to 2020, shared Peter Chavkin, managing principal with Biddle Real Estate Ventures & Sun Homes, at the same event. \u201cLand is not a commodity,\u201d he mentioned. \u201cThe values have been escalating because they aren\u2019t making any more land.\u201d<\/p>\n\n\n\n

What else are developers facing, trying?<\/h2>\n\n\n\n

Chavkin said his firm is buying and converting older office space and condos. \u201cThere is undervalued land, but the regulatory environment is in the way in New York,\u201d he said. \u201cBecause of zoning, you end up paying so much more in terms of costs and time lag.\u201d<\/p>\n\n\n\n

Dvorett said some neighborhood officials want to improve the situation, \u201cbut it doesn\u2019t happen overnight\u2014it\u2019s a five- to 10-year process,\u201d he added.<\/p>\n\n\n\n

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READ ALSO:<\/strong> Cause for Optimism on the Tech Front<\/a><\/p>\n\n\n\n

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Stephen Trapp, executive vice president of development at Columbia Property Trust, said prefabricated modular construction design has been \u201cGoing through fits and starts for the last 15 years, but there is optimism that progress is being made with it (in asset classes such as student housing and multifamily).\u201d<\/p>\n\n\n\n

Meanwhile, technology and mechanization continue to increasingly making a difference in construction as well. Robotics perform repetitive lifting of dangerous objects and work as remote-controlled jackhammers.<\/p>\n\n\n\n

\u201cWe think this technology will take off, and long-term innovation can make a difference,\u201d Trapp said. \u201cFor example, 15 years ago, we had never heard of LED lightbulbs.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Panelists at the Blueprint Conference in Las Vegas debated the trials of development in 2024. <\/p>\n","protected":false},"author":3568,"featured_media":1004729791,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21782,21808,1593,23891,21742,51037],"tags":[33221,52488,52468],"class_list":["post-1004729788","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-development","category-featured","category-las-vegas","category-national","category-latest","category-trends","tag-columbia-property-trust-inc","tag-midwood-investment-and-development","tag-northspyre"],"acf":[],"yoast_head":"\nBlueprint Special Report: Developers, Builders Feel the Pinch - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"Panelists from Midwood, Biddle Real Estate, Presidio Bay Ventures and Columbia talked about development hurdles at the Blueprint Conference.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/squeezed-margins-developers-builders-feel-the-pinch\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Blueprint Special Report: Developers, Builders Feel the Pinch\" \/>\n<meta property=\"og:description\" content=\"Panelists from Midwood, Biddle Real Estate, Presidio Bay Ventures and Columbia talked about development hurdles at the Blueprint Conference.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/squeezed-margins-developers-builders-feel-the-pinch\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2024-09-23T09:40:58+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-09-27T15:30:48+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/09\/Blueprint-Construction-Panel-rotated-e1727083611262.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1512\" \/>\n\t<meta property=\"og:image:height\" content=\"1135\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Richard Berger\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/squeezed-margins-developers-builders-feel-the-pinch\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/squeezed-margins-developers-builders-feel-the-pinch\/\",\"name\":\"Blueprint Special Report: Developers, Builders Feel the Pinch - 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