News September 05, 2023

How Construction Financing Remains Resilient Despite Rate Hikes

Commercial Observer reported that despite a turbulent debt market, construction lending, for the right projects, remains resilient. Newmark published a second quarter capital markets report that pegs commercial real estate debt originations down 52 percent, with 32 percent fewer lenders in the market than it had at this time in 2022, but a steady flow of capital, and deal closings endures for construction financing this past year. “There’s so much value creation because every dollar used in construction can yield a dollar and half in value,” explained Josh Zegen, co-founder of Madison Realty Capital. “But there’s more execution risk. However, once a building is built there’s more margin, and it can be less risky from a basis standpoint when lending is executed with depth and experience.”  

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