By Jim Costello on July 11th, 2018
Is capital flowing too quickly to construction-driven investment strategies in the U.S.? That question has dominated many discussions recently.
The chart below tracks changes in capital flows in the 6 Major Metros. If a redirection of capital to construction were truly a problem, most of the market and property type combinations would be in the top left quadrant. This quadrant represents markets and property types where capital deployed via construction is growing while that deployed in new acquisitions is falling.
There are two apartment markets in this top left quadrant, so one might note these markets with caution, but the other four apartment markets have a flat or falling pace of construction activity. The office sector has four metro areas with climbing construction and falling investment in existing assets.
Except for a few pockets of activity, there is little to fear from the current round of construction.
Data analysis by Haley Crimmins.
This analysis first appeared in US Capital Trends. The new edition of US Capital Trends, which examines volume and pricing trends across the property types in Q2’18, will be published July 25.