By Jim Costello on March 6th, 2019
Data analysis by Haley Crimmins
Should investors fear capital flows to new construction in the U.S.? How much is too much? The ratio of capital flowing to new construction relative to that going into existing assets suggests little to fear in many markets.
Markets with a high volume of construction starts may not be overbuilding. It is all about size, and larger markets will simply attract more construction-focused capital. Looking at the relative investor commitment to placing capital in construction versus existing assets can provide a sense of which markets face headwinds from construction.
Manhattan, for instance, does have the most capital committed to construction, with starts totaling $16.8 billion in 2018. This figure, though, is less than a third of total capital committed to Manhattan. By contrast, the NYC Boroughs, Miami/Dade County, and Kansas City have each had just as much capital committed to construction over the last 12 months as committed to existing assets.
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