Economic Cycles in the Development Business

We have been a developer’s contractor since we opened over 40 years ago.  As everyone knows, our economy goes through cycles, positive and negative.  And the development economy has significantly greater swings than the general business economy.   2008-2010 had dramatic negative swings, but we have been on an upswing now for almost 10 years.  When the economy trends down, construction costs decrease, as do interest rates.  But more importantly, the rank of developers thins.  Those with limited experience and capital can’t get deals done so exit the market, while the strong take advantage of lower prices and interest rates, but also a distressed inventory, and get stronger. The uptick in the economy creates the opportunity to be active for these people, but also the perception of opportunity for new entrants to the market.  Some are well capitalized, but with limited experience and expertise, and they can get deals done with the...

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