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Propmodo Technology

By Franco Faraudo · November 4, 2024

Greetings,

This week, Propmodo Technology is diving into capital project management experience with the support of our friends at Northspyre. Learn how multifamily site selection is evolving in the modern economy, and download the new ebook, A Real Estate Developer’s Guide to Multifamily Site Selection.

When the Fed lowered interest rates for treasury bills, there was hope this would spur more construction, especially of much-needed housing. However, despite the lower base rate, interest rates on loans—particularly construction loans—have remained steady. This is due to lenders’ low appetite for funding large construction projects. The number of housing starts decreased in September compared to the previous month, and the October figures will likely be watched closely by both the industry and the public, which is increasingly concerned about housing affordability.

The struggles of regional banks left a gap in the lending landscape, which non-traditional lenders, such as debt funds, were quick to fill. These funds are somewhat costlier than banks but are much more willing to take risks on construction projects. Even as rates start to decrease, many expect that non-traditional lenders will continue to grow their portfolios, given their ability to fund loans much faster than banks.

There are other options for multifamily borrowers that can’t find bank financing and don’t want to go through non-traditional lenders. HUD has been funding more loans with its new programs designed to help pay for things like energy efficiency retrofits and sustainable projects. A new loan type called Commercial Property Assessed Clean Energy (or C-PACE) loans are also becoming more popular.

Even when financing is available, large capital projects remain challenging to make feasible, largely due to rising labor and material costs. Non-residential construction labor prices have been increasing by about 8 percent annually, and materials are also becoming more costly. Asphalt and concrete, for instance, are on track to be 6 to 7 percent more expensive than last year, and lumber costs have surged by around 10 percent in just the past month.

Despite these challenges, there are reasons for optimism about large commercial projects. New technologies are helping construction teams and building owners streamline permitting, better oversee projects, and reduce costs. These software tools vary widely but are mostly tailored for commercial real estate. Even as construction grows more expensive, demand for new and renovated buildings across nearly every asset class remains strong, likely driving an increase in the sophistication of companies designing, building, and financing these projects. In the end, these lean times may be what ultimately drives the construction industry to adopt new techniques and technology.

Here are some of the most important stories around capital project management technology.

Let’s go!

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How Multifamily Site Selection is Evolving in the Modern Economy

Multifamily site selection has become increasingly complex, with developers facing high interest rates, capital constraints, and new migration trends reshaping site priorities. Suburban markets are gaining appeal alongside traditional urban centers, and AI and data analytics now offer tools for deeper market insights and more informed decisions.

Supportive legislation and alternative capital structures are also easing financing hurdles, helping developers bridge equity gaps and secure favorable loan terms as the economic outlook stabilizes. For more on leveraging these trends in site selection, check out our ebook, A Real Estate Developer's Guide to Multifamily Site Selection.

Bytes

Permission impossible
A former employee in charge of ghost kitchens for food delivery company Gopuff has set his sites on building a tech platform that can help speed up the permitting process. The startup, called GreenLite, is able to compile permit requirements from cities (where they are publicly available) and perform a digital plan review to avoid the costs of getting an application denied for non-compliance.

Open secrets
The construction software company Procore is being sued by tech giant Oracle for the alleged theft of trade secrets. The complain revolves around a former employee of Oracle who got hired by Procore, bringing with him “thousands” of trade secrets about the payment management software that he was working on.

More Propmodo Technology

Propmodo Technology is edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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