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Developers Are Building for the Next Cycle

“Half of our pipeline could be called next cycle,” Trammell Crow's Jim Andersen says at RealShare Apartments.

By Kelsi Maree Borland | Updated on October 23, 2017

RealShare Apartments RealShare Apartments

“There is going to be a pause at some point in time, and what we want to do is queue up the land for the next cycle,” Jim Andersen, SVP of Trammell Crow Co., said on the Growing Top Metros: Geographical Opportunities panel at RealShare Los Angeles. The panel of development and investment players—which included panel moderator Laurie Lustig-Bower, EVP at CBRE; Scott R. McClave, senior principal of transactions and finance at The Bascom Group; Dylan Simon, SVP at Colliers International; and Natalie Cariola, VP of Sales at Zumper—discussed where they are looking for opportunities in this market.

Simon agreed that he is seeing more “next-cycle” activity, adding “people are starting to look five-years out.” High land prices are driving the next-cycle sentiment, and more and more developers are dropping out of bidding rounds. “Cap rate are getting skinnier and some developers are dropping out as you get to the best and final round,” added Simon. High construction prices are also an issue. “There is a shortage of labor in every market, and I am very concerned about having enough people to build all of the projects that are on the books,” explained Andersen. The shortage is also going to be exacerbated by the natural disasters happening around the country, which have increased the need for quality workers.

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