New Construction Financing During Pandemic

Despite coronavirus challenges, financing is available for the right projects.

The coronavirus pandemic has caused widespread economic uncertainty, leaving owners and developers wary of taking risks. As a result, fewer new construction projects are kicking off. But that’s not to say the funding isn’t available– for the right project. Frank Cook, EBI Consulting’s National Program Director of Construction Risk, discusses these challenges in a Q&A with Construction Dive, summarized here.

Traditional banks are maintaining the tightest risk profile, leaving out heavily impacted asset types and markets, but they are still lending for low-risk projects. Their selectivity, however, has opened the door for alternative lenders and capital sources to provide financing.

Although not nearly as aggressive as predicted before the pandemic, construction lending is still expected to see moderate growth. Projects already in the works have generally been able to see completion, but new projects have been slow to launch. The added costs of COVID-19 safety inspections and supply chain delays are leading many owners, investors, and developers to play the “wait and see” game.

This is especially true for those in the retail and hospitality spaces, whereas multifamily and industrial asset construction continue seeing robust activity. Lenders across the board are still welcoming projects in key secondary and tertiary markets, areas heavy in industrial/warehousing and distribution activity, and redevelopments.

Despite uncertainties resulting from the pandemic, the outlook for new construction is still optimistic. Funding sources in the construction lending space only continue to diversify, and opportunistic investors and lenders alike are active now, even with the pandemic.

EBI Consulting provides a wide range of construction consulting services to financial institutions, asset managers, real estate investors, property managers, and real estate professionals nationwide. Our construction consulting services staff includes licensed architects, engineers, and experienced construction professionals offering a range of consulting services for existing buildings, new construction projects, renovations, property rehabilitation, fire and storm damage repairs, structural evaluations, and property monitoring.

If your firm is looking to take advantage of funding sources, speak with our team of construction consultants, and let us guide your project toward success.

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