Quote:
Originally Posted by comoneymaker
That makes no sense. If you wait till construction cools down you are waiting for the market to cool down which means they make less money. Not a very good business model. Any idea on how tall ??
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It's not an uncommon philosophy. They're hoping the ratio between costs and rents will improve. Their fluctuations aren't the same.
They might be thinking that the current local boom has peaked, which must be a common worry given the recent vacancy report, the oil market, and global worries. So rents might be stagnant before a new project would complete in 2017 or 2018. But construction activity is still high due to past starts, and other sectors possibly keeping busy for a while, though I don't know the local market enough to say.
If they wait a few years, maybe they can catch the front of an apartment wave rather than the back of one. If the area is generally slower, every step of the contractor/subcontractor/supplier chain will be hungrier and price more aggressively. And rents will be more likely to have risen before the project completes.
Condos don't work that way of course. If they have to presell to get financing, then they build with 2016 dollars and sell at 2016 dollars. That's unless the project has enough equity that they don't have to presell, in which case they can sell in 2017 or 2018 dollars.
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