REITs don’t want to build — here’s why that’s actually a good thing

Fitch report claims investor caution has prolonged market cycle

TRD New York /
July 20, 2017 11:15 AM

A rendering of One Vanderbilt

Real estate investment trusts have been reluctant to build in recent years, a caution that helped prop up property values and extended the market cycle, according to a new report from Fitch Ratings.

“Throughout this postcrisis cycle, REITs have demonstrated discipline, as the sector has navigated an environment of historically low-cost debt capital, record high commercial real-estate values and good liquidity positions,” the report notes.

The Wall Street Journal reported that REITs have learned from the 2008 crisis, when costly development projects got some firms into trouble. They now tend to avoid office construction because of lackluster employment growth.

There are some noteworthy exceptions. SL Green Realty, for example, is developing the $3.2 billion office tower One Vanderbilt in Manhattan and Boston Properties is building the $1 billion Salesforce Tower in San Francisco.  [WSJ]Konrad Putzier 

Related Article

The Watchtower building at 25 Columbia Heights, CIM Group’s Shaul Kuba (right) and LIVWRK’s Asher Abehsera (Credit: Wikipedia, CIM Group, and LinkedIn)

JPMorgan leads $335M refi for CIM and LIVWRK’s Watchtower renovation

The construction giants catching a Windy City windfall

David Marx of MDG Real Estate and the site at 71-05 Parsons Boulevard in Queens (Credit: Google Images and iStock)

Here’s a weird one: David Marx plans towers at Queens site he bought from his own company

Resi scorecard: Brooklyn and Queens condo inventory through June 2019