I can't understand why there is not more new construction and renovations.
Interest rates are the lowest in years, builders are highly competitive, material costs are low, the banks are willing to lend (they say), inflation is non-existent (for now), and there are incentives to invest in energy efficiency. It is a perfect time to build or renovate, but few are.
The best explanation I have heard came from a commercial realtor/developer. He explained that there is now so much vacancy, that appraised values are so depressed, and that landlords are now willing to absorb the costs for tenant improvements. The result is that it costs more to build than a building is worth.
But still there is a lack of any extensive renovation activity. The hesitation is not based on rational economics since there are quick payback periods for many activities. There is, in my opinion, too much perceived uncertainty, a concern that current economic conditions will persist and that the best course of action is to hold on to the cash you have. In short - people are scared. They want to be convinced that the recovery is for real before they invest in new facilities and equipment.
However, if you are now hesitating, you are part of the herd. Be courageous, be optimistic, carefully review your market position and capabilities, and make that investment!
