From the Editor
By Neil Pierson
The booming construction
industry is worth exploring
Real estate investors continue to push huge amounts of money into construction projects, forcing commercial
mortgage brokers to pay attention to a wide array of property types.
The seasonally adjusted dollar value of privately constructed buildings was up 4. 7 percent year over year
nationwide as of this past August, according to U.S. Census Bureau. There were multiple subsectors within
the category, however, that easily eclipsed that overall growth figure, including general commercial buildings
(up 10. 4 percent), communication (up 5. 9 percent) and transportation (up 17. 6 percent). Lodging and multifamily projects had more modest year-over-year construction growth of 3.1 percent and 2.3 percent, respectively.
Our December issue, focused on the topic of construction and development, should help
mortgage brokers better grasp growth trends and financing opportunities when working
with clients on these types of projects. Start by checking out the Q&A feature on Page 20, as
Donna Laquidara-Carr of Dodge Data & Analytics discusses the usefulness of her company’s
quarterly Commercial Construction Index.
On Page 44, Michael Persall of ABP Capital writes about the high-water mark for new construction
starts in 2017 and then details the process for closing construction loans in a complex regulatory
environment. Brokers should be aware of how banks and private lenders operate in this competitive marketplace, he writes.
Commercial real estate and finance attorney Peter Vilmos also talks construction on Page 79,
where he makes the case that rising interest rates and declining single-family home purchases
could benefit the multifamily sector. Again, strong data from sources like the Construction
Backlog Indicator are keys to understanding the industry’s long-range outlook, Vilmos writes.
On Page 56, Ken Schutter of A10 Capital takes a timely peek inside the niche-property sector of
self-storage facilities. Because of the hurricanes that struck the Gulf Coast and Texas this year,
self-storage businesses are seeing an influx of demand, both from consumers and potential
investors. Brokers can look to commercial mortgage-backed securities as solid funding sources
on stabilized properties valued north of $3 million to $5 million, Schutter writes.
Our lead article from Lawrence S. Brown of Evergreen Private Finance, on Page 31, neatly ties together much
of the edition’s information. In order to keep their clients content and their own businesses on track, Brown
says brokers should identify thriving metropolitan areas and build long-term relationships with reliable lenders.
Effective communication goes beyond sending e-mails to every prospective lender, Brown states.
On Page 49, we glimpse a possible future of commercial real estate investments within downtown cores.
Scott Peterson, an urban planner and transportation expert, paints a picture of how self-driving vehicles may
reshape the need for parking facilities. As automated-vehicle technology takes over in the next 25 to 30 years,
Peterson says, investors and brokers may have to consider other land uses for the spaces where drivers used to park.
Technological innovation also is the theme of Jindou Lee’s article on Page 40. Lee discusses the Internet of Things
— which is expected to connect more than 8 billion objects by year’s end — and how it can make the mortgage
industry more streamlined and cost-effective.
As we enter the final month of 2017, we hope you continue to use Scotsman Guide as your No. 1 resource for
mortgage-related knowledge and connections. As always, we welcome both new and experienced authors to
contribute to our publications in 2018. Whether your expertise is in hard money loans, underwriting practices or
career-development opportunities, we’ll be happy to help you help our readers.
Neil Pierson is editor of Scotsman Guide Commercial Edition.
Reach him at (800) 297-6061 or email@example.com.