Commercial Construction Starts Are Picking Back Up

Real Estate Insights. Success Mindset. One Step at a Time. Issue Date: April 13, 2025

📈 Market Insights

🏗️ Commercial Construction Starts Are Picking Back Up

According to Dodge Construction Network, nonresidential building starts rose 14% in March—led by a surge in warehouse and healthcare projects.

📍 Key Takeaway: Institutional money is betting on long-term demand for logistics and medical facilities. Dirt Dawgs should take note—those entitled land plays near infrastructure hubs just got hotter.

📉 Multifamily Pricing Faces Downward Pressure

In major markets like NYC, Boston, and D.C., multifamily valuations are still adjusting. Cap rates have crept up, and sellers are realizing that 2021 pricing is a thing of the past.

📍 Key Takeaway: If you’re buying, underwrite with discipline. If you’re holding—consider refinancing before rates climb further.

📢 New IRS Rule Could Impact 1031 Exchange Timing

The IRS just issued clarifying language on timelines for 1031 exchanges tied to disaster extensions. While this applies narrowly, it’s another reminder:

📍 Key Takeaway: Don’t cut it close. Your 1031 clock is ticking the moment that sale closes. Lock down replacement property options early, especially in today’s tighter deal flow.

🧠 The Alpha Effect: Adaptation Beats Perfection

One of the biggest lies in real estate—or life—is the idea that a perfect plan guarantees success.

Here’s the truth:

• Markets shift.
• Partners back out.
• Costs balloon.

The developers who win? They don’t chase perfection—they adapt fast.

A client of mine once built his entire strategy around a lease-up and flip. Then rates spiked and buyers froze.

Instead of panicking, he pivoted: 🔁 Extended financing 🎯 Retargeted renters 💰 Switched to a long-term cash flow model

And now? He’s profitable because he pivoted, not in spite of it.

Mindset takeaway:

"If you're rigid, the market will break you. If you're adaptable, you'll bend—and bounce back stronger."

💭 Where do you need more flexibility right now?

👣 One Step at a Time

🛠️ Pre-Development Checklist: Before breaking ground, confirm you’ve got:

• ✅ Verified zoning & entitlements
• ✅ GC and subcontractor vetting
• ✅ Financial model stress-tested (10–20% cost overrun)
• ✅ Market shift scenarios + exit strategies
• ✅ Community engagement plan

📊 Power Tool: Smartsheet for Developers – One dashboard for timelines, bid tracking, and reporting to lenders.

🎧 Podcast Pick: HousingWire Daily – Your daily hit of what’s really moving the market.

Want a deeper dive into any section? Hit reply or leave a comment.

Until next week, Kris “Dirt Dawg” McGee

Here's to building your success, one step at a time.—from the ground up.