Search Results
What’s Driving the Surge in U.S. Corporate Profits?
Nonfinancial industries, primarily retail and wholesale trade and construction, drove a recent rise in U.S. corporate profits as a share of national income.
Working Paper
On Commercial Construction Activity's Long and Variable Lags
We use microdata on the phases of commercial construction projects to document three facts regarding time-to-plan lags: (1) plan times are long—about 1.5 years—and highly variable, (2) roughly 40 percent of projects are abandoned in planning, and (3) property price appreciation reduces the likelihood of abandonment. We construct a model with endogenous planning starts and abandonment that matches these facts. The model has the testable implication that supply is more elastic when there are more "shovel ready" projects available to advance to construction. We use local projections to ...
Journal Article
How Long Does It Take to Build Multifamily Housing?
Increasing the supply of multifamily housing is a key strategy to reduce the cost of shelter in our larger cities. However, the time required to produce these units has grown over time. We document the duration from when an apartment or condominium development or redevelopment (i.e., conversion from another use) is first announced until its completion. We break down this duration into (a) the planning and permitting phase and (b) the construction phase. We find that, on average, projects spend three to four months more in the planning stage than in construction. This project duration is ...
Journal Article
Industrial building boom is bigger in Texas, signaling growth wave
Texas is undergoing a boom in technology and energy-related construction that follows a pandemic-era warehouse and logistics building surge.
Working Paper
Understanding the Exposure at Default Risk of Commercial Real Estate Construction and Land Development Loans
We study and model the determinants of exposure at default (EAD) for large U.S. construction and land development loans from 2010 to 2017. EAD is an important component of credit risk, and commercial real estate (CRE) construction loans are more risky than income producing loans. This is the first study modeling the EAD of construction loans. The underlying EAD data come from a large, confidential supervisory dataset used in the U.S. Federal Reserve’s annual Comprehensive Capital Assessment Review (CCAR) stress tests. EAD reflects the relative bargaining ability and information sets of ...
Working Paper
Shovel Ready Projects and Commercial Construction Activity’s Long and Variable Lags
We use microdata on the phases of commercial construction projects to document three facts regarding the sector's time-to-plan lags: (1) plan times are long and highly variable, (2) nearly half of projects in planning are abandoned, and (3) property price appreciation reduces the likelihood of abandonment. We write down a tractable model of endogenous planning starts and abandonment that can match these facts. The model also has the testable implication that supply is more elastic when there are more "shovel ready" projects ready for construction. We use local projections to validate this ...