after years of seeing city skylines dotted with cranes the landscape is poised to change as elevated interest rates high inflation and strong wage growth curb developers’ enthusiasm for starting new projects according to a recent report from commercial real estate cre firm marcus  millichap projects that already have broken ground or locked in financing are moving forward but new construction starts are being stalled banks are pulling back on construction loans compared to previous years as they tighten underwriting to reduce their risk of exposure if developers can get loans they’re at rates well above prepandemic levels compounding the issue is that materials cost 335 more than they did before the health crisis and construction sector wage growth was 58 in 2022 outpacing the private sector average “while the effect on new supply will be minimal in the near term higher costs for financing building materials and labor are expected to slow future development” according to the marcus  millichap report still some cre sectors are faring better than others for example supply chain disruptions and changes in consumer spending habits are driving demand for industrial space which has resulted in an increase in new products dont miss rooted in stability how farmland investments have outperformed in uncertain economic climates although additions to the supply will reach a twodecade high this year marcus  millichap predicts a development slowdown construction starts declined by about 40 in the fourth quarter compared to the previous three months and amazoncom inc which accounted for about 16 of all warehouse construction starts over the past three years recently announced it plans to stop building new facilities even with rising interest rates recent bank failures and more expensive materials and labor the apartment sector continues to see record inventory growth about 400000 new apartment units are expected to be completed in 2023 the first time in 30 years the multifamily sector has reached that mark and in february multifamily project starts reached the secondhighest monthly measure in three decades indicating that momentum for new construction hasn’t slowed in the sector marcus  millichap attributes the flurry of activity to an ongoing national housing shortage with steep barriers to homeownership which is boosting developer confidence and will continue to drive the development of new communities in the near to midterm while industrial and multifamily have continued to flourish office and retail are stagnant the total amount of square footage for both office and retail is projected to increase year over year in 2023 but new proposals are declining so construction starts are expected to do the same the prevalence of online and omnichannel shopping and workfromhome trends have lessened the demand for brickandmortar retail and new office space check out more on real estate from benzinga   warren buffetts investing strategy is more relevant than ever in todays real estate market here’s how you can act now before it’s too late   peoplefirst real estate fund shares rent with tenants while generating strong returns for investors   techies will soon flood austin even harder heres how to invest in its real estate before that happens