This month the Federal Reserve raised interest rates by another 75 basis points, bringing the total increase in 2022 to 2.25%. Rising interest rates and increased fears of a prolonged recession have already impacted commercial real estate projects, as future projects are burdened by additional constraints passed onto them by financial lenders. In Austin’s current active markets, we have witnessed multiple projects delayed from previously planned start dates. Prior to the latest increase, the hike in interest rates has had a profound impact on the residential construction market both in new builds and existing homes sales.  

When these factors are added to rising construction costs and impacts from current supply chain woes, we believe the economic environment will cause owners and developers to revisit their plans. While we are optimistic that prices and supply issues will soften, thus far we haven’t seen widespread price reductions make their way to future projects from subcontractors and suppliers.

Austin will continue to track and monitor leading material indicators as part of our TRUE | View to help our owners make informed decisions.