Construction Delays and the COVID-19 Pandemic

Analysis by Dr. Victor Calanog et al.

Economic downturns cause delays and cancellations for new construction in multifamily and commercial real estate, as uncertainty about the timing and magnitude of future cash flows prompts market players to reassess priorities. The COVID-19 crisis adds several layers of complexity as shelter-in-place policies are disrupting supply chains and (in some places) halting construction activity altogether.

This paper focuses on how the COVID-19 pandemic will affect construction delays across property types, and relevant geographic markets for those types. We combine Moody’s Analytics REIS platform’s proprietary building-level data on new construction lifecycles with real-time monitoring of which places have classified construction as either essential or non-essential. We make informed assessments of where delays will arise, in what magnitude, and how performance metrics like rent growth and vacancy trajectories will be affected.

Free Download


Victor Calanog, PhD CRE® is the Head of CRE Economics at Moody’s Analytics REIS. He and his team of economists and analysts are responsible for the firm’s market forecasting, valuation, and real estate portfolio analytics services. He holds a PhD in Applied Economics and Management Science, trained by a dissertation committee composed of faculty from the Wharton School of the University of Pennsylvania and Harvard Business School.

______

Looking for additional insights? Explore our interactive COVID-19 map to analyze the potential impact on commercial real estate markets.

______

You may also find our website dedicated to COVID-19 to be helpful during this time. Visit moodys.com/coronavirus for our latest research and views on the credit and economic impact of COVID-19. This site brings together insights from across Moody’s to help you better understand the financial implications of the outbreak.