Monday, May 4, 2009

The struggle to finance projects

It's become a standard part of just about any interview I have with a commercial real estate broker or developer: The complaints about how hard it is to get financing for new developments these days.

This came up again last week when I was interviewing commercial real estate professionals doing -- or trying to do -- business in Iowa. Acquiring financing is still a major hurdle here. And there are no signs that it's going to get any easier in the near future.

You've heard this before, undoubtedly. If you're in the commercial real estate business, you've probably heard this sentiment expressed a lot less delicately.

Kurt Mumm, president of Des Moines-based NAI Ruhl & Ruhl Commercial, went the more delicate route when we spoke. But that doesn't mean he wasn't accurate:

"We continue to see a lot of the same things that are happening with larger markets. It's all about the constraint in the credit markets," Mumm said. "There is a lack of equity and capital out there for so many of these real estate projects. It's putting a real strain on a lot of our local developers."

It's a shame, really, that developers are struggling so much to gain financing. It's hard for an industry to work its way out of a slump when there just isn't any money flowing into it.

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