The Power of a Construction Consultant in Streamlining Communication

With numerous stakeholders, complex processes, and the potential for miscommunication, the construction industry often faces challenges that can impact project timelines and outcomes. This is precisely where the power of construction consulting comes into play, acting as a catalyst for streamlined communication to ensure a successful project outcome.

 

What is a Construction Consultant?

A construction consultant offers strategic expertise and insight to optimize various aspects of a construction project. One of the fundamental features addressed by an experienced consultant is communication. The ability to convey information accurately and efficiently throughout the project lifecycle is fundamental for mitigating risks and ensuring timely completion. By identifying potential communication challenges early, consultants can develop proactive strategies to address these challenges before they escalate. This foresight minimizes the likelihood of misunderstandings and breakdowns in communication, fostering a more efficient project environment.

 

The Benefits of a Construction Consultant

Beyond the immediate strategies for communication improvement, construction consulting firms offer numerous long-term benefits. Projects under their guidance experience enhanced efficiency and have the potential for a project to remain on time and within budget. Here are several reasons how they contribute to enhanced communication:

Clear Project Goals and Objectives: Consultants work to establish clear and concise project goals and objectives. This clarity serves as a roadmap for the entire project team, reducing the likelihood of misunderstandings and promoting a unified understanding of the project’s needs.

Regular Project Updates: Consultants facilitate regular project updates to keep all stakeholders informed about the project’s progress through effective communication. This helps prevent surprises and allows for timely adjustments as needed.

Proactive Risk Assessment: Construction consultants are adept at identifying potential challenges early in the project planning phase. By conducting thorough risk assessments, they can anticipate issues that may arise and develop proactive strategies to address and mitigate these challenges.

Documentation and Reporting: Consultants ensure thorough documentation and reporting of project-related activities. This includes monthly progress reports and any other relevant information, providing a comprehensive record that aids in decision-making and accountability.

 

Why Choose Moran Consultants

Moran Consultants offers a specialized and efficient solution for effective communication through our construction loan monitoring service. Our team of consultants has the expertise to minimize risks, ensure stakeholder alignment, and provide transparent reporting crucial for successful project financing. With adaptive communication strategies and a commitment to efficiency, Moran Consultants have become invaluable partners in navigating the complex landscape of construction financing. With over 250 years of combined construction consulting experience, we have helped our clients mitigate risk across the country. We believe our years of success are attributed to our commitment to offering a personalized service tailored to each client’s individual needs.

Want to learn more about how Moran Consultants can help with your next CRE deal? Give us a call at 866-545-3350 or contact us online to learn how we can help safeguard your investment.

Understanding Local Law 97 and Its Impact on NYC’s Green Initiatives

In recent years, New York City has become one of the leading cities in passing legislation to reduce greenhouse gas emissions. With their city buildings accounting for approximately two-thirds of their overall emissions, former Mayor de Blasio made a bold commitment to reduce these emissions and make the city carbon neutral by 2050. A significant step towards achieving this ambitious goal is through the passing of Local Law 97, which will be taken into effect beginning in 2024.

Local Law 97: A Key Component of the Climate Mobilization Act

Local Law 97, a crucial component of the Climate Mobilization Act, was passed by the City Council in April 2019, aligning with the Mayor’s New York City Green New Deal. This law outlines a comprehensive strategy to tackle emissions by decreasing and/or eliminating the carbon footprint of certain city buildings.

Goals and Targets of Local Law 97

The primary objectives for Local Law 97 are to reduce emissions produced by the city’s largest buildings by 40 percent by 2030 and a remarkable 80 percent by 2050. To achieve this, buildings over 25,000 square feet must adhere to new energy efficiency and greenhouse gas emissions limits by 2024, with even stricter limits taking effect in 2030. Moreover, Local Law 97 established the Local Law 97 Advisory Board and Climate Working Groups to provide guidance and advice to the city on the best practices to meet these ambitious sustainability goals.

Local Law 97 primarily targets buildings that exceed 25,000 gross square feet, however, it also encompasses clusters of buildings on the same tax lot that together exceed 50,000 square feet and buildings owned by a condo association governed by the same board, totaling over 50,000 square feet. These criteria are designed to address emissions from the city’s most substantial buildings while providing clarity on affected properties. Starting in 2024, buildings that exceed their annual emission limits will face a fine of $268 per ton of CO2 equivalent over the limit. Emissions will be calculated based on tons of CO2 equivalent per square foot.

Chart of Local Law 97 penalties

Source: NYC Accelerator: New York City’s Climate Mobilization Act

There are some exemptions and compliance pathway options for properties such as affordable housing buildings, outlined within Local Law 97, ensuring that its application is both effective and fair. There are also numerous free resources available through NYC Accelerator for property owners to help them meet the new building requirements.

Staying Informed

To remain informed about Local Law 97 and its evolving implications, a valuable resource is the Department of Buildings (DOB) Greenhouse Gas Emission Reporting website. This website provides detailed information about emissions limits, exemptions, and compliance guidelines.

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Columbus on the Map: The Midwest’s New Tech Powerhouse

A recent article published by Construction Dive entitled “Columbus embraces its role as ‘Tech Capital of the Midwest”, delves into the rapid growth of Columbus, Ohio, and its emergence as a tech hub in the Midwest. The article highlights the resilience of Columbus throughout the years, such as during the economic downturn of 2008-2009. While initially known for its construction activities in healthcare and education projects, the city has strategically shifted its focus towards extensive industrial and technological developments.

Columbus Grows from Small Town Atmosphere to Tech Hub

Home to Ohio State University and headquarters for major corporations such as Bed Bath & Beyond, Nationwide, and Big Lots, Columbus’ appeal to businesses lies in its unique blend of a small-town atmosphere and its growing urban status. Several businesses have taken advantage of this growing metropolis and are contributing to the transformation of Columbus into a tech hub. This includes:

  • Intel’s colossal $20 billion semiconductor manufacturing facility
  • Google’s multimillion-dollar data centers
  • A $2 billion airport terminal expansion
  • And a $1.9 billion hospital project

State and local governments have also played a pivotal role in attracting global corporations, such as Intel and Amgen, further facilitating the establishment of major factories and operations in the city. In 2022 alone, an impressive 75 groundbreaking projects commenced in the semiconductor, electric vehicle, and life sciences sectors.

The Challenges of Rapid Growth

Even though the city is seeing major developments, Columbus’ rapid expansion has also posed some challenges. Just like other cities across the country, construction companies are grappling with a shortage of skilled labor as they compete with other employers for the same workforce. Additionally, there is a noticeable scarcity of qualified instructors and inspectors for construction-related training programs. To address this labor crisis, the industry is investing heavily in training and continuing education for its workforce.

The Pursuit of Innovation & Progress

The surge in construction activity and the rise of Columbus as a prospective tech hub have prompted the city to warmly embrace its newfound status as the “tech capital of the Midwest,” a distinction acknowledged by the state’s Lieutenant Governor. This construction upswing, characterized by big-ticket projects, highlights Columbus’ promise to become a city for innovation and progress.

While facing the looming challenges of a limited construction workforce, Columbus’ journey from a small-town gem to an expanding tech epicenter is a testament to its unwavering determination and adaptability, offering countless opportunities for both businesses and residents alike.

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Staffing Woes and Diesel Fuel Soars: A Snapshot of Construction Realities

In the world of commercial construction, every fluctuation in costs and labor availability can significantly impact a project’s timeline and budget. An analysis recently published by the Associated General Contractors of America (AGC) sheds light on the challenges facing the construction industry, revealing a monthly increase in costs driven by a dramatic surge in diesel fuel prices. The survey also underscores the ongoing staffing challenges faced by contractors, which have a direct impact on project completion. This serves as a stark reminder that supply chain disruptions experienced during the COVID-19 pandemic have not yet been fully mitigated. Below is an overview of the key insights derived from AGC’s research as well as the benefits of having a construction consultant on your team to ensure the success of your investment.

Soaring Diesel Fuel Prices

The headline-grabbing aspect of the AGC’s analysis is the near-record leap in the diesel fuel price index. From mid-July to mid-August, the producer price index for diesel fuel skyrocketed by a staggering 34.6%. This surge represents the most substantial one-month increase in diesel fuel prices since 1990. Further exacerbating the situation, retail diesel prices have continued their upward trajectory, with a 77 cents per gallon increase over just ten weeks.

Impact on Bid Prices

The effect of the diesel fuel price spike is evident in the broader landscape of construction costs. In August alone, these costs increased by 1.1%, marking the highest jump since January. However, it’s worth noting that while fuel costs played a significant role in this increase, other commodity prices remained relatively subdued. The index for new commercial building construction, a measure of the bid prices contractors charge for new structures, saw a modest 0.2% uptick in August. Year-over-year changes were also relatively mild, standing at 0.1% for inputs and 4% for bids.

Stable or Declining Prices for Other Commercial Construction Materials

Apart from volatile fuel costs, many construction materials experienced stable or declining prices in August. Cement and architectural coatings, for example, saw flat price indexes. There were also decreases of 0.2% for plastic construction products, 0.5% for steel mill products, and 0.4% for gypsum building materials. These figures suggest that the overall construction cost landscape is relatively stable beyond the diesel fuel price surge.

Ongoing Staffing Challenges

While fluctuating costs are a headache, the AGC’s annual workforce survey, conducted in collaboration with Autodesk, highlights an equally critical issue: staffing challenges. An astounding 85% of respondents reported having job openings for hourly skilled craft workers or salaried workers. Within this group of firms, 88% reported difficulty filling skilled craft positions, while 86% reported similar challenges for salaried openings. Furthermore, 61% of firms that experienced project delays attributed them to worker shortages.

Stephen E. Sandherr, the AGC’s chief executive officer, emphasized that the current approach to preparing future workers is failing the high-paying construction sector. Many parts of the country are struggling to find enough skilled workers to meet the increasing demand for construction projects. The survey findings reveal that two-thirds of contractors believe that many candidates lack the necessary skills to be employable in the industry. To address this gap, AGC officials stress the importance of exposing more individuals to construction career opportunities and providing them with the fundamental employment skills required for success.

How a Construction Consultant Can Protect Your Investment

While the construction industry grapples with the challenges of rising material costs and staffing shortages, there are strategic solutions available to help projects stay on time and within budget. One invaluable resource for achieving this goal is partnering with Moran Construction Consultants. Bringing a wealth of industry knowledge, our consultants utilize their years of experience to help project stakeholders make informed decisions that optimize resource allocation and budget management.

Skilled at adapting to changing circumstances in the face of fluctuating costs and labor market dynamics, we can provide recommendations to keep your project on the right track even when external factors threaten to derail it. Interested in learning more about how we can help? Contact us online or call us at 866-545-3350 to learn how our team of consultants can help protect your investment.

The Florida “Live Local Act”: A Game-Changer for Affordable Housing

What Is the “Live Local Act”?

Florida’s affordable housing crisis has recently taken center stage with the passing of new legislation. The state’s “Live Local Act” (Chapter 2023-17, L.O.F.) was recently approved by the Governor and has been in effect since July 1st,2023. As a comprehensive piece of legislation designed to make significant changes and additions to affordable housing programs and policies at both the state and local levels, below are the main takeaways and the impact it will make in the affordable housing space.

Empowering the FHFC

This landmark legislation touches on various aspects of affordable housing, with a primary emphasis on the Florida Housing Finance Corporation (FHFC). This public-private entity administers two of the state’s most critical affordable housing programs:

  • the State Apartment Incentive Loan (SAIL) program
  • and the State Housing Initiatives Partnership (SHIP) program

 

The legislation provides substantial appropriations for these programs, injecting $252 million from the Local Government Housing Trust Fund into the SHIP program and $109 million from the State Housing Trust Fund into the SAIL program for the 2023-2024 fiscal year. Additionally, a $100 million allocation from the General Revenue Fund is designated to create a competitive loan program to counter inflation-related cost increases for FHFC-approved multifamily projects that have not yet commenced construction. Any unallocated funds as of December 1, 2023, will also be allocated as additional SAIL funding.

Recognizing the importance of homeownership as a crucial measure to address housing stability, the “Live Local Act” establishes the Florida Hometown Hero down payment assistance program. This initiative is designed to assist first-time homebuyers with incomes at or below 150 percent of the area median income (AMI) who are employed by Florida-based employers. The program is bolstered by a $100 million appropriation from the General Revenue Fund, offering significant financial support to aspiring homeowners.

Additional Funding and Resources for FHFC Include:

  • Up to $5,000 in a refund for sales tax paid on any building materials used to construct affordable housing units.
  • Adds requirements to its annual legislative budget request.
  • The creation of a tax donation program that would allow corporate taxpayers to direct specific tax payments, up to $100 million annually, to the FHFC’s SAIL program.
    • Of these funds, up to $25 million can be given to loans for the construction of large-scale projects of significant regional impact.
  • Two members of the FHFC Board of Directors will be added with one appointed by the leader of each chamber of the Legislature.
  • Allow the FHFC to invest in affordable housing developments for those in and/or aging out of foster care.

 

State-Level Resources, Local Government Initiatives, and Ad Valorem Property Tax Exemptions

The legislation takes a comprehensive approach, not only focusing on the FHFC but also addressing state-level resources and local government initiatives. It revises the State Housing Strategy to align with current best practices and goals, fostering efficient resource allocation. Furthermore, it mandates the analysis of state nonconservation lands to determine if they could be more appropriately transferred to local governments for affordable housing purposes, optimizing land utilization. In a significant move, the legislation expands Job Growth Grant Fund eligibility to include public infrastructure projects that support affordable housing, encouraging economic growth and development in the sector. The Community Contribution Tax Credit Program for affordable housing also receives a boost, with the annual tax credits increasing from $14.5 million to $25 million, incentivizing private sector contributions to affordable housing initiatives.

Empowering Streamlined Housing Development

In an effort to expedite the construction of affordable housing in areas that need it the most, the “Live Local Act” preempts local governments’ requirements related to zoning, density, and height under certain circumstances, facilitating more efficient construction processes. It also removes the local government’s authority to approve affordable housing on residential parcels by bypassing state and local laws, ensuring a consistent regulatory framework for all developments. Moreover, it preemptively removes the possibility of local governments imposing rent control under emergency circumstances, further eliminating potential barriers to affordable housing growth.

Government Accountability

Local governments are also held accountable through the legislation, with requirements to update and electronically publish inventories of publicly owned properties suitable for affordable housing development. Technical assistance from the FHFC is provided to facilitate the use or lease of county or municipal property for affordable housing purposes. The bill further mandates local governments to establish public written policies outlining procedures for expediting building permits and development orders for affordable housing projects, promoting efficiency and transparency. Specifically relating to the Keys area, this act will exempt the Department of Economic Opportunity’s 1,300 affordable housing units constructed by the 2018 Keys Workforce Housing Initiative from evacuation time requirements that are applied in Monroe County.

Tax Exemptions

Lastly, the “Live Local Act” introduces three ad valorem property tax exemptions, which will apply to the 2024 tax roll. These exemptions incentivize affordable housing development, including exemptions for land owned by nonprofit entities leased for at least 99 years for affordable housing, rent-restricted units within newly constructed or substantially rehabilitated developments for low-income households, and the authorization for counties and municipalities to offer additional ad valorem tax exemptions to property owners dedicating units for affordable housing.

How Moran Construction Consultants Can Help

With the increased volume of affordable housing construction comes an increased need for construction risk mitigation and due diligence. Programs like the “Live Local Act” can greatly benefit from the expertise of professionals like Moran Construction Consultants. Through diligent oversight, Moran Construction Consultants can help identify and mitigate potential risks, ensuring that projects stay on track and within budget. This level of scrutiny and expertise is essential in safeguarding the success of these new initiatives. As Florida continues its mission to make housing more accessible and affordable, collaboration with experienced consultants becomes a crucial element in the equation. Give us a call at 866-545-3350 or contact us online to learn more about how we can help safeguard your next affordable housing investment.

Revitalizing Cincinnati: Budget Prioritizes Housing Solutions Amid Fiscal Challenges

Cincinnati City Hall’s proactive approach to addressing pressing housing issues takes center stage as city leaders meticulously craft the budget for fiscal years 2024 and 2025. In this proposed budget, the city showcases a resolute commitment to tackling housing-related challenges head-on, ranging from eviction prevention to improving code enforcement.

A Dual-Purpose Approach

One notable allocation in the proposed budget is $1 million for a program designed to provide tenants with access to counsel and emergency rental assistance for those who are at risk of eviction. This initiative seeks to offer a safety net for vulnerable renters and prevent homelessness. Additionally, the city wants to establish a code enforcement team that will be dedicated to addressing issues related to code violations and inadequate property conditions. This team will consist of nine full-time positions incorporated into the city’s building and inspection department. The team’s mission goes beyond mere enforcement, as it aims to protect tenants and improve housing conditions, which, in turn, can boost property values.

This dual-purpose approach is expected to generate revenue, both directly through citations and indirectly through the preservation and enhancement of property values. On top of this, the proposed department will oversee various aspects of housing policy, including blight enforcement, nuisance mitigation, and tenant protection. To support these endeavors, the city’s budget earmarks approximately $1.46 million annually. Another significant inclusion in the proposed budget is the allocation of roughly $550,000 for a pilot rental rehabilitation loan program. This initiative is aimed at smaller rental properties, with the goal of increasing the availability of affordable housing. By focusing on rehabilitating existing rental units, the city hopes to contribute to its affordable housing stock.

NYC Creates Team to Accelerate Office-to-Housing Conversions

New York City (NYC) has launched an Office Conversion Accelerator Team to streamline the process of converting office buildings into housing units. This initiative, announced by Mayor Eric Adams, aims to facilitate adaptive reuse projects that involve converting office spaces into 50 or more housing units. The team will consist of representatives from various city departments and agencies, including City Hall, The Department of City Planning, The Department of Buildings, The Department of Housing Preservations & Development, The Board of Standards & Appeals, and The Landmarks Preservation Commission.

This effort is based on recommendations from The Department of City Planning’s Office Adaptive Reuse Study, issued in January. The study suggested creating a centralized contact point within the city government to assist with office-to-residential conversion projects. Additionally, the study proposed rezoning a section of Manhattan, specifically from W. 23rd to W. 41st streets, to remove zoning restrictions that limit building uses to offices or manufacturing. This rezoning would enable aging office buildings to be transformed into apartments.

The Office Conversion Accelerator Team will provide support to property owners looking to convert their office buildings into residential units. This support includes analyzing the feasibility of zoning for individual conversion projects and helping secure the necessary permits.

Mayor Adams estimated that the rezoning and conversion efforts could yield around 20,000 housing units in midtown Manhattan, contributing to the larger goal of building 500,000 new housing units in NYC over the next decade. Additionally, the study recommended changing regulations to allow older office buildings constructed before 1990 to be more easily converted to residential use. The study also proposed expanding access to flexible conversion regulations for all high-intensity office districts.

How Moran Construction Consultants Can Help

The launch of the Office Conversion Accelerator Team marks a significant step by New York City to address its housing challenges through innovative adaptive reuse strategies. As the city strives to transform underutilized office spaces into much-needed housing units, the involvement of 3rd party consultants can play a pivotal role for lenders, syndicators, and investors.

Moran Construction Consultants bring a wealth of experience in navigating complex regulatory processes, assessing feasibility, and providing crucial insights to property owners and developers. Whether you require a Property Condition Assessment, Phase I ESA, Owner’s Representation, or Construction Loan Monitoring, our team of in-house consultants can offer invaluable insights for your upcoming commercial real estate venture. Utilizing our grasp of local expertise, our consultants play a pivotal role in guaranteeing the successful transformation of office buildings into residential units in New York City.

4 of the Fastest Growing Cities for Commercial Real Estate in the United States

The United States’ commercial real estate market is witnessing a dynamic and transformative period, driven by economic growth, innovation, and demographic shifts. As businesses continue to expand and adapt to evolving consumer demands, certain cities stand out as hotspots for commercial real estate investment. Below are a few of the fastest-growing cities for commercial real estate, where opportunities abound for investors, developers, and businesses alike.

Austin, TX's fast growth rate attracts businesses in need of commercial real estate.

 

Austin, Texas

Austin’s meteoric rise as a technology and innovation hub has propelled its commercial real estate market to new heights. With an annual population growth rate of around 3% over the past decade, the city’s vibrant community attracts both startups and established corporations. The demand for office space in Austin increased significantly, with absorption rates of over 2 million square feet in 2020 alone. The city’s tech job market remains robust, contributing to its reputation as a tech mecca. These trends signal Austin as a burgeoning destination for businesses seeking expansion and investors looking to capitalize on the city’s booming commercial real estate sector.

Nashville, TN is a commercial real estate powerhouse.

 

Nashville, Tennessee

Nashville has recently emerged as a major commercial real estate powerhouse. The city’s population has grown by an average of 2% per year over the last decade, reflecting its appeal as a destination for both businesses and residents. With over 15 million visitors expected to visit the city in 2023, Nashville’s hospitality industry has experienced remarkable growth, driving the demand for hotels and retail spaces. The job market has expanded across various sectors, including healthcare, entertainment, and finance. These impressive statistics showcase Nashville’s allure as a commercial real estate hotspot and underscore the city’s significance in the U.S. real estate market.

Charlotte, NC's financial sector drives commercial real estate growth.

 

Charlotte, North Carolina

As the second-largest banking center in the U.S., Charlotte’s financial sector has been a major driver of the demand for office spaces in the city. Moreover, the investment in infrastructure projects to support its growing economy has enhanced its appeal to investors. Consequently, the city’s population grew at an average rate of 2.5% per year over the last decade, reflecting its attractiveness to professionals and businesses alike. The city’s position as a top destination for commercial real estate opportunities is undeniable.

Phoenix, AZ has a booming commercial real estate market.

 

Phoenix, Arizona

With a population growth rate of around 2.5% annually over the last decade, Phoenix attracts businesses seeking affordable office spaces and a growing workforce. The city’s industrial market boom, driven by its advantageous location for distribution and logistics, has been a significant contributor to its commercial real estate growth. With an expanding job market across various industries, including healthcare, manufacturing, and technology, Phoenix offers promising opportunities for commercial real estate investors.

In the up-and-coming commercial real estate markets of Austin, Nashville, Charlotte, and Phoenix, opportunities are abundant, but so are the risks. As investors, developers, and businesses flock to these dynamic cities, the importance of mitigating construction risk becomes paramount. That’s where Moran Consultants steps in as your trusted partner.

How Moran Consultants Can Save You Time and Money with Your Next Investment

Navigating the complexities and unique risks of commercial real estate development and investment demands the utmost expertise and experience. Moran Consultants offers comprehensive services tailored to the unique challenges of each of these booming markets. With the help of our large database of past projects and years of local knowledge, we can complete accurate comparisons regarding project cost, time, and project team experience based on geographic region and specific project type. With Moran Consultants as part of your team, our consultants can offer the insights you need to make informed choices and the peace of mind that your investments are secure. Give us a call at (866)-545-3350 or contact us online to learn how we can help you with your next deal!

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Construction Loan Monitoring Decreases Probability of Loan Default Based on New Study

A greater level of construction loan monitoring can lead to improvements in overall loan default, according to a paper recently published by the FDIC Center for Financial Research. The paper “Bank Monitoring with On-Site Inspections” used a database of nearly 30,000 non-syndicated multiple-draw construction loans over a ten-year period by a single bank to quantify the rate at which banks receive updates on a project’s progress as well as how banks used the information obtained within a construction loan monitoring report to impact their decision making. Proclaimed to be the first study of its kind, the findings of this study verify the long-held theory that the use of construction loan monitoring is an advantage for lenders to lower their financial risk and improve the quality of their loan portfolios.

Based on their findings, the author specifies that if a bank increases its construction loan monitoring by 1% within a 100-day period, the probability of default would decrease by 3.63%. Being that the average default risk within a 100-day period is 5%, the use of construction loan monitoring reduces your level of risk by more than 50%. The information provided within a construction loan monitoring report can allow lenders to manage credit more effectively and incentivize borrowers to complete projects on time and within budget. With construction loans also requiring more administrative tasks and oversight than other loans, having a comprehensive report can help borrowers stay on top of the construction process, construction details, and local market conditions.

Although this study looked at primarily residential properties, the information gained gives great insight into the overall risk lenders face on all loan types. Highlighting a bank’s involvement in CRE deals, the author reports that, “lending in commercial real estate (CRE) has increased as a share of bank balance sheets over time, with the largest proportional increases occurring in small banks.” Further, the author emphasizes the riskiness of CRE loans by stating that, “CRE lending is inherently risky, and construction and land development (CLD) loans are widely considered the riskiest sub-category of such bank lending.” As banks continue to see a rise in CRE lending, the need for construction loan monitoring will remain a vital resource for these types of loans.

Construction loan monitoring may seem like a complex task, but with a professional construction consultant on your side, you can be confident knowing someone is looking out for your financial interest. At Moran Construction Consultants, our 50 years of industry experience have afforded us an incredible range of expertise. With projects across the country, we have a unique perspective on national and local market trends. Our extensive database of project information allows us to make current, accurate, and timely comparisons of similar projects in any market. Our dedicated and responsive team consistently meets the national demands of our customers with local market knowledge. Give us a call at 225-315-2003 or contact us online to learn how we can help safeguard your investment.

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New York State Bans Natural Gas Hookups: What Does This Mean for New Construction?

New York has become the first state to ban the use of natural gas stoves, furnaces, and propane heating in most buildings under a new budget deal negotiated by Gov. Kathy Hochula. This type of law has been seen at a city level, such as in Berkley, California, and Seattle, Washington. However, this larger-scale adaptation is unprecedented. The Governor does, however, understand that people might be hesitant to give up their current appliances for all-electric. Wanting to be at the forefront of decreasing building emissions, Gov. Hochula states, “This is where our nation has to go eventually” … “But I want to make sure that it’s not a bumpy road to the transition.” 

The Property Impact

To make the transition to all-electric as hassle-free as possible, this law will not impact existing properties. In addition, it will not go into effect for new construction until 2026 for buildings less than seven stories and until 2029 for anything taller. Buildings that currently utilize natural gas will be able to keep their appliances and projects currently under construction will be able to continue utilizing natural gas appliances.

Designed to largely impact residential properties, certain buildings will also be exempt such as restaurants, retail stores, laboratories, and hospitals. Furthermore, a city’s electrical grid will also be considered in the enforcement of this new law. Buildings being constructed in areas where the power grid cannot handle the electrical output will be able to use gas appliances as an alternative. 

The Financial Impact

While there may be some push-back on this new regulation, people who support this enactment are looking forward to a decreased dependency on oil and natural gas and believe that all-electric appliances have the potential to decrease energy costs for consumers. Opponents, however, are worried that the enforcement of electrical appliances, such as heat pumps, will require substantial upfront costs ( up to $10,000 for a typical residential system) and have the potential to not work effectively during New York winters, where residents can see temperatures as low as -2 °F.

The Future of National Natural Gas Regulations

With other state and local governments approving or scheduling measures for all-electric appliances in new construction, we may see more and more states pass regulations for natural gas usage. Washington State, for example, has approved a building code that requires the use of heat pumps in lieu of furnaces in most buildings. Similar regulations are being put in place in states such as Maryland and Colorado as well as many other local municipalities nationwide. With these new regulations gaining legislative popularity, only time will tell how these new regulations impact overall costs for new construction as well as overall building emissions.

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