Reuters has an interesting article today. Like many articles these days, its title is refuted by the facts reported in the body! Here are some of the highlights:
- 11 percent of global skyscraper construction has been halted. I think that means that 89 percent continues.
- In the U.S., it's 10 percent halted and 90 percent continuing.
- In Chicago, delinquency rates on construction loans were 15 percent in 2008 Q4.
To me, these results show no sign of a credit crunch. First of all, recall that construction requires ongoing credit, so that a credit crunch -- if it existed -- should be readily visible in skyscraper construction. Second, note that some of the planned skyscrapers were residential, such as the halted "Chicago Spire." Given the realization circa 2007 that we have too much residential housing, much residential construction should have been halted even without a credit crunch.
From this perspective, it is remarkable that 90 percent of skyscrapers continue to go up. I have been watching four of them (three residential and one commercial) out my window since last summer.
Lenders are generally obligated to continue supplying financing throughout the construction as long as loan covenants are being complied with. The test of a credit crunch is whether otherwise worthy new projects can't get financing. Not that that is an easy thing to determine!
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