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Hines shifts toward development as new building drops
Hines cited a sharp pullback in development, including U.S. industrial projects down about 60% from 2022 peak and London office development cut in half since 2023, alongside stabilized financing costs.
Bisnow reports Hines is pivoting back toward development after years when real estate investment volumes fell and, more importantly, new development dried up globally.
According to Hines Managing Partner and co-Head of Investment Management Alfonso Munk, development is positioned to deliver attractive returns as scarcity emerges in specific locations and sectors where demand outstrips available supply.
The outlet points to broad declines in new construction activity, including U.S. industrial development down about 60% since its 2022 peak, London office development halved since 2023, and European residential construction at a 20-year low.
Bisnow adds that higher costs starting in 2022, driven by materials and labor inflation and the resulting interest rate increases, made development harder to finance and less viable when rents failed to catch up. Munk said financing conditions have since stabilized, with lender rate margins lower than historic levels and competition among debt providers contributing to improved feasibility for developers.