Read the latest news and trends in the construction industry.
January in Review
We’re ready to share with you all some industry insights from the past month including rising interest rates, slowing commercial starts, Florida construction, and more.
What is a Reliance Letter?
A Reliance Letter is used to convey the right to rely on a report to a particular party (someone other than the original user of the report).
When NWM provides a due diligence report (i.e., a Project Review or Draw Inspection), it is for the sole use of the original requestor.
When multiple lenders are involved in a CRE project, a lender will engage us to perform a Project Review or Draw Inspection. The user is the lender and additional reliance may be granted to other parties. Without this reliance, an additional party could perhaps review a report but would not be able to rely on it for their own due diligence or liability protection.
A reliance letter gives the third party the right to rely upon the accuracy of the report that was initially prepared for someone else, which results in increased liability for NWM. Hence, someone who was once considered a third party is now, for all intents and purposes, a client.
Feel free to book a meeting below to answer any questions you might have.
How Rising Interest Rates Affect the Construction Industry
The Federal Reserve sets interest rates to control inflation, and changes in interest rates can have a significant impact on the economy as a whole, including the construction industry.
When interest rates are low, it becomes more affordable for individuals and companies to borrow money for construction projects, leading to increased construction activity. Conversely, when interest rates are high, borrowing becomes more expensive, slowing down the construction industry.
Read about some construction industry challenges that have been caused by higher interest rates and their potential impact on your construction project here:
Total Commercial Starts are Beginning to Show Strain as the Economy Slows.
According to Construction Dive, the number of commercial construction starts is expected to decrease in the coming year, due to factors such as a shortage of skilled labor, rising material prices, and interest rate hikes.
Retail, office, warehouse, manufacturing and hotel projects, are to fall 13% in 2023, when adjusted for inflation. Continue reading here.
Florida Remains the Best State for Construction
For the fourth time, Florida claimed the top spot in Associated Builders and Contractors’ eighth annual Merit Shop Scorecard, a ranking of all 50 states and the District of Columbia, based on policies and programs that strengthen career pathways in construction, encourage workforce development and advocate for fair and open competition on taxpayer-funded construction projects.