Shovel Ready Projects and Commercial Construction Activity’s Long and Variable Lags

David Glancy, Robert Kurtzman and Lara Loewenstein

No 2024-016r1, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We use microdata on the phases of commercial construction projects to document three facts regarding the sector's time-to-plan lags: (1) plan times are long and highly variable, (2) nearly half of projects in planning are abandoned, and (3) property price appreciation reduces the likelihood of abandonment. We write down a tractable model of endogenous planning starts and abandonment that can match these facts. The model also has the testable implication that supply is more elastic when there are more "shovel ready" projects ready for construction. We use local projections to validate this prediction in the cross-section for US cities.

Keywords: Building supply elasticities; Commercial real estate; Construction; Time to plan (search for similar items in EconPapers)
JEL-codes: E22 E32 L74 R33 (search for similar items in EconPapers)
Pages: 55 p.
Date: 2024-04-04, Revised 2025-06-25
New Economics Papers: this item is included in nep-ppm and nep-ure
Note: Revision
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2024-16

DOI: 10.17016/FEDS.2024.016r1

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