Finance and Economics Discussion Series (FEDS)
April 2024 (Revised June 2025)
Shovel Ready Projects and Commercial Construction Activity's Long and Variable Lags
David Glancy, Robert J. Kurtzman, and Lara Loewenstein
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
DOI: https://doi.org/10.17016/FEDS.2024.016r1
PDF: Full Paper
Original Paper: PDF | Accessible materials (.zip)
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