The upheaval in capital and debt markets means few new commercial developments will break ground in Metro Atlanta in the near future. But those projects that move forward will do so with builders saddled with more expensive loans and putting a lot more of their own money into the development, panelists said at Bisnow’s Atlanta Construction and Development Summit last week.

Bisnow/Brandon Elsasser

SJC Ventures principal Fain Hicks and Selig Enterprises Chief Investment Officer Matt Rendle.

“It’s certainly not for the faint of heart to be trying to finance and capitalize development projects in the current environment,” SJC Ventures principal Fain Hicks said during the event held at The W Atlanta Downtown. 

The rapid rise in interest rates has wreaked havoc on the commercial real estate industry, with loans and other debt becoming rapidly more expensive and banks pulling back on new lending as property values drop. This dynamic has slowed the start of new commercial developments across the country, especially new retail centers, offices and warehouses.

Hicks, whose firm developed The Interlock on Midtown Atlanta’s Westside, said there is money available to developers with a track record and conviction, but it’s not without complications.

“Financing is available, but it’s a lot more expensive and it takes a lot longer,” he said. “To complete the capital stack, you either have to contribute more equity, which impacts the project’s returns, or there’s preferred equity or mezzanine lenders, which kind of create additional layers and many different additional considerations compared to just…