Section 8.3 - How Market Delays Create Real Estate Cycles

In this episode, Alex and Lily explain the stock-flow model, a simplified framework for understanding how construction, demand, vacancy, and rents interact over time. They explore how past rents and a minimum “trigger rent” influence development decisions, while construction and tenant absorption delays slow the market’s response. The discussion traces how completed buildings and changes in occupied space affect vacancy, which then influences rents and the next round of development. These feedback loops reveal why real estate can experience booms and corrections even when the underlying economy grows steadily. They also acknowledge the model’s limitations, including its simplified treatment of developers’ forecasting decisions. Audio was generated using Wondercraft, with production assistance from Nicole Jordan & Alli Garmon and audio uploaded by Peyton Stone. © 2026 CRE Explained Podcast Team. Based on Commercial Real Estate Analysis for Investment, Finance, and Development (4th Edition) by David M. Geltner, Norman G. Miller, Alex van de Minne, Piet Eichholtz, Thies Lindenthal, and Lily Shen. Developed through Clemson University Creative Inquiry (CI) 4980, under the supervision of Dr. Lily Shen. Reference Material: Commercial Real Estate Resources | CREBook.net