So even just thinking about our pipeline, I think, the last time we talked about our pipeline before the recent deliveries. I think we guided, we said, it was in kind of the low- to mid-6% yield range. I think we mentioned today that the three recent deliveries kind of are at a 7% or 7 plus overall yield benefiting from better rent growth and other things. So we think we are — we understand that risk and we build a good enough margin into it. And as we think about development going forward, if you take kind of even that low- to mid-6% range today, if that’s what we are targeting for future land sites. My view on it is, typically, if we have a land site today that’s going to go through entitlements, that could take a year plus, for example, the Charlotte land and then another, call it, year for development, we are two years away.
We think likely based on current trends there will be rent growth from today, two years from now. But if there isn’t rent growth, we would expect, that’s because demand has cooled off significantly, and if that’s the case, we sort of view there’s some likely the fact that construction costs are going to come down, right? There’s a supply and demand element to cost of construction, as well as input costs, an example of that is structural steel. Structural steel was $4 a building foot in 2019 and it went to $16 a building foot in the last year, it’s down, call it, to $14 today, but that was purely supply and demand driven. If demand cools off, that could come down, it could double and go down to an $8, but that’s still a pretty material cost savings.
So we think there are some moving parts there that give us some room on the development side. We also like the development and getting your comment about balance sheet and using capital into land. But still for a lot of these transactions, land cost is a fairly small amount of the purchase price. And typically, our history has been we have entitled land and we pretty much put into production fairly quickly after being entitled. It could be something like the Charlotte project, which is up to four buildings, so we would build that in phases. We have typically gone SPAC or pre-leased or found build-to-suits before we started construction on the land. So we try to get returns on it as quickly as we can. That said, we do like that land gives us some flexibility that if we find a great land site entitle it and a year from now the market conditions aren’t great.
It’s not a huge amount of capital tied up in something that isn’t generating income and we think in today’s market, having really good land sites, and I mentioned, potentially the market is getting more conducive to finding that in the near-term is really valuable, right? In certain markets, it’s just very, very difficult to find well-located land sites. Development keeps getting pushed further and further away from where the ideal locations are. So we think there’s incremental value over time to having those, as we ride through whatever cycle or cycles may happen. So we think that’s an important part of the business. I think, all that said, we are recognizing we don’t want to have a lot of capital tied up in assets that are not going to produce income for an extended period of time.
