Manhattan construction loans fall in 2008

TRD New York /
Feb.February 05, 2009 05:01 PM

A little-known bureaucratic filing provides further evidence that lending and construction have slowed in Manhattan.

number of building loan agreements filed in Manhattan fell by 20
percent in 2008 to the lowest level in a number of years, as lenders
pulled back the reins on construction spending.

The quantity rose to 436 in 2007 from 393 in 2005, before declining
sharply to 350 in 2008, the lowest level in at least four years,
according to data The Real Deal obtained from the County Clerk of New
York County.

In the fourth quarter of 2008, the number of loans filed fell by 24
percent to 67, when compared to 89 filed in the fourth quarter of 2007,
the data showed.

“Right now a lot of people will only make
construction loans for a project that really makes sense with a strong
sponsor,” said Richard Nardi, a partner specializing in commercial real
estate at law firm Loeb & Loeb.

However, the slide was not as pronounced as many expected, as loan
agreements continued to be filed for buildings in the borough even
during the fourth quarter.

“I suspect looking at 2009, that is when you will see an amazing drop-off,” he said.

Building loan agreements are generally filed as the construction
loan is closed, regardless of the size of the loan, to record what
money is available for so-called “hard” construction costs like
contractors and suppliers. It does not include “soft” costs like
architects and marketing, real estate attorneys said. The Real Deal
reported in October that only three new building permits were filed in
September 2008

Real estate experts suggest a number of possible explanations for the
relative strength in loan filings when compared to the New York
economy, including the lag time between when a deal was negotiated and
when the loan was closed.

Sheri Chromow, senior partner in the real estate group at Katten
Muchin Rosenman, suggested the 421a tax incentive induced developers to
secure funding when they might otherwise have waited.

“So maybe
it was a little higher than it might have been,” she said. “But I did
not have the sense there was this much activity, so I guess I would
call it a pleasant surprise that it is still happening.” She added that
funding remained relatively easier to obtain for deals under $50

Related Articles

(Image by Wolfgang & Hite via Dezeen)

Hudson Yards megadevelopment inspires a new line of sex toys

Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio

Wendy Silverstein (Credit: Getty Images)

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out

220 Central Park South and 960 Fifth Avenue with Aerin Lauder (Credit: Getty Images, Warburg Realty)

Who bought the priciest pads in Manhattan last month?

Cristiano Moura (Credit: Christie’s Real Estate and iStock)

Viral Instagram post leads to arrest, assault charge for former Christie’s agent

Amazon CEO Jeff Bezos and Hudson Yards (Credit: Getty Images and Wikipedia)

Amazon takes big new office space near Hudson Yards

A&E Real Estate Holdings principal Douglas Eisenberg and the properties (Credit: The Rego Park 18 Portfolio)

Deutsche Bank provided A&E $97M in financing for big Rego Park buy

Billy Macklowe and Key Food at 120 Fifth Avenue in Brooklyn (Credit: Getty Images and Google Maps)

Billy Macklowe looking to break into Brooklyn