A fresh start for new condos

New York /
Oct.October 01, 2010 07:00 AM
It’s an odd time for new condo development to be making a comeback. The national economy is still in shambles, unemployment is high and getting a mortgage is still no picnic. And yet, industry experts are reporting unmistakable glimmers of life in New York’s long-suffering new condo market, which has struggled mightily since the financial crisis of 2008 and lagged behind the resale market on the recovery front.

Buyers are showing a renewed interest in new developments, brokers say. Suddenly, units in newly built projects — with prices marked down substantially from the boom — are moving faster than expected.

Of course, many buyers are still nervous about new condos, but their desire for a good deal is at least starting to outweigh their doubts.

Plus, with prices down but no longer free-falling, many potential buyers are less nervous.

“Buyers have been waiting for two years in many cases, and they feel they have waited long enough,” said Pauline Evans, a broker at Sotheby’s International Realty.

Developers are doing their best to capitalize on this new activity. For the first time since before the downturn, a critical mass of new product is now hitting the market. Some are condos entering the market for the first time after finishing construction, like Extell’s the Aldyn, where Yankees star Alex Rodriguez reportedly took a private tour before the condos even hit the market. Others, like the Sheffield and 1 Rector Park, are older projects that have emerged with reorganized financial structures and lower prices.

While activity may be picking up, that doesn’t mean that it’s back to business as usual for new developments. Until now, new development has been a notoriously nontransparent sector of the real estate industry, with buyers often unable to get basic information about their new buildings. But after an avalanche of post-boom lawsuits, buyers are demanding a much higher level of disclosure from developers and brokers before signing on the dotted line.

Similarly, some developers are getting frustrated with the conflicts of interest that can occur when brokers within large firms take on the marketing of new developments. In response, some are hiring their own staffs directly or migrating to firms that focus specifically on new developments.

Meanwhile, experts say developers who suffered with failed projects during the downturn should not be counted out going forward. Although it may be hard for them to get funding now, if they handled themselves well with their lenders during the worst of the downturn, they should be able to secure financing when the economy fully bounces back. Nonetheless, many New York developers are branching out while waiting for the economy to recover, often with smaller projects or new locations.

Many of them opted to do so because acquiring buildings to redevelop in New York is becoming too costly. In fact, as assets finally start changing hands again, experts say a mini-bubble is forming. That’s because so much dry powder has accumulated and some are overpaying for properties in their haste to deploy their capital.

For more in this month’s package on new development, rebooted, see the stories below:

A new development rebirth?

The conflict-of-interest conundrum

What does it take to make a comeback?

A reinvention act

Bubble or recovery?

Unraveling the new development mystery


Related Articles

arrow_forward_ios
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
 Fredrik Eklund and the property (Getty, Steve Frankel)
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Gordon Ramsey and his Lucky Cat restaurant (Lucky Cat)
Gordon Ramsay to open first South Florida restaurant in Miami Beach
Gordon Ramsay to open first South Florida restaurant in Miami Beach
 Jeff Sutton of Wharton Properties, 25 West 34th Street in NYC (Google Maps)
eff Sutton’s Midtown hotel project snags Sonder as first tenant
eff Sutton’s Midtown hotel project snags Sonder as first tenant
Carlyle's Kewsong Lee and Jason Hart with 22-22 Jackson Avenue (Carlyle Group, ODA Architecture)
For $85M, Carlyle Group nabs another LIC resi building
For $85M, Carlyle Group nabs another LIC resi building
From left: Ilya Zavolunov, restaurateur, ZAVŌ, and Zachary Bornstein, president, Olshan Properties (Olshan Properties, ZAVŌ)
City law protecting commercial tenants upheld on appeal
City law protecting commercial tenants upheld on appeal
Photo Illustration of Elon Musk (Getty)
Musk could save $2B in California taxes on Texas move
Musk could save $2B in California taxes on Texas move
Dov Hertz lands $442M loan for Sunset Park warehouse project
Dov Hertz lands $442M loan for Sunset Park warehouse project
Dov Hertz lands $442M loan for Sunset Park warehouse project
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...