Landlords take on short-term debt to spruce up struggling assets
Most of the newcomers that rushed into the New York City real estate market during the boom have all but disappeared, the Wall Street Journal reported, making banks nervous to lend to first-time developers.
The banks “have set the bar too high for small developers to participate this time in the market,” said veteran developer Adam Gordon. “The opportunities for a fresh face without a large balance sheet are extremely limited without funding, which is the oxygen for these projects.”
It has always been somewhat unusual for young people to fly solo on small independent projects, the Journal said, but it’s become almost impossible.
“If they all define themselves linearly, as putting together an equity fund and building a boutique building…then you’ve created clones who only know how to think one way,” said James Stuckey, dean of NYU’s Schack Institute of Real Estate, of his students. He urges them to look for alternatives to traditional development, such as disaster rebuilding, he said. [WSJ]
