Banks backing away from apartment projects

Supply is outpacing demand

New York /
Feb.February 21, 2017 09:50 AM

Banks are shying away from financing new apartment projects as supply starts to outpace demand.

This year more than 378,000 new apartments are expected to be completed nationwide, according to real estate researcher Axiometrics Inc. But only 50,000 of the 88,000 apartments completed in the fourth quarter of last year were rented out, the Wall Street Journal reported.

Developers are increasingly turning to non-traditional lenders and small regional banks, like the Arkansas-based Bank of the Ozarks, to fill out their capital stacks. Bank of the Ozarks has been one of the most visible lenders in New York City in recent years, with about $2 billion in loans as of July 2016.

“Our business has radically changed,” Toby Bozzuto, president and chief executive of the Bozzuto Group, which has about eight buildings in New York City, told the newspaper. “I haven’t seen anything this seismically different since 2008, when credit dried up.”

Meanwhile rent growth has slowed. In New York, San Francisco and Houston, rents dropped roughly 1 percent from 2015 to 2016.

Last month, 31 percent of all new leases in Manhattan included some form of concessions, nearly double what it was a year ago, according to a Douglas Elliman report. In Brooklyn, 18 percent of leases had concessions, compared to just 5 percent last year. [WSJ] — Kathryn Brenzel 


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)
Real estate stocks push up this week as U.S.-China trade tensions ease
Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
As the economy rebounds, rental prices are following suit. With the eviction ban recently overturned, that spells trouble for tenants who are struggling to make ends meet. (iStock)
Rents rise across country as economy rebounds
Rents rise across country as economy rebounds
From left: 909 Third Avenue, 79 Fifth Avenue, 240 West 37th Street and 27 East 62nd Street (VNO, Cercone Exterior Restoration, Google Maps)
These were the largest Manhattan real estate loans in April
These were the largest Manhattan real estate loans in April
RGB chair David Reiss (iStock, Brooklyn Law)
City board considers rent hike in preliminary vote
City board considers rent hike in preliminary vote
U.S. District Court Judge Dabney Friedrich (Senate/Chris Coons, iStock)
Judge strikes down federal eviction ban
Judge strikes down federal eviction ban
(Getty, iStock/Illustration by Alexis Manrodt for The Real Deal)
Renters prepare for eviction crisis as aid is held up
Renters prepare for eviction crisis as aid is held up
A rendering of One Boerum Place with Avery Hall Investments' Avi Fisher (top) and Brian Ezra (SLCE Architects, Avery Hall Investments)
Shifting gears: Brooklyn condo tower to debut as rental
Shifting gears: Brooklyn condo tower to debut as rental
arrow_forward_ios

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

Loading...