Banks backing away from apartment projects

Supply is outpacing demand

TRD MIAMI /
Feb.February 21, 2017 10:30 AM

From the New York website: 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
Masoud Shojaee and a rendering of Shoma Village 

Shoma Group scores $67M loan for mixed-use Hialeah project

Shoma Group scores $67M loan for mixed-use Hialeah project
Mayor Carlos Gimenez (Credit: Joe Raedle/Getty Images)

Miami-Dade approves $10M emergency rent relief program

Miami-Dade approves $10M emergency rent relief program
Housing Trust Group CEO and president Matt Rieger and Hudson Village renderings

HTG scores financing for Hollywood affordable housing project

HTG scores financing for Hollywood affordable housing project
J.C. de Ona, Southeast Florida Division President of Centennial Bank, Amelia Mixed Use rendering

Prestige Companies nabs loan for mixed-use project in Hialeah

Prestige Companies nabs loan for mixed-use project in Hialeah
Al Patel, President of Baywood Hotels and 1101 Northwest 57th Avenue (Credit: Google Maps)

Baywood scores $31M loan to build hotel near Miami International Airport

Baywood scores $31M loan to build hotel near Miami International Airport
Vacation rentals, gyms, fitness studios get the green light to resume operations in Miami-Dade

Short-term rentals, gyms, fitness studios can operate again in Miami-Dade

Short-term rentals, gyms, fitness studios can operate again in Miami-Dade
 Rendering of Father Marquess-Barry Apartments with Matt Rieger

HTG scores financing for senior affordable housing in Overtown

HTG scores financing for senior affordable housing in Overtown
Mayor of Miami Beach Dan Gelber (Credit: Nicholas Hunt/Getty Images)

Miami Beach creates $550K rent relief fund

Miami Beach creates $550K rent relief fund
arrow_forward_ios

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

Loading...