Banks backing away from apartment projects

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
Davie student housing complex scores $62M refi, construction loan
Davie student housing complex scores $62M refi, construction loan
Davie student housing complex scores $62M refi, construction loan
A rendering of Wynwood Haus
Wynwood Haus apartment tower in an Opportunity Zone scores $38M construction loan
Wynwood Haus apartment tower in an Opportunity Zone scores $38M construction loan
Joseph Chetrit and a rendering of the Collins Park project (Getty, Kobi Karp)
Chetrit scores $63M construction loan for long-planned Collins Park hotel in Miami Beach
Chetrit scores $63M construction loan for long-planned Collins Park hotel in Miami Beach
Cain International's Jonathan Goldstein, OKO Group's Vlad Doronin and the Brickell condo renderings. (Getty, OKO Group & Cain International)
Billionaire Vlad Doronin, partner score $128M construction loan for Brickell condo tower
Billionaire Vlad Doronin, partner score $128M construction loan for Brickell condo tower
Rendering of The Trail multifamily project with Prestige Companies COO Alexander Ruiz and Centennial Bank Southeast Florida Regional President J.C. de Ona
Prestige Companies nabs $12M construction loan for multifamily project on Ludlam Trail
Prestige Companies nabs $12M construction loan for multifamily project on Ludlam Trail
Astor Companies founder Henry Torres and a rendering of the Douglas Enclave (The Astor Companies)
Astor Companies scores $32M construction loan for Miami apartments
Astor Companies scores $32M construction loan for Miami apartments
Terra’s David Martin and renderings of the project (Terra, iStock)
Terra scores $65M loan for Northwest Miami-Dade project
Terra scores $65M loan for Northwest Miami-Dade project
Jeffrey Soffer and a rendering of SeaGlass Jupiter Island (Getty)
Fontainebleau Development scores loan for boutique Jupiter Island condo project
Fontainebleau Development scores loan for boutique Jupiter Island condo 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...