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
Rendering of the Dorsey with Alex Karakhanian, Jon Paul Perez and Tricera’s Scott Sherman and Ben Mandel (iStock)
Related scores $88M construction loan for Dorsey project in Wynwood
Related scores $88M construction loan for Dorsey project in Wynwood
Renderings of 502 NY 207th Street and Coastland Construction president Alex Rodriguez (Coastland, Miami Gardens)
Touchdown! Housing development near Hard Rock Stadium scores $38M loan
Touchdown! Housing development near Hard Rock Stadium scores $38M loan
Miami's Quadro in the Design District (Quadro Residences)
Alta Developers begins closings at Quadro at Design District
Alta Developers begins closings at Quadro at Design District
Exeter Property Group CEO Ward J. Fitzgerald III (Ehlers-Danlos, Google Maps, Exeter)
Exeter lands $75M loan for spec Coral Springs warehouse project
Exeter lands $75M loan for spec Coral Springs warehouse project
Photo courtesy of David Iglesias
Boca Beach House condo project scores $43M construction loan
Boca Beach House condo project scores $43M construction loan
Nick Rojo and Jeff Burns (Affiliated, iStock)
Affiliated Development launches $125M workforce housing fund
Affiliated Development launches $125M workforce housing fund
Tom Cabrerizo and 6790-6880 Southwest 80th Street (Google Maps)
Developers score $15M construction loan for Miami townhouse development
Developers score $15M construction loan for Miami townhouse development
Triton Center (iStock)
Questions surround $50M in EB-5 investments tied to former INS building: lawsuit
Questions surround $50M in EB-5 investments tied to former INS building: lawsuit
arrow_forward_ios

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

Loading...