Despite the collapse in housing prices in much of the country and a definite slowdown in sales, new residential development in New York City—and Manhattan in particular—continues, though at a much more modest pace than in recent years. The Big Apple may not be experiencing the all-out freeze on new growth that’s stalled other markets, but the impact of the mortgage crisis and financial meltdown is definitely being felt in the form of fewer new projects, slow sales in projects near completion, halts to some new condos in the pipeline, and a much tougher market for developers trying to get financing for new buildings.
New Projects Scarce
According to market watchers, the market’s hunger for residential units—long fed by a seemingly endless supply of new projects planned or coming online—has dwindled significantly over the last year.
“There’s a steep decline,” says Dan August Cordeiro, managing partner for Corcoran Sunshine Marketing Group. In 2007, 8,500 new units went on the market in the city. In 2009, there will be fewer than 1,000 new units. “There’s really going to be no new supply. We should be at an equilibrium kind of level,” Cordeiro says, adding that the market is experiencing downward pressure on pricing, but by the end of 2009 should have stabilized somewhat.
One of the reasons—indeed, the primary reason—for the reduction is the fact that so many developers are facing difficulties in getting funding for new projects. Experts like Cordeiro say that financing for such projects has nearly dried up, and across the city construction projects have stalled, been plagued by liens and threat of foreclosure, or are being transformed into rentals, new affordable housing, commercial and institutional uses, or just sitting empty.
In its February 2009 issue, The Real Dealsurveyed some 26,000 units of new construction in the five boroughs and identified more than 50 projects as “in trouble.” According to the magazine, some of the more notable developments include Hudson Blue in the West Village; the West Side’s Sheffield 57, Lev Leviev and Shaya Boymelgreen’s much-heralded 20 Pine and The Exchange by Swig Equities downtown, among others.