Tight financing, fewer available sites change face of New York City condo building as developers switch to smaller projects, farther from city core
September 21, 2011
– Banks' reluctance to finance large-scale condominium developments in New York City is leading to smaller projects, a move into the exurbs such as New Jersey, and innovative mix-income or boutique developments, said an industry publication, The Wall Street Journal reported Sept. 19.
The lack of suitable sites in Manhattan also makes smaller projects easier, according to StreetEasy.com. In 2011, the average number of units per building fell to 34, down from an average of 83 units in 2005 and 2006, according to StreetEasy data.
CEO Ron Moelis of New York-based L+M Development Partners Inc. said Friday that three or four smaller units are easier to build than larger ones, such as the 1,000-unit Northside Piers condo project he launched in Brooklyn in 2006, reported The Wall Street Journal.
Toll Brothers Inc. senior VP David Von Spreckelsen said the number of larger sites is shrinking, adding that his Horsham, Pennsylvania-based company has responded by developing several smaller projects.
Steve Kliegerman, president of New York-based Halstead Property Development Marketing LLC, said small projects are selling well right now, The Wall Street Journal reported.
Banks have begun to make small housing development loans of US$25 million to $75 million, developers said, but are mostly unwilling to lend the $500 million or more needed for typical mega-developments.
The lack of suitable large sites has led some developers to refocus on New Jersey, Long Island City and Brooklyn. Others are finding readier financing for boutique-style condos.
The primary source of this article is The Wall Street Journal, New York, New York, on Sept. 19, 2011.