Back HomeA Shift in the Manhattan Development Market
In the New York condominium market, the costs of development for luxury condos have increased and the condos have stayed on the market for longer periods of time. This combination has led to a slow in development, even in areas of extreme gentrification like the Lower East Side.
Manhattan developers are realizing the escalating costs of their investments, and are looking to slow or cease development in New York. Developer David Amirian told Ari Harkov of the Daily News that “There are more people looking to sell development sites today than ever before. Many sponsors/developers are having issues with raising debt and equity financing, and this will ultimately affect the market in the short term” (1)
Most of the issues are stemming from the fact that there are unrealistic expectations in the marketplace. The buyer is often unaware of the amount of resources that are poured into property development. To avoid paying exorbitant prices for luxury condos, buyers will let them stay on the market.
However, at the end of the day, “something is worth [only] what someone is willing to pay. [The developers] have to buy right, build it quickly, and have to sell right away” (1). The opportunity cost is too high for developers, and buyers will soon have to accept the state of the market. Steve Witcoff told the Real Deal he believes “that we’re going to see some real distress” (2). The end results could also have the developers lowering prices to meet buyers’ demands or to sell altogether.
(1) NY Daily News
(2) The Real Deal
