Back HomeStop and Go: the Cycle of Developments and Current Trends in New York’s Ever-Changing Real Estate Market
Both residential and commercial buildings in New York City have seen dramatic impact in the development process. With much transition happening in the industry, the developers are the leaders of the next stages of which direction the market can turn.
In the commercial sphere, many developers are taking initiative in an effort to further stimulate the economy and see growth in spaces for business use. For example, on the west side of Manhattan, in the Hudson Yards neighborhood, developers are aiming to build a community around a large tower overlooking Midtown in its entirety. The building has the tentative name of “The Spiral” and will be used for commercial use. “The Spiral” will punctuate the northern end of the High Line, and the linear park will appear to carry through into the tower, forming an ascending ribbon of lively green spaces,” architect Bjarke Ingels mentioned in a statement (1). With the growth of commercial space, residential buildings also develop. This has been seen in the past with the Financial District as well as Midtown on “Billionaires Row,” 57th Street. Rob Spreyer of Tishman Speyer states that “(the) tower will serve as a significant leap forward in the evolution of the modern, collaborative and sustainable workplace,” (1). Developers are looking to get ahead and move with the trends of the real estate market, and the commercial workspaces that are currently in demand. All, of course, while trying to maintain efforts to be environmentally conscious.
One of the major reasons that development on the commercial-use side has progressed is due to the investment from foreign companies and individuals that was secured when foreign entities were still pouring money into the New York real estate market. Speyer’s statement about the new design [of “The Spiral”] also revealed that the company had lined up $1 billion from “a group of international investors” to get the building underway.” (1).
On the residential side, because of the surplus of existing residential properties, developers are more hesitant to see these through. This could be due to lack of demand, cost, or both. However, “developers say delays are normal and no cause for alarm, even though building permits have expiration dates and loans can have strict terms about construction start dates and other milestones.” (2). For those who have already invested their money into large residential projects, developers are reassuring that this is nothing out of the norm. Sometimes developers are suffering the ramifications of dealing with difficult banks and loan contracts. “If private loans are now tougher to secure, especially for untested developers, policy decisions don’t always break their way either, developers say” (2). Since 2008, it is much more difficult to obtain a loan- for the protection of future residents, banks, the government, as well as the development company. The building must be safe and built on sound structure in order to be marketable, especially to those who are purchasing ultra high end condos and leasing commercial spaces.
There are already such a large amount of unoccupied luxury residential condominiums in Manhattan; and continuing to develop them does not necessarily stimulate the economy much further than it already has, because the money was coming from foreign investors who are, generally speaking, not occupying the condos. “The super high end — as in apartments for $10 million or more — has met with headwinds recently, but people continue to stream into New York, while developers benefit from cheap capital and a pro-growth mood” (2). Nevertheless, “stalled projects can be found around the city, including a glassy tower designed by Foster & Partners off Sutton Place, a 65-story spire on East 37th Street in Midtown (2). These projects could in turn be a great thing for New York’s real estate market growth, but developers must decide and agree with their partners in order for things to progress.
(1) NY Daily News
(2) NY Times
