"After seven years of nonstop construction, skyrocketing rents and sales prices, and a seemingly endless appetite for luxury housing that transformed gritty and glamorous neighborhoods alike, the credit crisis and the turmoil on Wall Street are bringing New York’s real estate boom to an end." So begins Charles Bagli's analysis of the state of the real estate market, and with that, the New York Times has declared the real estate boom dead. The freezing of the credit markets is paralyzing the industry, and "examples of aborted deals and troubled developments abound," Bagli writes. So, can we get a waterfront Williamsburg condo for a loaf of bread? Not quite. Most of the focus is on the commercial world, but there are examples across the markets:
1) Commercial: HSBC tore up its lease agreement at 7 World Trade Center after bids for its building at 452 Fifth Avenue were 30% lower than the expected $600 million price tag. After 18 months, 11 Times Square is still without a single tenant. Experts say the value of commercial buildings has fallen by at least 20 percent.
2) Rental: Still strong, but slipping. The vacancy rate is at 9%, up from 8.2% a year ago, and rents are falling slightly when landlord concessions and throw-ins are taken into account. Also, continuing Tishman Speyer's issues with its $5.4 billion buy of Stuyvesant Town/Peter Cooper Village, Standard & Poor's dropped its rating on the bonds used in the deal, "because of an estimated 10 percent decline in the properties' value and the rapid depletion of reserve funds."
3) Sales There will be fewer construction projects in the future, and Bagli writes, "Some developers who are currently erecting condominiums are trying to convert to rentals, while others are looking to sell the projects." C'mon, Chuckie boy, how about a little dirt? Examples, please!
And then there are the megaprojects—the poor, poor megaprojects. Who knows how long it will take before Mayor Bloomberg's legacy-making checklist—Hudson Yards, Moynihan Station, the World Trade Center, Coney Island and Willets Point—even show significant progress, let alone get completed. Perhaps during a third term?
· Failed Deals Replace Real Estate Boom [NYT]For more stories from Curbed, go to curbed.com.
