If you've been wondering why many condo developments have been slow to make broad price cuts in the face of overwhelming evidence of a weakening market, this month's issue of The Real Deal has your answer for you: Banks. "What incredulous buyers often don't realize is that across-the-board price cuts have not been easy for most developers to make, because price reductions must be cleared with lenders," the article says. A few of the major development marketing groups like Corcoran and The Developers Group report that the debt holders are starting to play ball, but they are exacting tougher terms out of developers in return for lowering what's referred to as the "release price" for a new unit. Desperate at this point, developers are increasingly biting the bullet. "In September, [developers] weren't willing to see there was going to be this type of negotiation," said Jacqueline Urgo, president of the Marketing Directors. "They are much more open now." The article doesn't name any Brooklyn names but it's probably a good bet that developers of projects like One Brooklyn Bridge and Oro that were highlighted in another Real Deal article this month as only being about 1/5 sold have had some intimate conversations with their lenders in recent months.
Developers, Banks Doing to Renegotiation Dance
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