In the wake of a building boom that has added thousands of condos to the New York market over the past five years, many projects are foundering as the local economy cools. Brokers report that developers in some areas of the city are struggling to sell units as consumers and lenders grow increasingly skittish. Hardest hit are developments now seen as inappropriate for their neighborhoods or those located in peripheral parts of the city that are still gentrifying.
Condo glut builds
"A lot of guys are scrambling out there," says Eric Anton, executive managing director at Eastern Consolidated, a real estate investment services firm. "A lot of them are going to lose their shirts if they don't think of something to do."
The problem is that easy solutions are few. Buyers for entire buildings are scarce—as are banks willing to finance them. Instead, many developers are targeting buyers of individual units by cutting prices or offering to pay closing costs.
A few others are taking more drastic action. Unable to sell their units, they are converting their projects to rentals—typically taking a major financial hit in the process. The owners of 99 Gold St. in Dumbo and 192 Spencer St. in Clinton Hill, Brooklyn have converted their projects, as has the owner of the Bridges NYC North on Third Avenue in Harlem.
If DUMBO and Harlem are considered "peripheral parts of the city" then LIC brokers must be wetting their pants for sure!