The Epitaph of Epitaphs for Williamsburg's Boom
It’s tough to know where to start with the New York mag story on the rise and dizzying fall of Williamsburg’s condo boom, which casts the neighborhood as “New York’s version of the collapsing exurban ‘boomburgs’ in Florida and Arizona.” Is it the detail that the developers of the Steelworks Lofts, who paid $26.5 million…
It’s tough to know where to start with the New York mag story on the rise and dizzying fall of Williamsburg’s condo boom, which casts the neighborhood as “New York’s version of the collapsing exurban ‘boomburgs’ in Florida and Arizona.” Is it the detail that the developers of the Steelworks Lofts, who paid $26.5 million for their condo-to-be a couple years ago, are considering turning their building into a youth hostel? No, perhaps it’s the news that potential buyers for the failed (and mostly constructed) Warehouse 11 project are coming up with offers “closer to $30 million than the $50 million owed” to the bank by its developers. There’s too much in it to fully blurb, but here are some of the choicest bits:
- David Maundrell, president of Aptsandlofts.com, estimates that 2,818 new Burg apartments will have hit the market by the end of this year, with another 2,766 projected by the end of next year. Also, Maundrell tools around town in a $120K Maserati bought with condo-sales dough.
- Even though Williamsburg developers are having a lot of trouble selling the units they do have, they’re still bemoaning the repeal of the 421-a tax abatement that would have allowed them to build even more units.
- Before she died, Jane Jacobs wrote a letter to the mayor saying the Williamsburg rezoning that put the wheels in motion for the condo explosion appeared to be a particularly risky move: Even the presumed beneficiaries of this misuse of governmental powers, the developers and financiers of luxury towers, may not benefit, she wrote. Misused environments are not good long-term economic bets.
There’s a great deal more of note in the article, which is well worth a read.
The Billyburg Bust [New York]
Pic by krzysztof.poluchowicz.
I doubt the bust will look anything like Miami. 5500 units is a lot for a neighborhood, but it’s not enormous for a city of 8.3 million people. Manhattan is so easy to get to from Williamsburg, and at $650ft2, that is a substantial discount to what you can buy in Manhattan (these days, the price point that is needed to move units). I’m sure a lot of developers will lose their shirts (some, with better luck and timing, will break even or make some $$) but in the end the result will be an even more robust Williamsburg with more shops, more restaurants, more bars, and more apartments boasting spectacular views of Manhattan. I seriously looked into buying in that area and decided I much preferred the more established neighborhood of Park Slope – just greener and cleaner. But as the Bedford Avenue area comes of age, and after a year of riding the F train, I could almost see myself trading the slope in for this neighb. Also, I doubt you’ll see much new product trading below $500ft2.
“$300/sq ft”
That price sounds about right!
m4l, I would be comfortable in the quality from Toll Brothers. It’s the new ones that have sprung up and have no history that are the potential problems. Alas, many of them are probably bankrupt or close to it.
DIBS,
assuming one buys from the big developers (like Toll Brothers), would $300/sq ft ease those fears?
And remember, you don’t know what structural issues will be a problem until 2-3 years or so down the road. Additionally, after the tax abatements are gone the taxes will be astronomical in these places compared to older existing buildings. Buyer beware at any price!!!!!
Montrose, it depends on when developers bought the land. Land in NYC is super expensive. Some developers build out just so they can attempt to free the cash they paid on the land (even if they sell the finished product at a loss – which some developers view as better than all the cash stuck in the purchased lot)
” density obsessed posters”
Excellent.
For those of us who predicted this, only a couple of years ago on this very blog, it’s not a surprise. When we heretically said there would be a condo glut, and that was when 4th Ave and Wmsburg were going full guns, and AY was seen as a done deal, certain density obsessed posters flat out said we were nuts.
Even a layman could see this coming, and I’m surprised fewer developers, especially those long in the biz, couldn’t see there was just too much being built, and the entire housing industry was being propped up by dubious mortgage based air bubbles. Not to be a What-like, gleeful imp screaming, I was right, but then, no one even listened to Jane Jacobs, for crying out loud.
I was waiting for this for some time now. As the article says bunch of developers actually went into foreclosure on their buildings. Next step would be banks selling these REO buildings to other developers for 50c on a dollar. New developers will have much lower basis cost and will be able to offer condos for much lower price driving all prices down. I think major price correction is just starting.