Open House Picks: Six Months Later

Ow Ow My Ass
Massive hurt from I-Beam
Blood leaking from my Anus

The What

Someday this war is gonna end…

Joe I hope this one works and please read the PDF!

http://s3.amazonaws.com/trd_three/images/89480/ghost_towers.pdf

The story!

http://therealdeal.com/newyork/articles/new-york-city-s-future-ghost-towers

New York City’s future ghost towers
May 27, 2009 06:19PM
By Sarah Ryley

In many of America’s most popular destinations, from the beaches of South Florida to the Las Vegas strip, “ghost towers” — empty or near empty buildings — mark the skyline, mere shells of their developers’ failed ambitions.

The perfect storm of plunging property values, frozen credit markets and excess supply in certain real estate submarkets is stalling many newly built projects. That raises the question: Is New York City, late to the real estate downturn that has plagued the rest of the country, due to be haunted, too?

To determine which buildings in New York City are the most likely future ghost towers, The Real Deal turned to sources in the real estate, finance and legal industries who identified 23 residential condo and rental projects as among the most at risk of remaining empty for years to come.

These towers, along with brief synopses of their circumstances, are listed in the accompanying chart.

Most of the projects are stalled and completely uninhabited. Another five are among a group of 180 condominiums citywide that StreetEasy lists as less than 70 percent sold. The 70 percent threshold is a requirement Fannie Mae put into effect March 1 that subsequently has been adopted by most lenders as a criterion before they will approve mortgage loans in a particular building. The high benchmark, up from the previous standard of 51 percent, has made financing many new condo purchases nearly impossible and created a nearly insurmountable obstacle that brokers complain locks a building into a state of being “undersold.”

Buyers disappear

In all, of the more than 18,115 new apartments that have come to market in recent years, roughly 55 percent have been sold, according to StreetEasy. That figure doesn’t include the thousands of units that will be released in the next few years or buildings that have been turned into rentals.

For those apartments to be filled with buyers, the credit market needs to open up. Until then, many developers could turn to rentals, which are not dependent on the availability of mortgages.

The city’s mounting job losses also need to be reversed, said Jim Brown, a state Department of Labor analyst.

Between March 2008 and March 2009, Brown said, the five boroughs lost 86,400 jobs at a rate that has been “widening pretty steadily.”

“Finance and insurance [job loss] counts for about a quarter of that. They’re off 21,600, which is probably going to have an impact on your above-rent-control condos and co-ops,” he said.

From 2003 until well into last summer, when all these new apartments were envisioned, the city was seeing gains in jobs, said Brown.

Now, he said, a turnaround in job losses isn’t expected until at least 2010, assuming there’s a national economic recovery later this year.

Prices plummet

Some buildings, meanwhile, are not fully finished. “If the project needs another 10 percent of funds to be completed, a lot of these projects that have come to a halt are going to be sitting there, some for several years, before they’re actually completed,” said J.D. Parker, a regional manager for Marcus & Millichap.

Parker briefly marketed Greenpoint’s 130-unit Viridian at the discounted price of $65 million — or $500,000 per unit — until the project was pulled after the owners filed for bankruptcy. That also left at least seven renters who had signed leases there, expecting the building to be finished in one month, suddenly looking for a new home.

“Right now I’m working on 10 to 15 projects of a similar nature, predominantly in Brooklyn and Queens,” said Parker, who declined to name the projects. “All of them are empty because most of them are only half-built, three-quarters built, and they’re stalled.”

In addition, the price point at which banks and developers need to sell or rent to break even on their buildings is above current market rates, causing a standoff between them and investors looking to take over these projects.

“There remains a significant disconnect between the bid and the ask, particularly with regards to development sites with land values off 50 to 75 percent from their peak, in many locations,” said David Schechtman, a senior director for Eastern Consolidated.

“That is a tremendous pill for a lender to swallow,” he added.

Until the pricing standoff is resolved, towers here will remain empty, as in other parts of the country, predicted Peter Zalewski, founder of CondoVultures.com, a market intelligence service that connects investors with distressed projects in Miami, San Diego and Las Vegas.

For example, based on a review of public records, Swig Equities’ the Exchange at 25 Broad, a condominium conversion that was swept up in the Lehman Brothers bankruptcy, would need to sell at near $1,000 per square foot simply to break even.

“[Investors] would expect to buy residential conversion buildings a heck of a lot closer to $300 or $400 a foot, and that’s for buildings that are fairly far along like 25 Broad,” said Schechtman.

Rather than sell the debt, Lehman is proceeding in its effort to foreclose on the property. Swig declined to comment on the matter. Meanwhile, the last remaining 10 contract holders are living in the 346-unit building on interim leases. Patricia Bransford, who moved there in November 2007 expecting to eventually close on the apartment, said she doesn’t mind living in an empty building because there’s never a wait for a treadmill in the gym.

Still, she doesn’t enjoy being searched by a K-9 unit every time she’s dropped off at the door, since 25 Broad is on a post-Sept. 11 heightened-security block. “I’m not sure I would close on a unit in New York City now because prices are going down,” she said.

Incomplete buildings

New investors are unwilling to give more money to buildings that are already over-leveraged before they’ve even been completed.

“I get calls literally every day, sometimes

multiple times a day, from guys

hey what the link does’t work for me – is there another way to get it? I want to read it.

“Very good What, except Last Weeks Biggest Sales are not fictional. And, they are all “post lehman” my friend.
”

What about volume dumbafuck?! Do you read the Real Deal story yet Dave? Get back to me.

The What

Someday this war is gonna end…

Very good What, except Last Weeks Biggest Sales are not fictional. And, they are all “post lehman” my friend.