Are developers playing "chicken" with the market?

David Goldsmith

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The bid deadline for the UCC foreclosure sale on this controversial development site is October 17th.

The site was sold to Fortis by LIHC

David Goldsmith

All Powerful Moderator
Staff member

Mortgage rates climb to 15-year high​

Average 6.7% rate more than doubled year-over-year: Freddie Mac​

Mortgage rates hit their highest level in 15 years, continuing a surge that’s likely no longer a big surprise in the market, but not any less painful.
The average 30-year fixed mortgage rate reached 6.7 percent, according to Freddie Mac’s weekly survey of lenders reported by the Wall Street Journal. The figure marks the sixth straight week the average increased and the highest average rate since July 2007.
The unceasing rise in rates comes as the Federal Reserve keeps raising benchmark interest rates in an effort to tamp down inflation, including a raise of three-quarters of a point after its Sept. 21 meeting. Mortgage rates have less to directly do with the Fed’s rates than the 10-year Treasury yield, which is influenced by Fed rate expectations.

Mortgage rates have been on a wild ride since the start of the pandemic, but the increases of late are particularly stark. A week ago, the Mortgage Bankers Association had the average rate at 6.25 percent, while Freddie Mac put it at 6.29 percent. A year ago, Freddie Mac’s average recorded rate was less than half of that, a smidge over 3 percent.
Rates hit record lows at the start of the pandemic, creating an environment for a frenzied housing market. The good times for prospective homebuyers didn’t last, though, and many are feeling pinched by rates, along with the continued rise of sales prices — even if they’re climbing at a slower rate.

The S&P CoreLogic Case-Shiller Index posted a 2.3 percentage point difference in July from the previous month, the fourth straight month of deceleration and the largest difference recorded in the index’s history.

Home prices may continue to decline as the Fed keeps making moves, but if mortgage rates continue to climb, the combination could complicate back-of-the-napkin math for buyers.
Rising mortgage rates aren’t only impacting homebuyers. They are also having a crushing effect on mortgage, proptech and brokerage firms, forcing layoffs throughout the industry.

David Goldsmith

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New development boom dead, with mortgage rates a prime suspect
Activity fell below pre-pandemic levels for the second time in three months

No matter how high developers build, they can’t avoid gravity.

New-development contract signings in September fell below pre-pandemic levels for the second time in three months, according to a report by Marketproof. The numbers are the strongest evidence yet that the market’s pandemic sugar high is coming to a close.

“This is a healthier diet,” said Kael Goodman, founder of Marketproof. “We’re just back to normal.”

Across the city, developers reported 215 contracts for units last asking a combined $495 million. The median asking price was $1.5 million or $1,682 per square foot, relatively unchanged from last month. But mortgage rates blasted through the 6 percent threshold.

While the number of deals fell by 16 percent, the median and price-per-square-foot numbers hardly changed, which means the drop from August was equally divided between big-ticket and below-average apartments.

While activity is roughly on par with 2019 levels, price per square foot is up 22 percent since then. Contracts can take months to become closed sales, and some never do, but they provide a more current picture of the market.

Activity dipped by 11 percent in Manhattan from August, but the median price rose as entry-level buyers were increasingly sidelined by rising mortgage rates.

In all, the borough’s new developments notched 104 contracts for homes last asking $350.9 million. That’s a whopping 40 percent decline in deals from last September, but it’s still 24 percent above the 2019 total.

At least in terms of contract activity, the market’s recent declines look less like drowning and more like a return to sea level.

That said, pricing is way up. The median asking price for Manhattan units finding buyers increased by nearly 20 percent in September to $2.3 million or $2,116 per square foot. Developers reported four contracts for units last asking more than $10 million, including the penthouse of 35 Hudson Yards. While that deal closed for a massive $35 million, it was still a 41 percent discount from the $59 million asking price.

The month’s top performing new development was The Cortland, the Related Companies’ Chelsea project. It notched 22 deals in September.

Brooklyn’s developments took a bigger hit. New projects there reported just 80 contracts, down from 110 last month. Pricing was not the reason, as the median price per square foot dipped to $1,297. But rising mortgage rates made homes more expensive.

Hudson Companies’ One Clinton had the priciest unit go into contract as a five-bedroom apartment last asking $8.9 million came off the market. Fortis Property Group’s perennial top finisher Olympia Dumbo secured the number two and three spots.

David Goldsmith

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Some Skyline Tower condo owners say they were deceived​

Allegations about Chris Jiashu Xu’s Queens project “unsubstantiated,” sponsor says​

Life in Queens’ tallest condominium has not been what some of its unit owners expected.
Ninety buyers, representing fewer than 1 in 5 unit owners, filed a complaint this summer against Chris Jiashu Xu’s Skyline Tower in Long Island City with the attorney general’s office.

In a July 13 complaint obtained by The Real Deal, the owners cite issues with the 802-unit building’s marketing, management and construction, and raise questions about its sales and financial disclosures.

The 67-story luxury tower at 3 Court Square was the first to target a 10-figure sellout, with Xu projecting unit sales would add up to $1.1 billion. The complaint alleges that the sponsor’s sales and marketing agent, brokerage Modern Spaces, exaggerated the building’s success to a local website. Rapid sales can create urgency and inspire confidence among prospective buyers.

In an article published on Dec. 31, 2021, on, Modern Spaces CEO Eric Benaim claimed Skyline had sold nearly 60 percent of its units, and was the city’s “best-selling luxury building” that year. But the complaint says the project’s year-end financial statement showed only 339 units had sold, or roughly 42 percent.
Benaim said his 60 percent figure included units under contract.

Also, a Dec. 13, 2021, amendment to the building’s offering plan stated that 366 units had sold as of Nov. 1. The complaint asks how the number fell to 339 as of Dec. 31.

“We question how many units have actually been sold because this affects Unit Owners’ payment of actual operating expenses,” the complaint said. “If the Condo Board cannot keep track of its units sold in official documents, how can we expect it to administrate payment properly?”
Benaim referred questions about the building’s finances to Adam Kriegstein, a lawyer for the project sponsor.

“We, together with our client and the sales team, are extraordinarily proud of this project and maintain that the sponsor has at all times acted in good faith and in full compliance with the attorney general’s regulations,” Kriegstein responded in a statement.
The attorney noted that the concerned unit owners were granted full access to the condominium’s books and records and reviewed them. “Should the attorney general’s office wish to discuss the unsubstantiated claims in the letter, we welcome the opportunity,” Kriegstein added.

As of Aug. 18, roughly four years since sales began in the tower, 509 of its 802 units had sold.
The complaint also raised concerns about a flyer circulated by building staff regarding their right to organize for “the same wages, health care, job security, safety training, advancement opportunities and modest retirement afforded to over 35,000 building service workers across New York City.”

Skyline has suffered from construction issues, according to the complaint. There’s the delayed repair of the freight elevator, the delayed soundproofing of the mechanical room and punch lists that remain incomplete 120 days past closing.
The grievances listed in the complaint also populate the building’s Google Reviews, where users have submitted claims of structural defects, flooding and a lack of amenities.

Contract signings in Skyline slowed to a mere 35 in 2020 before bouncing back to 186 last year. As of August of this year, 116 have been signed.

David Goldsmith

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NYC’S New Dev Condo Market is Slowing Down – Except for Luxury​

New development condo sales declined for the fourth consecutive week, this time dropping 17.5%. Projects across the city reported 33 contracts compared to nearly double at the height of September.
But eight of those deals were for homes asking more than $4 million, a nearly 170% increase in luxury activity from the previous week. As New York City’s new dev condo market slows down from the unusually active summer, luxury continues to be the bright spot – specifically in Manhattan.

Manhattan was the only boro to hold steady 16 sales, mirroring the previous week. Brooklyn had 14 (-26%) and Queens had 3 (-40%).
Selene located at 100 East 53rd Street had one of the week’s priciest contracts, signing a three-bedroom residence asking nearly $9M. Brown Harris Stevens New Development Marketing recently took over sales and, after recalibrating prices, is winning over buyers with the message that you can have world-class design with Billionaire’s Row-style services and amenities for a better price.

“We set out to create an unprecedented value for buyers looking for a Pritzker Prize-winning level of design, beautiful finishes and five-star amenities in the ‘Billionaires’ Row’ area, and it has been incredibly gratifying to see such an enthusiastic response from buyers and brokers,” said Robin Schneiderman, Managing Director of Brown Harris Stevens Development Marketing, emphasizing the Foster + Partners architecture.
This is a strong message and having that clear point of distinction is critical in a market like today’s.
That’s likely a factor for Post House in Boerum Hill, averaging more than three monthly contracts even though it’s priced high for the neighborhood at $1,497 PSF.

A brand new condo inspired by local history (i.e. the former art deco post office that one stood at the site) and all the must-have amenities, Post House has the allure of a residence that honors Brooklyn’s rich past but built ground-up for today.
“Post House is design-forward and also exceedingly livable,” said Tamara Abir of the Tamara and Noah Team at Compass, leading sales at the project. “The location is super convenient and the unique garden entryway provides a quiet respite in the heart of Brooklyn. The layouts are thoughtful and gracious, the amenity package is robust, especially for a boutique building. The light and views are just spectacular. It’s a very special building that checks a lot of boxes for buyers.”

While there’s no denying the market is slowing down, new developments with the right offering (and the right price) are selling well. The pace of deceleration is the metric to watch in the coming weeks, especially if volume dips well below pre-pandemic. October 2019 did have two weeks with volume in the 30 to 40 range, comparable to what we’re seeing now, so New York City is still hovering near pre-pandemic norms.

David Goldsmith

All Powerful Moderator
Staff member

Barnett doubling down in Two Bridges​

Extell is buying Starrett Corporation’s 765-unit development site​

If Gary Barnett’s $250 million listing on Billionaires’ Row didn’t tell you he was bullish on the residential market, his latest deal will.
The Extell Development chief is buying a Two Bridges development site next to his One Manhattan Square condo tower for a price approaching $100 million, sources said.

Barnett is in contract to buy the Starrett Corporation’s site at 259 Clinton Street, which can be developed into a 61-story tower with up to 765 apartments. The Real Deal previously reported that Starrett filed plans to put a foundation in place by the spring so the site would qualify for the 421-a tax break, which expired in June.
Starrett put the site on the market late last year with an Eastdil Secured team led by Gary Phillips and Will Silverman eying a price of $100 million. The contract price is not quite $100 million but is close, according to a source. The deal is expected to close this year.

A spokesperson for Extell did not immediately respond to a request for comment and a representative for Starrett declined to comment on the deal.

Barnett started the trend of developing mega-towers along the East River waterfront north of the Manhattan Bridge with his One Manhattan Square condo at 225 Cherry Street.
He was followed by Starrett, Michael Stern’s JDS Development Group and a partnership between CIM Group and L+M Development Partners, which planned four towers among them and defeated a legal challenge that claimed City Council approval was necessary. The case was resolved in May 2021.

CIM and L+M sold their site this spring to Joseph Chetrit for $78 million.

Another lawsuit looks to stop Two Bridges developments​

Residents weaponize state’s new “green amendment” to challenge projects​

The legal fight over the development of multiple towers in Two Bridges appeared to be over, but its opponents are now attempting to use a newly enshrined constitutional right to block the projects.
Councilmember Christopher Marte and residents of the Lower East Side and Chinatown filed a lawsuit against the city and four developers on Friday, The City reported. The lawsuit argues construction of three high-rise towers in the area will create further environmental and health issues for those already contending with effects from 9/11.

Part of the lawsuit’s argument is that the developments violate the so-called green amendment, passed by a ballot referendum last year. The constitutional right gives New York state residents the right to clean air and a healthful environment.
This is the first known time the constitutional right has been cited in such a lawsuit. Critics had warned that it would be used to block development.
The plaintiffs’ stated goal is to have the city update the environmental impact statement for the project. The document was completed in 2018, but the lawsuit argues it needs to be updated in light of the amendment and the pandemic.
The developers named in the lawsuit are shell companies. The addresses in question, however, link the litigation to a who’s who of major New York real estate players.
JDS Development Group has spent years looking to build a 79-story apartment tower at 247 Cherry Street, which could contain 660 units.
In April, Joseph Chetrit purchased the site at 260 South Street for $78 million from CIM Group and L+M Development Partners. Madison Realty Capital provided $70 million to finance the acquisition. Chetrit was previously reported as looking to team with JDS on the purchase, but a partnership never materialized.
The previous developers filed plans for a two-tower, 73-story project. Chetrit is eyeing a complex with slightly shorter towers, but 1,300 units.
And last month, Extell Development moved to buy the development site at 259 Clinton Street for nearly $100 million. The site can be developed into a 61-story tower with up to 765 apartments.
The projects had been the subject of a long, unsuccessful legal fight by opponents in the neighborhood and on the City Council.
Starrett Corporation, Michael Stern’s JDS Development, the CIM Group and L+M Development Partners venture planned four towers among them. They defeated a challenge that claimed City Council approval was needed for development to proceed. The de Blasio administration sided with developers in the case, backing up a city agency’s decision that no rezoning was needed.

David Goldsmith

All Powerful Moderator
Staff member

Fortis faces foreclosure on large Cobble Hill condo project​

Madison Realty initiates UCC sale of Fortis’ interests in two sites for River Park development​

Fortis Property Group’s big plans to redevelop a quiet part of Cobble Hill into a three-building luxury condo development have run into trouble.
Lender Madison Realty Capital has initiated a UCC foreclosure sale for the equity interests on development sites at 350 Hicks Street and 91-95 Pacific Street, where Fortis plans two condo buildings totaling 150 units.

The Hicks Street building, called 1 River Park, is to rise 20 stories and contain 48 apartments above a parking area and a community space. At the Pacific Street site, 2 River Park will have 102 residential units.
A third building, the 25-unit 5 River Park at 347 Henry Street, is not part of the UCC foreclosure and is “almost 75 percent sold,” according to Fortis’ website.
The sale of the equity interests in the two sites would satisfy $47.7 million in debt, according to marketing materials. The sale is set for Sept. 29. The reason for the default is not clear.
The foreclosure notice comes as another major Fortis project, its planned 60-story condo tower at One Maiden Lane in the Financial District, remains unfinished amid a dispute between Fortis and its lender over cash-flow and construction issues.
The firm has had more success in Brooklyn, where its 76-unit Olympia Dumbo is home to some of the borough’s most expensive real estate on a per-square-foot basis.
Fortis and Madison Realty could resolve the foreclosure prior to the auction date by restructuring the debt or agreeing on an extension, averting a sale.
Fortis acquired the Cobble Hill site in 2015 as part of a $240 million deal with the State University of New York for 18 buildings that were formerly part of the Long Island College Hospital Campus.
That deal later drew scrutiny over Mayor Bill de Blasio’s alleged role in facilitating it.
The former mayor, who was arrested during his 2013 campaign for protesting the closure of the hospital on the site, helped broker the deal to sell the property after taking office. Former Manhattan U.S. Attorney Preet Bharara investigated de Blasio’s involvement in the sale, multiple news outlets reported at the time, but did not bring charges.
De Blasio then pushed for a rezoning at the hospital site to allow for both greater density and affordable housing, but then-Council member Brad Lander, who represented the neighborhood, opposed it. Fortis ultimately decided to go with market-rate condos, which did not require a rezoning.
Soon after winning the bid, Fortis secured a $107 million bridge loan from Madison Realty. Two years later, Madison Realty provided Fortis with a $297 million construction loan for the three condo buildings.
“Madison offered us an opportunity to leverage the property at a reasonably priced cost of funds relative to the dilution we would have taken if we brought in a partner,” Fortis’s Jonathan Landau told The Real Deal in 2016.
Greg Corbin, president of bankruptcy and restructuring at Rosewood Realty Group, is marketing the foreclosure sale. Matthew Mannion of Mannion Auctions is the auctioneer.
Fortis did not immediately return a request to comment. Madison Realty declined to comment.


David Goldsmith

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The Upper East Side goes condo crazy

The Daily Dirt
David Goldsmith
Nov 4 at 10:00 PM

An analysis of New York's

October was one of the worst months for new development sales in years, but that’s not stopping these builders.

Late this week, elusive developer Joseph Chetrit filed plans for a 20-story condominium project at 260 East 72nd Street on the Upper East Side. The development will span 190,000 square feet and include 53 apartments and 3,400 square feet of commercial space.

Chetrit has spent years piecing together the assemblage, made up of four lots on Second Avenue and East 71st and East 72nd streets. The parcels have appreciated handsomely as a result of the Second Avenue subway extension and sit in a transit land use district, so they could qualify for special zoning bonuses.

Earlier in the week, Eliot Spitzer moved to build his own ultra-luxury condo project on the Upper East Side. The former governor’s development firm, Spitzer Enterprises, filed for permits to replace its rental at 985 Fifth Avenue, which was built by Spitzer’s father, with a 26-unit condominium project. The 19-story, SLCE-designed project would cover 106,000 square feet and feature two setbacks with a limestone facade.

To build it, Spitzer would have to tear down an income-generating rental building. The 1,900-square-foot penthouse pulls in $30,000 per month, and a 20th-floor unit with Central Park views is asking $17,000 per month.

Both projects are betting on the city’s condo market turning around. New development sales nosedived in October, with contract volume down 20 percent from September and 36 percent from October 2019. Still, the ultra-wealthy have continued to buy, as they are less sensitive to rate hikes than the typical buyer.

David Goldsmith

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How does this math work?

Just look at Skyline Tower in Long Island City. Soaring 61-stories with architecture by Hill West, the 801-unit condo is 67% sold and averaging 9.4 monthly sales over the past year, based on Marketproof’s sales velocity analysis. It was the top-selling project in 2021. If sales continue at this pace, Skyline Tower could sell out by this time next year.

801 * 0.33 / 9.4 = 28 months

To say nothing of the “if sales continue at this pace” conditional.

David Goldsmith

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How does this math work?

801 * 0.33 / 9.4 = 28 months

To say nothing of the “if sales continue at this pace” conditional.
I like the numbers MarketProof presents but find the conclusions are usually slanted to the rosy side. Especially considering the video I posted in the post directly above this one, I'm not nearly as sanguine about the health of the market.


But that would be 87% sold out. Is that what you meant, not 80%?
Just look at Skyline Tower in Long Island City. Soaring 61-stories with architecture by Hill West, the 801-unit condo is 67% sold and averaging 9.4 monthly sales over the past year, based on Marketproof’s sales velocity analysis. It was the top-selling project in 2021. If sales continue at this pace, Skyline Tower could sell out by this time next year.

I meant they should put 80% in the last sentence as you were commenting. 67%+13%=80%, 67% comes from the second sentence.

"If sales continue at this pace, Skyline Tower could be 80% sold out by this time next year"

I don't think that they could change the second sentence with "the 801-unit condo is 87% sold" (=1-13%), if this is what you meant about 87%. The math would work, but this number would not stick.