Manhattan Condo Glut Leads Developers to New Tactics

(iStock/Illustration by Kevin Rebong for The Real Deal)

Developers have been saddled with an oversupply of new condos for years, and now — thanks in part to the pandemic, which further hobbled the luxury market — they’re taking steps to turn the tide.

It’s estimated that there are more than 15,000 unsold units across 900 projects, largely in Manhattan, with a total listed value of $45 billion, Bloomberg News reported. That’s resulted in developers lowering their prices, investors amassing funds to buy unsold units and lenders aggressively foreclosing on lingering projects.

Urban Standard Capital found that there are about 300 developments where 15 percent of the units remain unsold. Led by Seth Weissman, the firm has $100 million to buy out those units at a discount.

At its Charlie West project, Elad Group agreed to sell 70 units to Tishman Realty. The move aimed to get rid of most of its unsold units at the 121-unit property.

“Time is the worst enemy,” Shlomi Reuveni, president of Reuveni Real Estate, the brokerage that marketed Charlie West to buyers before the bulk sale (which his firm was not involved in), told the publication. “There’s a strong pipeline that’s coming, and that has to be contended with. Brand new projects that open up might be more attractive to buyers.”

For others, like HFZ’s The XI, defaults and litigation has already arrived.

“There’s going to be foreclosures, there’s going to be restructures, note sales, it’s all coming,” Brett Siegel, vice chairman for New York capital markets at Newmark Knight Frank, told Bloomberg. “Lenders are starting to realize they have to go back to their business of making loans. They can’t just be in the business of giving forbearance forever.”

[Bloomberg] — Sasha Jones

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