Originally Posted by micropundit
It's not like they have a wide range of options here.With the Emory expansion(s) on hold Cousins has nada on the books for the immediate future and developers are like sharks: if they stop moving they're dead.
I agree - it's a move to start selling these units and produce positive cash flows this year, which they desperately need. I imagine the rationale is that, if they can make it to 2012, they will have other projects starting that might offset any losses they see via this program.
NYClife2005 - there is a lot to be happy about here, since the projects we have seen completed or near completion in the past year have really redefined this city. Unfortunately, development junkies are whores for new and different. And we hate to see good projects get stalled or canceled, which is about all that is happening at the moment (apart from construction that has already been financed).
I have to agree with micropundit here, though. No project is immune from this mess, since the real problem is not selling condos or finding tenants (although that is a huge problem), it is securing financing. Without available (and relatively cheap) credit, developers cannot get permanent financing and therefore cannot secure a construction loan. And when these projects get leveraged anywhere from 50-80% (four years ago that could have been as high as 95%), that financing is a deal breaker. The one glimmer of hope might be Tivoli's 1138 project, since they were trying to secure huge amounts of private equity from a number of sources in Asia - although even that probably won't happen for at least a year.
I have to say that the future looks bleak for SOB as well, although you stated otherwise. Two hotels have already pulled out of the project, and I think we will start seeing retailers leave in the next few months. Retail nationwide has been hit hard, but high-end stores have been hit the hardest, many of them down 30-40% year over year. That doesn't bode well for a development predicated on the notion that people will embrace complete extravagance.
Perhaps we could all be more optimistic. After all, there is a lot of great development to be happy about. But in the short-term, I think realism might rule the day, and that means that we should face the fact that real estate is an incredibly volatile asset at the moment...and that good news for a few months might be stories of developers and retailers avoiding bankruptcy.