By: Andy B. Mayfair
If you can’t beat ‘em, join ‘em. And if you can’t sell, then rent.
With sales of uber-expensive apartments dipping, more and more developers of condominiums are turning, albeit reluctantly, to leasing. The income helps defray their expenses, they reason, and the apartments can always be sold at a later date – hopefully, they figure, to the renter himself.
“There’s two different ways of looking at it,” said Jordan Brill, a managing partner at Magnum Real Estate Group, in an interview with Crain’s New York Business. “There’s ‘Oh my God, you can’t sell and now you have to rent.’ And the other is that, look, the market is in a state of paralysis, and if you have a good product that can hold its value long term, you can take the risk and do this.”
The thinking behind the strategy isn’t hard to understand. There is no shortage of people with big bucks, but they’re nervous, and want to bide their time until Coronavirus worries and the dire possibility of a Democratic candidate winning the presidency go away or at least die down. They also figure that with so many apartments available, prices will come down later.
“There’s the feeling that the price of newly built, high-end condos may have gone up too far and too fast, and people are skeptical of buying at these prices,” Nancy Packes, principal of residential consulting firm Nancy Packes Data Services, told Crain’s. “So it’s not that we don’t have the people to buy. We never stop minting millionaires and billionaires. It’s [that] no one wants to buy a unit today that they believe is going to devalue tomorrow even if they can afford it. It’s psychology.”
Nor is this glut of expensive apartments anything especially new. It was last August that Bloomberg News reported that apartments down around Wall Street simply were not moving. “Whether in converted Art Deco office buildings or new glass towers, units are spending more time on the market and often selling below asking prices. After a spurt of construction aimed at foreign buyers, whose numbers are dwindling, and finance workers, who have seen many of their jobs move uptown, the area is plagued by oversupply.”
The news service interviewed Steven Gottlieb, a broker at Warburg Realty, who told them that “There was so much new development in that neighborhood and I think that many of the people who wanted to buy there did. I don’t know that there is such a huge a demand for that neighborhood anymore.”
