Despite Oversupply, Developers Say Time To Build Apartments Is Now
Posted On November 6, 2017
By ETHAN ROTHSTEIN
East Coast Editor
Concerns about overbuilding and rent growth have spooked lenders. Rents have fallen by nearly 2% in Manhattan this year compared to 2016, and in places like Downtown Brooklyn, where thousands of units are coming online at the same time, fears of a glut have developers offering high concessions.
Bisnow: Ethan Rothstein Besen & Associates Senior Director Shallini Mehra, Ariel Property Advisors President Shimon Shkury and Rose Associates Chief Operating Officer Brian Peters speak at Bisnow's 2017 New York State of the Market.
"There’s a great deal of talk about oversupply in the rental marketplace and that’s particularly acute in some areas, like Downtown Brooklyn," Rose Associates Chief Operating Officer Brian Peters said. "The oversupply is going to prove to be temporary, and the time to start developing to deliver into the market in three years is now."
The lack of lender appetite for new construction loans is just one of the factors that have cut into New York City's apartment pipeline. A lack of available land, and the cost to buy the parcels that are on the market have hampered developers aching to build ground-up apartments. Rent stagnation has also put the brakes on building sales as investors do not anticipate being able to raise rents — and therefore profit — on buildings they acquire.
About Rose Associates, Inc.
Based in New York, Rose Associates is a developer, owner and operator of premium residential properties. From planning a new development to managing day-to-day property operations, the Rose 360 Platform offers a full range of services designed to maximize the value of real estate. The firm oversees more than 26,000 units across New York, with approximately $2 billion in projects under development. Rose recently opened the historic skyscraper 70 Pine Street, which the firm is transforming into a luxury rental property with 644 residential units, 132 extend-stay apartments and a destination restaurant/lounge occupying the top four floors.