March 16, 2017

The Onetime Kings Of Impossible Prices

A report from Bloomberg. “Apartment rents in cities such as New York and San Francisco will need to fall as much as 15 percent for a glut of high-end developments to be absorbed, according to billionaire real estate investor Richard LeFrak. New York landlords are already feeling the pinch as renters take advantage of a flood of new buildings to negotiate concessions and price cuts. Rents fell last month for Manhattan apartments of all sizes, the first across-the-board decline in at least four years, as property owners compromised to keep units from going empty. ‘We built a lot of new product at the high end, anticipating incomes that don’t exist in the market now,’ said LeFrak, chief executive officer of the LeFrak Organization.”

From SF Curbed in California. “For the first time this year, San Francisco no longer has America’s most expensive median rent, at least by one measure. The site RENTCafe reports that San Francisco has slipped back down to the number two spot in their rankings, behind onetime king of impossible home prices, New York City. The really significant takeaway from this is that the city was neither the most expensive city in the report nor in the US.”

From Insider Louisville in Kentucky. “An out-of-town developer may back out of plans to build a $56 million luxury apartment complex in NuLu, according to the developer’s attorney, Jeffrey McKenzie, of Bingham Greenebaum Doll. ‘Flournoy Cos. is frankly not able to go forward,’ McKenzie said when addressing members of the Louisville Metro Council’s Labor and Economic Development Committee. The council was set to vote on a tax incentive agreement between the city and Flournoy Cos. but instead tabled it.”

“Flournoy Cos. previously agreed to rent 18 of its one-bedroom apartments at $947 per month, whereas a regular one-bedroom unit would go for $1,300 a month. However, when McKenzie addressed the council committee, he stated that the project can’t move forward if Flournoy Cos. is required to have the 18 cheaper apartments. Either that requirement would need to be eliminated, or the property owner must agree to sell the properties on Main and Clay streets at a lower price.”

“Without tax incentives, McKenzie asserted that Louisville would not be able to pull the large luxury apartment developments that were in development or under construction currently. Financing for apartment projects is tightening and costs are rising, which could cool the multifamily residential market.”

From The State in South Carolina. “Copper Beech Townhomes, one of the first in the current wave of private student housing complexes in Columbia, was sold at auction last week in a foreclosure sale, Richland County court officials said. The 1,002-bedroom complex was purchased by Southern Drive LLC for $22 million, according to Joseph P. Strickland, Richland County Master in Equity. Southern Drive, a Delaware-based company, sued the previous owners, Copper Beech Townhome Communities Twenty-Five LLC, for nonpayment, court records show.”

“The complex, which opened in 2007, will remain open and rebrand itself, according to its new management company, Southern Management Partners. Designed to appeal to college students, the complex is spacious and features a large swimming pool.”

“But occupancy rates have struggled at the complex as new student housing offerings closer to the city have continued to be erected since 2007. Last year in August, Copper Beech had a 40 percent occupancy rate, management officials there said. The previous year, in 2015, the occupancy rate was 100 percent, the company reported. Several housing developments aimed at college and young professionals have gone up in town nearer to USC and the downtown since 2007, with construction continuing.”