May 11, 2017

The Free-For-All Is Going To Come Under More Scrutiny

A report from The Register Guard in Oregon. “Out-of-state developers have bought the shuttered Louie’s Village Chinese restaurant property in Eugene and hope to demolish it soon, taking a big step forward in their plan for a towering 12-story student apartment complex on the site. The project by Houston-based The Dinerstein Cos. and Pittsburgh-based Maifly Development would be one of the tallest buildings in Eugene, roughly the same height as the Hub apartments on East Broadway, if it’s developed according to plans filed with the city earlier this spring. The venture would add an apartment tower catering to University of Oregon students in a market that some analysts warn is overbuilt, amid flat enrollment at the UO in recent years.”

“The firm doesn’t appear to have ever built or owned a property in Oregon. Ya-Po-Ah Terrace is the city’s tallest building, at 18 stories, followed by the Willamette Towers and Olive Plaza apartments, each 13 stories. The Hub, Hilton Eugene and Patterson Towers are all 12 stories.”

The Charlotte Observer in North Carolina. “Charlotte’s apartment developers are optimistic about the future, mostly agreeing that any slowdown in new building is likely to be a gradual easing back from the city’s record-breaking boom rather than a sudden crash. But at a Bisnow forum Wednesday, some of the city’s most prominent developers said they expect the market to cool a bit in the coming years. Still, they seemed surprised that the market hasn’t slowed already.”

“Some 26,000 new units are either planned or under construction in the Charlotte region. ‘Rents, truthfully, are getting hard to sustain,’ said David Ravin, CEO of apartment developer and manager Northwood Ravin. Ravin said more lenders are asking questions about whether the ‘concessions’ – an industry term for one- or two-month breaks on rent, commonly used to lure tenants to new buildings – are temporary or here to stay.”

“Their consensus: It’s better for the apartment market to slow down a bit, gradually, than come to a crashing halt reminiscent of 2008. ‘I don’t think it’s necessarily a bad thing for us to catch our breath and absorb what we have,’ said Ravin. ‘The free-for-all we’ve been in for the last few years is going to come under some more scrutiny.’”

The Bay State Banner in Massachusetts. “Mayor Martin Walsh joined neighborhood activists to cut the ribbon on 44 new units of affordable housing in the Codman Square area Monday. In a city where 21,865 residential units were permitted at the beginning of the year, the ones in Dorchester stood out. For renters, some relief may be in sight. The 7,000 new subsidized units, along with a total of 12,001 new housing units built and 7,237 permitted, may be taking the edge off the city’s rental market.”

“Average rents in housing units built prior to 2010 dropped 4 percent from $2,071 to $1,984 between 2015 and 2016. In neighborhoods, including Roxbury, the drop was more dramatic. Roxbury, for instance, saw average rents drop 9 percent from $1,757 to $1,598.”

From Curbed New York. “This month, concessions remain the new normal for NYC’s rental market. Landlord perks were high in Manhattan, Brooklyn, and Queens—and yet, those landlords continue to resist lowering the face rent at new and high-priced developments. Jonathan Miller, the man behind Douglas Elliman’s April rental report, explains: ‘While the three boroughs didn’t set records with concessions, they’re flirting with record levels.’”

“In Brooklyn, 14.7 percent of new rentals transactions came with concessions, up from 6.5 percent last year. And in Northwest Queens (the part of the borough that Elliman tracks), those perks have tripled to their highest level to date. A whopping 45.5 percent of rental transactions came with some kind of perk, up from 14.6 percent when the firm began tracking those number last year. ‘As concessions continue to rise as a tool by landlords to fill buildings, you’ll have people at the end of the year who can’t afford to live there if the concessions go away,’ explains Miller. At a certain point, he says, landlords will have to reduce the face rent of apartments. ‘They won’t be able to continue the charade,’ he notes.”

From Bisnow on Illinois. “Northfield-based Interforum Holdings appears to have pulled out of a plan to build 53 luxury condos in the western edge of Lincoln Park, as Chicago’s multifamily real estate sector remains heavily skewed in favor of luxury apartments. The project’s website URL is still online, but leads to an empty homepage. And six combined double lots earmarked for The Parker are now on the market with an asking price of $8.7M; the site will retain its condo zoning.”

From The Real Deal on Florida. “In order to protect the gutted 16-story Versailles Hotel in Miami Beach from the elements, and to avoid the wrath of code enforcement, developer Alan Faena plans to wrap the entire 77-year-old building with a plain red wrap absent of logos while the development company re-evaluates its proposed renovation project. In April 2015, Faena announced that he would convert the old Versailles Hotel into a 22-unit condo called the Faena Versailles Classic. However, Faena told The Real Deal this past October that he was putting the Faena Versailles Classic and Faena Mar projects on hold while he re-evaluates the condo market.”

“Faena’s attorney, Neisen Kasdin, also admitted that the project was on hold in a March 27 letter to the preservation board ‘due to shifting macroeconomic conditions.’ A wrap with the logo ‘CULTURE REIMAGINED Faena District’ was partially blown down about a month ago, said Matthew Barnes, a consultant for Akerman LLP, the Brickell-based law firm that represents the Faena Group. Barnes assured the board that although the original Versailles condo concept ‘is not viable in the market right now’ Faena was ‘not letting it deteriorate.’”