Condo Fallout 2007 may bring broken deals.
As the condo market has gone from white-hot to ice-cold, opportunists are preparing for failed projects.
“I think there are a lot of lenders that are about ready to pull product,” says Jack McCabe, CEO of McCabe Research and Consulting in Deerfield Beach, Fla. “The consensus is that with rates lower and all of these concessions that are prevalent right now, a lot of the snowbirds will take advantage in the first quarter. There could be a flurry of action in the first three months. But, in second half of 2007, we’ll see tons of properties go to lenders.”
That kind of failure could create lots of opportunities for developers and managers. “The hedge fund and investors looking for strategic allegiances with different experts and developers will get lined up and active in 2007,” McCabe says. “There will be opportunities for developers to pick up projects in mid-stream and mid-construction and finish them out. There will be opportunities for others to come in and take over troubled projects and sell them out.”
Among those planning to capitalize on those opportunities is Norman Radow, president of The Radco Cos. With the condo market foundering, he’s working with mezzanine lenders and equity investors to turn around faltering condos. Right now, he’s in Chicago, Atlanta, and Boston—but Florida is on his radar. “Everyone had gone into the condo business,” Radow says. “Even products that are in good markets and the right location may need a change [in this market]. If you have a developer who can’t change, that’s what we come in to do.” —L.S.
Project of the Month Overlook at West Hill Ithaca, N.Y.
The 128-unit, two-story Overlook is the first New York apartment development in the affordable housing sector to incorporate energy-efficient components into the construction process. These green building features include high-efficiency furnaces and boilers, tankless water heaters, occupancy sensors, and timer-controlled lighting.
The project’s green design promotes affordability through reduced fuel usage that will deliver long-term cost savings for its residents. At least that’s the goal of the Overlook’s development team: Queens, N.Y.-based The Domain Cos., Long Island, N.Y.-based The Arker Cos., and Ithaca Neighborhood Housing Services.
According to Chris Papamichael, principal of The Domain Cos., roughly half of the units will be set aside for residents earning no more than 60 percent of HUD’s area median income; 35 percent are reserved for residents at 50 percent of AMI; and 15 percent will be occupied by renters at 30 percent AMI or less. The remaining 15 percent of the units will be given to formerly homeless families.