Is the market in crisis? Well, there is evidence from the nasty month of March to suggest that the big project boom may have reached a symbolic turning point in the 31 days that just concluded. Before we get to that, however, we will turn to the Luxury Letter, which expresses confidence about "a normal market, not too affected by the unbelievable turmoil on Wall Street":
Pricing is stable. On the very high end there appears to be some weakening, but it remains to be seen if this is a result of the quality of product trading (and available) or a trend. Most of the ‘price reductions’ one hears about are ASKING price reductions. While that certainly indicates the end of a rising market, it does not necessarily show pricing deflation.The Letter is calling for drop in volume of about 10 percent for 2008 and says that the Wall Street fallout won't be felt until the second quarter. As for big developments and megaprojects, well, March was one of the cruelest months in recent memory. The appetizer actually was served at the end of February when Forest City Ratner announced what could be termed a major scaling back of its Renzo Piano project in Downtown Brooklyn. Piano's 100-story or so tower went out the window and will be replaced by a ten-story or so dorm. Uh oh.
March 15: While it's not a market condition, per se, the horrendous crane collapse on E. 53 Street was symbolic of very deep fears and in keeping with the awful March trends.
March 18: The Tower of Darkness walked toward the light as reports surfaced that JPMorgan Chase has backed out of plans to build the 42-story Tower 5 at the World Trade Center, and instead the Port Authority is already looking at mixed-use and residential uses for the Liberty Street site.
March 21: The Atlantic Yards Stall hits as the Times reports that developer Bruce Ratner is dropping or delaying most parts of the mega-development, including Frank Gehry's Miss Brooklyn tower. What's left is a $950 million basketball arena whose price has doubled and Nicolai Ouroussoff calls for a mercy killing.
March 26: It should be cause for celebration: Tishman Speyer bids $1.004 billion and is selected to develop Hudson Yards, but New York calls the process part of a "desperate rush" to try to salvage some megaprojects and Mr. Ouroussoff calls it "a damning indictment of large-scale development in New York."
March 27. It could be a negotiating tactic, but Madison Square Garden pulls out of the Moynihan Station plan leading to many headlines about the "death" of the big project.
March 27: Developer Sheldon Solow's big East Side development plan is approved, but it's put on a little bit of a diet.
March 28: There are reports that the city's efforts to find a Coney Island developer are not going as hoped and that "a desperate city" is considering bringing developer Joe Sitt back into the plan.
· Luxury Letter [luxuryloft.com]