If there's an early theme for the New York City real estate market in 2011, it's this: Rumors of its demise have been greatly exaggerated. And that counts for developers, too. The Times' Charles Bagli recently wrote about developers who suffered major losses during the credit crunch, only to carry on like nothing bad happened. If a homeowner gets foreclosed, the scars run deep, but developers who have given up huge properties and lost tons of money?mostly other people's?barely suffer. The most famous case is of course Tishman Speyer's Stuyvesant Town debacle, but Bagli also includes Harry Macklowe and Larry Gluck, whom Bagli outs as the mystery buyer of The Windermere (right) in Hell's Kitchen. Surprise!
The competition isn't thrilled that the bad seeds still get to play with the rest of the group. Straight-A student Douglas Dirst tells the Times, "That has not given us any advantage as we go through each financial cycle in which the bankers who made bad loans are let go, but the defaulting borrowers are waiting for the new team of bankers to start the process over again." So basically, the world of big-time Manhattan real estate is run by screwups and fall guys. Sweet! So what's this crowd up to in 2011?
Also pushing the comeback thing, the Journal took a look at some delayed projects that might find new life thi year. One is the replacement for the demolished Drake Hotel, where Harry Macklowe still retains a stake. The paper calls the new building's rise "unlikely," because, "While the property is situated on a prime site, rents are generally considered too low to justify new office development in the city, as they're about 30% off their peak. With the development's Park Avenue location, its long-term prospects are good." A couple more boom-and-bust cycles and maybe this thing will actually happen.
· Real Estate Developers Prosper Despite Defaults [NYT]
· New Life for Projects Put on Hold [WSJ]