The integration of automated parking into projects is making its way to downtown and with it some new condos that I suspect will find a market ready for them. Given the recent taste for building for lease multifamily rather than condos I would bet there is some latent demand for condos downtown. This will be an interesting project to watch both for the sales but also for the developers willingness to shoehorn residential into buildings where most cannot imagine it. This is how innovation happens.
Quick thinking developers and building owners seeing the glut of rooms on the apartment rental market have begun to pivot to hotels. A wise move and one that can be quite lucrative. Though now we have the concern about having too many hotel rooms but hey it’s always something isn’t it.
Keep an eye on these projects and see how downtown absorbs and builds around them. Those that get left on islands where there is little else will have a hard time in the long run.
John Wise says it well: “…I’m afraid the party is over and there are going to be some tough times for some developers.”
In every real estate cycle there is the BOTTOM, the UP, the TOP and the DOWN. Calling the BOTTOM and TOP is hard to do but seeing the UP and DOWN is much easier. We are now seeing the long called for DOWN with discounts, desperate marketing efforts and other tricks starting to come out. In time we may see the next phase of a down: sales. Discount sales as lenders and investors pull the plug on projects they’re just going to write off as a loss. Those are usually a good indication that the BOTTOM is close by.
How long any of this actually takes to happen is a guess and is dependent on lenders staying power and devotion to the market. A local lender / investor with long ties to the market may stay with a project and work with the developer / owner to restructure the debt or delay payments in order to weather the downturn. Most national lenders and equity players have a much shorter fuse and when things look like they’re going to take a while to rebound many will cut bait. Take their lumps and move on.
This can be a great deal for tenants with lowered rents and all manner of incentives. It can also be great for those looking for an opportunity to buy into the market as some of the projects may trade at a discount. With a new lower basis it will be easier to ride out the market downturn and then make even better money in the following UP cycle.
I think the interesting part of this story is that the buyer is looking to continue the industrial use of the site and not convert it to the overheated residential market. While the site may lend itself more to residential the effort to maintain a business base will help the city in the long term: