Amid a boom in luxury residential high-rise construction, developer the Lightstone Group announced that it has garnered a $305 million construction loan for its planned 800-foot-tall residential high-rise in Manhattan, according to Crain’s New York Business.
The loan is expected to cover half of the anticipated construction costs. The developer has said the site on which the tower will be built was purchased below market value and so its condominium units will be sold at a lower rate than those of comparable projects nearby.
Slated for completion by the fall of 2019, the project, which is located at 130 William Street, will also include studio and one-bedroom apartments. The developer had initially proposed a 500-foot-tall tower but has since aimed higher for the value-add provided by the additional views.
An influx of multifamily projects in New York City — and in Manhattan in particular — could trigger a slowdown in the segment, as an oversupply pushes down rental and for-sale prices that developers can charge for the units. Meanwhile, construction costs in the country’s largest city continue to climb.
As one piece of evidence that the multifamily slowdown is already underway, big banks are pulling back from financing some of these projects, according to a report last month from The Wall Street Journal, citing data from real estate research firm Axiometrics. The number of new multifamily units nationwide is expected to reach its highest level in three decades this year as apartment rents hover more than a quarter above 2010 levels.
According to online apartment listing website Zumper, rents for one- and two-bedroom units in New York City were down 10% year over year in March, while nationwide those categories saw little change for the period. High rents in Manhattan are pushing renters whose income affords them a certain degree of mobility to consider Brooklyn and Queens — which is having the effect of increasing rents there.
Despite a tight lending environment, other luxury residential projects have won financing from banks. In Chicago, a city experiencing a similar oversupply in the category, Related Midwest late last year secured $240 million to fund the construction of a 70-story, $400 million tower set to contain a mix of condos and apartments. And in New York, GID late last year snagged $1.24 billion in construction loans for the development of a 1,132-unit residential project expected to be complete in 2019.
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