Condo No! Developers' Big Williamsburg Dreams Go Bust

Photograph of 80 Metropolitan by John Del Signore/Gothamist

This week NY Mag takes a harrowing look at the Williamsburg condo implosion—harrowing, that is, if you're a developer who's losing your shirt because nobody's buying the luxury units you started building before the economic collapse. The in-depth article highlights how the city's requirement that all new buildings, no matter how small, devote 20 percent of their units to affordable housing, backfired.

Broker David Maundrell explains: "'That 20 percent? It’s a developer’s profits. What the city did is they forced all these guys to take down the existing building and drive the pile'—in other words, to rush construction far enough along that the development would not be subject to the new rules. 'Most of them did it with their own money, or they took a hard-money loan at some outrageous interest rate. Well, that was just as the banks stopped lending. It was like Armageddon. You had the city looming, you had to take down your old building, and then—poof!—there was no money...So here we are, everyone asking the same question: What the hell is going to happen?'"

Well, one result is that smaller developers like Bushwick's Jamie Wiseman are picking up the pieces. He tells NY Mag, "The biggest difference between us and most of the developers out there is we’re not building apartments based on the fantasy that Williamsburg is where bankers want to live. Basically, what we’re doing is creating places for the people who live here now."

Contact the author of this article or email tips@gothamist.com with further questions, comments or tips.

By John Del Signore in News on July 13, 2009 12:44 PM

Comments [rss]

payday loan

Nominal fees are not the answer, it is a failure of management at the most high levels. This goes
to Obama and Eric Holder who will come by tomorrow after visiting 9/11
hallowed ground. Hire Joe Biden and, earth to Brint, earth to Meekus ...... They were promised "luxury living" only to have their dreams shattered after buying pricey condos at a new high-rise complex on the Williamsburg waterfront that residents complain is rife with "shoddy" construction. ...

books

what bs - blame the fact that 20% of the housing had to be for low income people - fck - DEVELOERS took most of the Value from Greenpoint, Gowanus and williamsburg that the people who ALREADY lived there had - fck them, every last one of them

greeen

Wiseman's building is NOT inhabited by people who "already live here", it is overrun by frat types and extremely obnoxious opportunists who think Williamsburg is their disneyland. That party ended with people throwing beer off the roof and generally disturbing the peace.

I dont feel an ounce of sympathy for the developers who are losing out. They moved in on the neighborhood with one motive:GREED. Now they have been hoisted on their own petard.

boo-f*cking hoo.

mihow

I hate perpetuating stereotypes, but I have to agree with Greeen regarding the frat boy types at that building. It is precisely how he/she describes. But to be frank, that's kind of what I see happening to WB in general. Husband and I have been here for a decade and it's really not about hipsters anymore. (Even though that's kind of what Jen Carlson wants you to believe!) It's a lot of young college type, Abercrombie and Fitch kids, several of which live behind our place and play beer pong until 4 AM.

Ah well. Perhaps it's time to finally pack it in and say goodbye...

leftylib

We need sustainable economies! We need affordable housing! To hell with gentrification and out of control development! Lets deal with things as they really are! Lets take care of our citizens!

spiritross

Time to haggle!

NannyState

When the city finally converts these gloomy buildings to homeless shelters, they will be "where bankers want to live".

whitecastlerock

People want to live in Bushwick?

schizofriendly

Canarsie = Brooklyn's final frontier

grandeur

yeah! I'm just as surprised about people wanting to live in bushwick. It has got to be the grossest area to live in.

Clickety-Clickety Clack

Wait, am I supposed to feel bad for these greedy developers? I don't. Serves ya right.

Bottomless Chips

This is more great news for the renters out there.

mihow

That's not true, either. In many cases, renters still have to pay the top premium amount. Why? Banks aren't giving loans for buyers. The renting business is going to flourish in this area, imo. Rents will not drop much at all. People still want to live here, they just can't afford to buy a lot of the time, or don't want to.

Rents won't change much. What will happen is tax payers will end up with the burden. The city will buy up the properties and sell the condos at a discounted rate to families that make less than a certain amount. (I have a friend who qualified for a condo recently, her entire family had to make less than 150. They are a family of three, two of them work.) The people who were able to buy won't be able to sell for what they purchased the property for because the demand will be too high or there will be cheaper units or this will lower the overall sales price.

This could take a decade to work itself out.

Bottomless Chips

Your reality will probably reign true due to the heavy hand of the city and state. This is state capitalism at its finest: feign and talk about how free-market you are, but use taxpayer money to subsidize your utopian ideas to save the world.

If the city does the right thing and does nothing, we'll be fine. I'm in a double-leveraged UltraShort ETF right now so I'm reading a ton on real estate, and methinks that banks will uptrend on their mortgage business and we'll see more underwriting as finance arms of the big names have stabilized and capital is available. We'll see, though.

It's the politicians and their meddling that will fuck this up for us.

Bottomless Chips

To clarify: Yes, I may sound optimistic while being in a vehicle that shorts the market, but I'm banking on commercial real estate falling.

billybob

Here's an idea developers: lower your sale prices.

mihow

In some cases, they can't because the banks won't let them lower their prices. Read the article again and you'll see what I mean.

It's not an easy thing to fix, and there are many people to blame, that's for sure, it's precisely what took place regarding the banks, wall street, and the government. You're probably safe blaming it on any of the three, but in reality, each party is equally as guilty.

I could talk about this for hours, because i really got my head all wrapped up in it. The problem is hugely complicated, it's not as simple as stating, "Lower sales price"! Really.

John Del Signore

Yeah, the NY Mag article does a really great job of detailing why developers are so cornered now.

jaycjay

"What the city did is they forced all these guys to take down the existing building and drive the pile'—in other words, to rush construction far enough along that the development would not be subject to the new rules."

The city didn't "force" developers to do that. Developers chose to skirt the impending rules. You roll the dice, sometimes you win and sometimes you lose.