When a bank loans money to a developer, they require the developer to agree that nothing will be sold below their minimum release price. But what happens when the market dips below that minimum release price? Firstly, it probably means that the developer has lost his equity position in the deal and has no motivation to do a deal like this.  Secondly, it means that the bank may soon have the ability to take back the project and still make some money.  A banks “break-even” number is clearly lower than the developers. No deals are made. No new contracts are signed.

This tug of war we see going on now is not helping anyone. Some of these projects will be worked out, and sell.  Some will not.  It’s becoming easier to see which of those will stall. It’s not that difficult to see sites that have been abandoned.  No construction activity.  No more flow of money to finish what has been started.  One thing I do know is that Manhattan is an island and has limited space. These projects will become something.  Perhaps not what was originally conceived, but they won’t sit idle forever.

In every market, just like a tug of war, there seems to be a winner and a loser.

Chelsea is a neighborhood I know intimately. Over the course of my career I have sold and rented many townhouses, apartments, lofts and penthouses in the neighborhood. I have also worked on some of the very first development projects and exclusively represented some of the finest buildings. I look forward to continuing to expand our business in the city and becoming an integral part of the neighborhood.