« Some Trustees Challenge Polytechnic-N.Y.U. Merger | Main | MTA cop, not "Atlantic Yards cop" »
February 6, 2008
The Stench of '89
The last great New York recession was prolonged and deep. And it’s eerily familiar.
New York Magazine
by Michael Idov
There's the glass-half-full viewpoint:
In terms of construction, optimists say, the current building boom is no match in volume for the commercial-building craze of the mid-eighties, so a major contraction there is unlikely. Another key difference between now and 1989 is that developers and contractors have found an enthusiastic co-sponsor in the government. The city, the state, the MTA, and the Port Authority have tremendous capital budgets compared with the eighties, and they’re using them. From the two brand-new stadiums (and a possible basketball arena in Brooklyn) to subway-line extensions, the city is awash in major civic projects. Even Bruce Ratner, who’s using the atmosphere of economic uncertainty to try to expedite Atlantic Yards before the sky falls, is likely just being clever: His financiers at Goldman Sachs had a banner year and appear to be uniquely unaffected by the bad-debt debacle.
And the glass-half-empty take:
Finally, despite its developer-friendly intentions and healthy capital budgets, city government is proving an unreliable partner. Every big civic project with state or city money in it (save the new baseball stadiums, both well under way) recently took a budget cut. The funding for such much-heralded undertakings as the Second Avenue subway, Santiago Calatrava’s path terminal, and the 7-train extension is in question. Perhaps most surprising, after two years’ worth of adoring press, the dome-shaped Fulton transportation hub—touted as downtown’s answer to Grand Central—is out entirely. Until banks regain the confidence to begin lending again, commercial and civic construction in New York could grind to an almost immediate halt.
The pessimistic line on residential real estate is simple: We’re overbuilt and overpriced. By some estimates, tens of thousands of newly built condos could sit on the market. If the lack of Wall Street bonuses saps demand, we might see quite a few of these condos turned into rentals by 2009, which will, for the first time in ages, make renting a preferable alternative to owning (and speed up the price decline, in a self-propelling downward cycle). The consensus among top real-estate economists quoted in this magazine in September cites the worst-case scenario for New York residential housing as a 5 percent correction this year, followed by a nosedive of 18 percent, in reaction to the sure-to-be-anemic 2008 data, in 2009.
Posted by eric at February 6, 2008 5:19 PM