It seems like Extell Development is building one supertall after another and I am just worried that with upper upper floors ranging from $15-20 million to as much as $70-100 million in some cases, will the Developer come to a bust by not being able to sell for the price that was intended?
There will always be a need to park money in real estate. These units are not so much for raising a family but rather to avoid taxation in local countries and to politely wash money of its provenance. Sure, some wealthy finance types might want to alpha-dog themselves into an apartment, but in general, the high-end real estate in NYC is a particular asset class, separate from traditional real estate.
As mentioned by archanonymous, there is tremendous margin in these projects, so I doubt anyone is worried.
Things in NYC are starting to turn south, albeit slowly. While we have work currently, payments are becoming more and more delayed (moreso than the usually bs), and there are fewer 'on the vine' jobs.
You could probably work out what that pro-forma looks like. I wonder what construction cost is on those supertalls, but typically when I see "behind the curtain" on projects or have public info on developer costs, you find out they a have huge profit margins. Often a developer saying they "can't afford" to build on a site without bonuses or exemptions (or at all) comes down to a certain% of profit to not be enough.
Point is, they probably don't need the full sale price to come out ahead.
Do you know what % of some of these buildings are sold already?
The developers I knew wouldn’t touch anything that wouldn’t return at least 30% under the most pessimistic possible scenarios.
Oct 22, 19 12:54 pm ·
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GridBubbles
Precisely. In the mean time, architects would be secretly laughing all the way to the bank if they manage to net 15% profit if they're lucky not to incur labour overruns and that the project runs relatively smoothly.
There will always be a need to park money in real estate. These units are not so much for raising a family but rather to avoid taxation in local countries and to politely wash money of its provenance. Sure, some wealthy finance types might want to alpha-dog themselves into an apartment, but in general, the high-end real estate in NYC is a particular asset class, separate from traditional real estate.
As mentioned by archanonymous, there is tremendous margin in these projects, so I doubt anyone is worried.
Things in NYC are starting to turn south, albeit slowly. While we have work currently, payments are becoming more and more delayed (moreso than the usually bs), and there are fewer 'on the vine' jobs.
Oct 22, 19 11:06 am ·
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BulgarBlogger
Not so sure I agree with you about fees
. I am doing mostly public work and hgh-end resential jobs at the moment.
Oct 22, 19 12:10 pm ·
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OddArchitect
How do you like that BB? I've never done work in high end residential.
Oct 22, 19 12:51 pm ·
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BulgarBlogger
Most of my jobs are 5,000 square foot town homes with a construction budget of $1,600 to $2,000 per sq. ft. I like dealing with really knowledgeable and talented contractors, but dealing with the interior designers and clients' odd-ball requests (measuring underwear, shoes, etc) is a bit annoying sometimes. Overall, I like the generous budgets and the custom work.
Oct 22, 19 1:07 pm ·
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threeohdoor
Yea, my work is on the opposite side of the spectrum, mostly. $2k/sf sounds downright dreamy. Chelsea?
Oct 22, 19 1:31 pm ·
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BulgarBlogger
lol- park avenue, the village, chelsea, soho, brooklyn
Oct 22, 19 1:44 pm ·
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OddArchitect
Jebus, my 'big' projects have a cost of around $385 sf.
Don't worry about the developers. Worry about the lenders. They will be the ones taking the hickey while the developer just keeps on trucking. If the lender is an American bank or insurance company, then worry about the US taxpayer, who will pick up the tab at the next inevitable bailout,.
Oct 28, 19 7:28 am ·
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NYC Highrise Bubble
It seems like Extell Development is building one supertall after another and I am just worried that with upper upper floors ranging from $15-20 million to as much as $70-100 million in some cases, will the Developer come to a bust by not being able to sell for the price that was intended?
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There will always be a need to park money in real estate. These units are not so much for raising a family but rather to avoid taxation in local countries and to politely wash money of its provenance. Sure, some wealthy finance types might want to alpha-dog themselves into an apartment, but in general, the high-end real estate in NYC is a particular asset class, separate from traditional real estate.
As mentioned by archanonymous, there is tremendous margin in these projects, so I doubt anyone is worried.
Things in NYC are starting to turn south, albeit slowly. While we have work currently, payments are becoming more and more delayed (moreso than the usually bs), and there are fewer 'on the vine' jobs.
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You’re worried about developers going bust? Really?
Afraid that the poor billionaires won’t buy each other’s shit?
Afraid that the top is going to fall off the pyramid (scheme)?
This would be funny if it wasn’t so pathetically sad.
I dunno, seems like a valid question in general. Development and appreciation of said development cannot go on forever.
saudis and russians can go on forever.
There's a leap from "Do you think this will happen?" to "I hope this doesn't happen" that you made here & it seems presumptuous.
You could probably work out what that pro-forma looks like. I wonder what construction cost is on those supertalls, but typically when I see "behind the curtain" on projects or have public info on developer costs, you find out they a have huge profit margins. Often a developer saying they "can't afford" to build on a site without bonuses or exemptions (or at all) comes down to a certain% of profit to not be enough.
Point is, they probably don't need the full sale price to come out ahead.
Do you know what % of some of these buildings are sold already?
The developers I knew wouldn’t touch anything that wouldn’t return at least 30% under the most pessimistic possible scenarios.
Precisely. In the mean time, architects would be secretly laughing all the way to the bank if they manage to net 15% profit if they're lucky not to incur labour overruns and that the project runs relatively smoothly.
There will always be a need to park money in real estate. These units are not so much for raising a family but rather to avoid taxation in local countries and to politely wash money of its provenance. Sure, some wealthy finance types might want to alpha-dog themselves into an apartment, but in general, the high-end real estate in NYC is a particular asset class, separate from traditional real estate.
As mentioned by archanonymous, there is tremendous margin in these projects, so I doubt anyone is worried.
Things in NYC are starting to turn south, albeit slowly. While we have work currently, payments are becoming more and more delayed (moreso than the usually bs), and there are fewer 'on the vine' jobs.
Not so sure I agree with you about fees
. I am doing mostly public work and hgh-end resential jobs at the moment.
How do you like that BB? I've never done work in high end residential.
Most of my jobs are 5,000 square foot town homes with a construction budget of $1,600 to $2,000 per sq. ft. I like dealing with really knowledgeable and talented contractors, but dealing with the interior designers and clients' odd-ball requests (measuring underwear, shoes, etc) is a bit annoying sometimes. Overall, I like the generous budgets and the custom work.
Yea, my work is on the opposite side of the spectrum, mostly. $2k/sf sounds downright dreamy. Chelsea?
lol- park avenue, the village, chelsea, soho, brooklyn
Jebus, my 'big' projects have a cost of around $385 sf.
Here in Paradise you can barely build a garage for that.
We build schools around here with that. Nice schools.
before the new rent control laws, slum lords were claiming BulgarBlogger's numbers for kitchen and bathroom upgrades....
Don't worry about the developers. Worry about the lenders. They will be the ones taking the hickey while the developer just keeps on trucking. If the lender is an American bank or insurance company, then worry about the US taxpayer, who will pick up the tab at the next inevitable bailout,.
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