Quote:
Originally Posted by biggus diggus
I don't necessarily think it's jitters from Derby but I do think there's a realization that we have a metric ton of apartments in the area and each one is a carbon copy of the next. Same price points, same kinds of finishes, the competition between them will be immense and I think the initial excitement blinded a lot of developers.
I don't mean this to sound insulting to anyone it's more just a "hey did you know?" type of comment. People building these apartment buildings have no interest in owning them long term and running them, they're just developers looking to cash out and sell to a REIT. If they think the product will be hard to sell in a year or two years, they aren't going to build it and I think we are getting to that point right now within this high end market. There's money to be made in the lower end products that everyone is overlooking but the land cost and construction cost at this location is too high to make any low end product pencil.
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I disagree. Not that these are flipped to REITS and that much of the same product is available, those are all valid points. I disagree because I believe RED just flipped the CityScape apartments for a record sale. Sure, the market could become saturated, but they just got record prices. Values on a new project could in theory drop, but it won't be much in that time period.
Also, the supply of apartments in general is rapidly increasing, but the supply of high-rise apartments is still very limited. You only have CityScape and 44 Monroe. Sure maybe The Stewart will pan out, maybe One Central Park East will pan out, but supply of high-rise apartments is not near saturation levels and still command a premium, as evidenced by the sale of city scape apartments.