Fact or Fiction

If condos are in demand, why are developers hesitant?

Diana-120x150For a long time after the financial meltdown of 2008, our coverage of the condo market consisted of stalled construction, “mothballed” projects and condo-to-rental conversions. Frankly, we were much more interested in rentals—and so was the multi-housing industry. But things are different now. The sporadic condo press release has gradually turned into a regular occurrence. As MHN readers already know, Toronto claims to be North America’s largest condominium market and a slew of new residential towers have been rising in a number of other Canadian cities including Vancouver, Montreal and Calgary. In San Francisco, ground was broken for Lumina, a mixed-use project with 655 condos downtown near the waterfront. Lumina is noteworthy because it’s a joint venture between Tishman Speyer, which will develop and manage the asset, and equity partner China Vanke, the largest residential developer in the People’s Republic of China. Lumina is China Vanke’s first investment in North America. Designed by noted architect Bernardo Fort-Brescia of Arquitectonica, Lumina will feature two residential towers 350 and 400 feet tall. As expected, New York is seeing lots of condo activity and South Florida has bounced back nicely.
This month’s cover story (“The Condo Comeback?” page 24) by MHN Senior Associate Editor Mike Ratliff looks at the trends shaping the recovery of this sector. In a growing number of markets, strained supply and high rents have condos in demand, especially since first-time home buyers often look at condos as a less expensive alternative to buying a house. But developers are hesitant. “The product being built now is much different than the product that was built during the last boom,” according to Jonathan Miller, president & CEO of New York real estate appraisal and consulting firm Miller Samuel Inc. “This is less true in New York—which has always had a penchant for luxury—but in other markets, the new product is generally weighted to the upper end of the market.” Will the development community begin introducing more market-rate condo product? Will luxury real estate always be a global currency? How will the condo comeback impact the rental market going forward? Let us know what you think. And Happy 2014!

Diana Mosher, Editorial Director