There Are Hundreds (If Not Thousands) Of ‘Shadow Inventory’ Units, Which Are Uninhabited
A report from Curbed New York. “A contractor who worked on a lower Manhattan condo tower—which is now leaning slightly—is suing the project’s developer, accusing the firm of cutting corners to curb costs, according to court documents. The 58-story tower at 161 Maiden Lane, also known as 1 Seaport, is leaning north by about three inches because the skyscraper’s foundation is defective, according to a March 22 lawsuit filed by the project’s contractor, Pizzarotti, in New York State Supreme Court.”
“But a representative for Fortis Property Group, the project’s developer, points the finger at Pizzarotti for the leaning lower Manhattan tower, and says the contractor improperly poured a concrete slab and failed to account for the settling of the foundation. Pizzarotti is now in ‘panic mode’ and filed the suit in a last-ditch effort to avoid damages, according to the Fortis spokesperson.”
“‘This lawsuit is patently false from start to finish and nothing more than simple defamation and a desperate attempt by a failing general contractor to divert attention from the fact it defaulted on yet another New York City project,’ said the spokesperson. ‘As a number of prominent New York City developers have learned the hard way over the past few years, Pizzarotti is simply incapable of buying out, managing and completing a construction project within contractually promised timelines.'”
From City Limits. “A looming affordable housing deadline in Brooklyn may be met—but only because state requirements are far looser than what Brooklynites were promised regarding the project launched in 2003 as Atlantic Yards. A newly acquired document discloses a plan, otherwise kept under wraps, for the developer of the vexed project, called Pacific Park since 2014, to meet an ever-closer deadline: building the required 2,250 affordable housing units by May 31, 2025.”
“The new details about Greenland Forest City’s plan were made available not in Brooklyn but half a world away in China, as part of a document discussing unbuilt project sites, treated as collateral for immigrant investors seeking green cards under the federal government’s EB-5 program.”
“Asked by City Limits to confirm or clarify the plans—the document was prepared for a lender to the developer, not the developer itself–the developer instead offered a general statement: ‘Greenland Forest City Partners is fully committed to meeting our target of 2,250 units of affordable housing by 2025, and our development plan for the remaining affordable units will be in full compliance with the outlined General Project Plan.'”
“Why the unwillingness to say more? Perhaps because the company’s previous ‘100 percent affordable’ buildings have faced criticism, given they’ve been skewed to middle-income households earning six figures, with such units tough to rent, as City Limits reported.”
“When would Pacific Park be finished? A map (below) charting the tentative buildout, prepared by Greenland Forest City in August 2014, predicted completion by 2025, with the final three buildings delivering major portions of affordable housing: all three, built over that platform, would have a 50/30/20 configuration, with 20 percent low-income units, 30 percent moderate- or middle-income, and the remaining 50 percent market rate.”
“However, that plan was upended by delays, with no new buildings starting after mid-2015. In November 2016, in a sign of tension within the joint venture, Forest City unilaterally announced a pause in construction, citing a glut of market-rate buildings in and around Downtown Brooklyn, rising construction costs, and uncertainty about the 421-a tax break.”
From New York Real Estate Journal. “Compound Asset Management (Compound), a New York City-based real estate asset management company, will integrate New York City’s most accurate automated valuation model, also known as AVM, as part of the firm’s data aggregation platform for urban residential real estate investment.”
“‘Today, there are more than 3,800 apartments publicly listed for sale in Manhattan – and there are hundreds (if not thousands) of ‘shadow inventory’ units, which are uninhabited or soon to be uninhabited residences,’ Janine Yorio, CEO of Compound. ‘As units come on and off the market and price changes are announced, the ability to parse through this complex data will allow us to pin-point properties that fit Compound’s investment strategy.'”
“Unlike most i-buyers, Compound’s strategy is to hold residential assets for the long-term in a fund, rather than rehabbing and flipping them. The firm believes this model is more sustainable and less vulnerable to market downturns.”
‘divert attention from the fact it defaulted on yet another New York City project’
Note the MSM doesn’t talk about these failed towers much. Kinda like Miami Beach or downtown Los Angeles and San Francisco.
‘that plan was upended by delays, with no new buildings starting after mid-2015. In November 2016, in a sign of tension within the joint venture, Forest City unilaterally announced a pause in construction, citing a glut of market-rate buildings in and around Downtown Brooklyn’
“…and there are hundreds (if not thousands) of ‘shadow inventory’ units, which are uninhabited or soon to be uninhabited residences…”
Yellen bux settled in to their toetag homes…
Provo, UT Housing Prices Crater 10% YOY As Housing Demand Plummets To 20 Year Low
Why everyone hates the Vessel
The centerpiece of New York’s massive new Hudson Yards development has drawn relentless criticism.
“It’s not just critics who are dismayed by the structure. The public has taken aim as well. Instagram posts reference the structure’s resemblance to a tower of shawarma meat, a beehive, a “pineapple thing,” an architecture overdose, M.C. Escher stairs, “a shiny thing to walk on.” One person quoted the blog Boing Boing, calling the structure “a perfect symbol for the grifter capitalism of New York City’s privatized Hudson Yards ‘neighborhood.’”
“The Vessel also serves as an amenity for the neighboring luxury apartment buildings (condos start at $2 million). The website for one of the luxury towers, 1 Hudson Yards, highlights the fact that the building overlooks the Vessel as a prime reason for why someone should spend $9,000 per month in rent for a two-bedroom apartment in the tower. The Vessel gives Related built-in marketing, much as The High Line, another controversial New York City landmark, gave real estate companies license to dramatically hike up property values in the Meatpacking District.”
“Even the Vessel is supposed to be a temporary name, until the public comes up with a better one. Online, Related is asking people to submit ideas for what the name should be online. This is meant to reinforce the idea that the structure is for everyone, not just Hudson Yards’ wealthy residents. (It’s also a handy way for Related to get your name and email, which are required to submit a name.) But tellingly, people have come up with creative names for the Vessel. Suggestions, per NYC’s subreddit, include: Staircase McStaircaseface, Meat Tornado, The Rat’s Nest, Chalice of the Privileged, The Escalator to Nowhere, The Hudson Yards Copyright Assignment Provision Clause, and UnitedHealth Group Vessel brought to you by Papa John’s dot Com Bowl.”
“I’ll be voting for Staircase McStaircaseface.”
Too funny! It’s good to see that a sense of humor endures!
So not only are these “safety” deposit boxes in the sky not financially safe for your money, they are not safe for your live (or neighbor’s lives) either.
Builders cutting corners to make money???? HHHMMMMM where did we hear this before? OPAL? Millennium Tower SF?
Note that with interest rate down from 0.5% since last year may help with refinancing but will not prevent the bubble from blowing up. It merely kick it down the road. My co-worker who brought a 2BR condo in Campbell (probably for close to 1M) told me he is trying to refinance. He brought around Spring 2018. The level of constructions in SV and Milpitas (where I live) is alarming. Everywhere I go, construction of new, tall office buildings or thousands of luxury apartments scatter the area. Right when hiring is slowing down dramatically. I worked in Tech but not just Tech, Cybersecurity Tech. There are thousands of companies in this area alone and many of them are losing money hand over fist over single day. At some points, the investors will force these companies to make profits or have some plan to make profits in the near future and thats when the layoffs will begin. Its very hard now because with so much competition you got no pricing powers! The next recession will save that!
My wife has constantly nagged me for not going with a startup (I work for 1 of the top 5 cybersecurity firms here) but right now I’m more worry about the Tech Bubble 2.0 than the Housing Bubble 2.0. I still have 75% of my RSUs unvested so I want to play it safe. While a startup may make more money there are much more risks. With 2 kids and a third one coming in October, I just want to make enough money here to retire else where (like Florida or TX).
Very telling comments qt, thanks!
I always like Boots on the ground anecdotes. Real time obs is what keeps us ahead of the curve
Washington Fine Properties has a fabulous penthouse in Dupont that has had a dramatic $100,000 price reduction! One-of-a-kind residence offered at $2,299,900!
Def a safer bet staying with an established company over an unproven startup, but also take a look at the way your company has structured your RSU tax obligations, if the RSUs are one of the main factors keeping you there. At my last job, RSU tax rate was about 60% withholding, so at vesting I kept 4 out of 10 shares. Also, when you sell the shares, you typically pay capital gains on any appreciation in the share price.
So stay with safe bet job if the total package and job security outweighs what you’d get at a startup, but also research the net compensation a startup could provide after taxes, etc. if you’re on the fence about switching up companies. A startup may pay off better in the long run after all.
And who knows? If you leave your current job on good terms, they may take you back should you lose a startup job in Tech Bubble 2.0 meltdown.
Nobody ever got rich being a salary man.
“The level of constructions in SV and Milpitas (where I live) is alarming. ”
A booming economy is “alarming”? So it would be better if there were zero construction in SV?
‘They can’t give it away: Texas natgas at all-time negative lows’
‘Next-day natural gas prices for Wednesday at the Waha hub in West Texas plunged to record negative levels – meaning some drillers are paying those with spare pipeline capacity to take the unwanted gas and are getting nothing for it.’
‘Spot prices at the Waha hub fell to minus $3.38 per million British thermal units for Wednesday from minus 2 cents for Tuesday, according to Intercontinental Exchange (ICE) data. That beat the prior all-time next-day low of minus $1.99 for March 29.’
‘Prices have been negative in the real-time or next-day market since March 22.’
Export this stuff to China. Natural gas is relatively clean too, so switching from coal to nat gas is a win for emissions, CO2, and the environment.
Did anyone read the Saudi Aramco report on the obscene amount of money they make? More than Apple and Google combined. Talk about a money machine!
Selling $6 barrels of crude for $50 is very profitable, domestic or foreign.
Wind? $olar? … Why, just tell’s ’em to go pound.$and.
After a big cra$h in stock$, some frack $and miners are de$perate
David Wethe | Bloomberg
“For the past six years, Kevin Bowen has made good money selling sand to shale frackers who use it for drilling. It was hard not to. The industry has been booming in the oil fields of West Texas
But today the U.S. frack-sand industry is swimming in an excess of supply that has battered prices and cut the stocks of frack sand miners by more than 70 percent in the last two years. So Bowen’s Shale Support LLC, based in Mississippi, is doing something he thought would never happen: selling sand outside of the U.S. — and reaping a 20 percent bump in profit. The first shipment, 25,000 tons worth, pulled into a port in Bahia Blanca, Argentina last month after a 22-day sea odyssey from New Orleans, and he’s still amazed that Argentina would look past its own sand.”
“But the frenzied sand expansion has brought the inevitable bust. The price of West Texas sand is expected to drop almost 20 percent to about $30 a ton compared with last year, according to Rystad Energy AS. Covia, the second-biggest frack-sand miner, has idled 7 million tons, the most by any one company tracked by Evercore ISI.
U.S. Silica, the current king of frack sand in terms of market size, estimated in February that as much as 20 percent of the 50 million tons of northern sand needs to get shut down. Its stock is down about 70 percent since the end of 2016.”
Chevy Chase, MD Housing Prices Crater 18% YOY As Massive Shadow Inventory Emerges Across DC Area
Collap$e … a $prouting springtime word seed.
“Synchronized global growth has collapsed, the China Land Cycle is rolling over, … Europe is slowing more than expected and the US is oversaturated with construction equipment,” Chad Dillard says.
John Melloy | CNBC|Published 4/3/2019
This must mean stocks are up!!!
“A contractor who worked on a lower Manhattan condo tower—which is now leaning slightly—is suing the project’s developer, accusing the firm of cutting corners to curb costs, according to court documents.
Where were the inspectors, regulators, and enforcers in all this?
Oh, right – they were on the make and on the take, just like they are in every crony capitalist wonderland.
NYC is about to explode with construction lawsuits as the bills start to go unpaid. A friend is getting weekly calls to testify. We have about 3 months due to cheap credit- a lot of Tel Aviv money has no patience and some dumpsters might get filled soon.
NYC has a self-inspection system- the Special inspectors will get the blame like the Appraisers in the last cycle.
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