Developers! They’re Not Like Us
Matt Chaban Jan. 3, 2011, 5:44 p.m.
Ever since the credit crisis hit and the real estate market collapsed, the news has been filled with disgraced developers–including in these very pages. Yet for every plucked chicken, there seems to be an equal number of phoenixes who, year after year, decade after decade, return from the construction graveyard to build again. (The Observer, in fact, tackled this very angle early last year.)
Over the weekend, The Times inimitable Charles Bagli took his look at some of the recovery casualties from the boom, many of whom The Observer has also written about of late–Harry Macklowe, Shaya Boymelgreen, Bruce Eichner, Larry Gluck. The question is, why do these guys bounce back so easily when the Joe Apartment gets wiped out?
The truth is that there have been surprisingly few career fatalities among New York developers, even though they have lost billions of investor dollars on overpriced real estate and have littered the city with unfinished apartment buildings. While a homeowner who lost a house to foreclosure would find it difficult to borrow for years, developers who defaulted on enormous loans have still been able to attract money.
The reasons, experts say, are that there is still plenty of money floating around and that the market has a very short memory.
“You can always find an investor who’ll put up equity with a guy, unless he’s Attila the Hun,” said Daniel Alpert, managing partner at Westwood Capital, a real estate investment bank.
Meanwhile, The Journal handicaps a number of stalled construction projects, including some mentioned in the Times‘s article, such as the Drake Hotel, as well as Atlantic Yards and the troubled 3 Columbus Circle. The rival dailies outlook is far less sanguine.
So which is it? Another bubble or another bust?