Saturday, December 16, 2006

'At the Moment, Nothing Will Pencil' "Despite a Mountain of Recent Hype"

From the Sacramento Bee:

...Sacramento's central city housing effort -- despite a mountain of recent hype -- took so long to germinate that downtown largely sat out one of the hottest housing markets in memory. With the real estate industry in a slump, it's unclear whether some of the ambitious projects conceived at the tail end of the housing boom will materialize. "In Sacramento, we didn't capitalize on a great market cycle," said Sotiris Kolokotronis....

The local urban market was just starting to take off when the nationwide housing downturn began. Now, developers say, sales prices have stagnated while the cost of steel, concrete and other materials continues to rise -- making it more difficult to finance already tight deals.

"Market conditions have deteriorated rapidly," said developer Mark Friedman, whose Loftworks group developed successful loft housing, office and retail projects at 16th and J streets. But the firm recently walked away from a 16th Street project it was working on with the Capitol Area Development Authority. "At the moment, nothing will pencil."
...
Friedman said he also has put on hold his plan to build about 2,000 housing units just across the river from downtown on the West Sacramento waterfront.
...
Unlike Saca and Nassi, some other developers who started planning downtown projects while the market was hot have backed out or said they're waiting to see where prices go before breaking ground.

Citing the nationwide market downturn, D.R. Horton, one of the nation's largest home builders, recently pulled out of two high-rise condo projects planned for downtown Sacramento....

Meanwhile, the Sacramento suburbs still offer so much more square footage for the money that people who might otherwise choose to live downtown don't. "We've basically got unlimited land for suburban development, which detracts from the downtown," said John Frisch, local head of real estate brokerage Cornish & Carey Commercial.

3 comments:

Anonymous said...

BS, BS, BS, Hype and more BS from Midtown/Downtown...Hypemasters...

City/State/County Hypemasters set this one up...

All this Friedman (10 million govt subsidy for 16th Street), Kolokotronis stuff was funded by the government (that's your money)...

and now? It won't pencil out? even for the Friedman cancelled 16th street stuff (at least 4 million subsidy, probably more)...

Actually the nubmers have not worked out for anything midtown/dowtown without a huge subsidy and that WAS NOT owner occupied...

But the Government has plenty of money, YOUR MONEY, to spend for millionaire developers...and what the hell,

The Bureaucrats don't live downtown and the State doesn't pay property taxes...

oiacjgr

dan said...

Friedman knew what the costs were before he went in, he built similar stuff a block or so away

All the "concrete costs are up because of Shanghai" statements are malarkey, THE MARKET IS NOT THERE for the product even with a heavy government subsidy. Friedman and his partners even said as much. Saca still has head buried in his "big dig."

Much as the hypsters and outright crooks in suburban Sacramento drove Real Estate to some pretty lofty numbers with phoney baloney loans and panic purchases, so to did the hypsters of downtown Sacramento drive a market for condos that does not in fact exist. The actual Downtown Hypsters were not driven by the speculative greed of their suburban cousins, but rather by their jobs dependent on a hyped Sacramento and the herd mentality.

Anonymous said...

Chronicle article on how developers are screwing their current homeowners:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/12/17/SACTO.TMP