“While a dozen amenity-packed deluxe condo projects have vied for attention over the past three years, financing for new construction has dried up in recent months. Instead of the 10 to 15 percent equity common in past few years, lenders now look for developers to put in 40 percent of construction costs, and few banks are willing to lend more than $50 million for new condo projects, according to Michael Joseph of Kearny Street Capital, a commercial mortgage broker who worked with Jackson Pacific on [One Hawthorne].
‘A lot of banks are licking their wounds right now and they are not interested in more speculative development,’ said Joseph.”
New S.F. condo project will be a rarity in 2008 [Business Times]
One Hawthorne: The Design (And Some Details) Of What’s On The Way [SocketSite]

4 thoughts on “JustQuotes: Crunch Goes The Construction Captial For Condominiums”
  1. Double Hmmm…
    Perhaps they need to close on the units in the first tower to raise money for the downpayment on the second.

  2. C’mon you guys, they bought a very undesirable location for a song and tricked a bunch of people into thinking it was the “it” project. They’ll make a mint even if they sell half of the first tower.
    Trust me, they’ll build the second tower. I’m sure they aren’t worried about pricing: they can halve the prices and still make out just fine.

  3. this is no surprise.
    many of us have doubted that a lot of the towers will ever get built. it’s the nature of the credit cycle.
    who knows if tower II of ORH will get built or not… it depends on the financing. The bigger problem for those residents is that a lot of the proposed surrounding towers won’t. It may be a long time coming before that area matures.
    it also puts in jeapordy places like Transbay tower. even with the city urging them to build it will be difficult. And the monoline insurers (MBIA/Ambac) struggling won’t help on that front either.
    Trust me, they’ll build the second tower. I’m sure they aren’t worried about pricing: they can halve the prices and still make out just fine.
    it’s not about the builder making a profit. It’s about them securing a bridge loan to get the place built. No financing, no build. The lenders have been hammered with bridge loans on construction of late, which is why they don’t want to fund many more.
    ORH may have non-bank financing options however… I’m not sure how their financing works.

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