Almost $5 billion worth of property projects in New York City have been delayed or cancelled because of the economic crisis, according to research.
Property development was once a great economic force in the city but now real estate executives are advised to take up golf instead.
'There's no way to finance a project,' said Stephen Blank, a researcher with the Urban Land Institute, a nonprofit group.
National figures show that developers are struggling financially. The percentage of loans in default jumped to 7.3% in September 2008, compared with 1% in 2007, according to data tracked by Reis Inc, a New York-based real estate research company.
Construction generated more than $30 billion in economic activity in New York last year according to the Building Trades Employers' Association. Chief executive Louis Coletti, said the $5 billion in cancelled or delayed projects includes all types of construction such as luxury high-rise buildings, office renovations for major banks and new hospital wings.
New York's development world is rife with rumours about developers who have been busy for years that are now killing projects or scrambling to avoid default because of the credit crunch.
Charles Blaichman, who has built two dozen projects in the past 20 years, admits he is struggling to borrow money. He is looking for $370 million for three hotels, which include a venture with Jay-Z, the hip-hop mogul. 'A year ago it would have seemed a reasonable amount. Not now. Even the banks who want to give us money can't,' he said.
Over the past 15 years, Josh Guberman, 48, developed 28 condo buildings in Brooklyn and Manhattan, many of them purchased by well-paid bankers. He is cutting back to one project in 2009.
Donald Capoccia, 53, who has built roughly 4,500 condos and moderate-income housing units in all five boroughs is shifting his attention to projects like housing for the elderly on Staten Island, which the government seems willing to finance.
Even high profile developers are struggling. In August, Deutsche Bank started foreclosure proceedings against William Macklowe over his planned project at the former Drake Hotel on Park Avenue.
But even when the lending market improves restarting large-scale projects will not be a quick process. A freeze in development, in fact, could continue well after the recession ends.
Blank of the Urban Land Institute has no words of encouragement. Asked what advice he would give to real estate executives he replied; 'Take up golf.'
