Manhattan’s Shadow Inventory Steps Into the Light

The “shadow inventory” of condos and apartments is starting to come into the light. Projects that were placed on hold in 2008 to wait out the recession are going back on the market for a variety of reasons. Condo sales are beginning to pick up again overall, banks are making loans to developers again, and some developments that were taken over by banks are looking for a return.

Manhattan's 6,500 shadow units in the first quarter.

As Crain’s points out, there is reason for hope: 75% of the 120 units at Warehouse 11 that went back on the market earlier this year in Williamsburg are sold or under contract. The Dillon, a 83-unit Hell’s Kitchen condo from SDS Procida, which first suspended their plans and then lost funding, went back on the market 3 weeks ago. They have 11 contracts out for signatures already.

Some experts are worried that the current trickle of shadow inventory coming onto the market will turn into a flood though, possibly in the second half of this year. If the entire reservoir of shadow units, estimated at around 6,500 units in the first quarter, were put on the market it would increase the Manhattan condo supply by 70%. While sales numbers for the first quarter were up, median prices are still 11% below 2009 values.

Many Manhattan buildings in Manhattan, including 1 Rector Square, a 174-unit condo conversion in Battery Park City; 34 Leonard, a 16-unit TriBeCa co-op conversion; and 245 10th Ave., a new 22-unit development in Chelsea, and +Art, a 91-unit condo at 540 W. 28th St. in Chelsea are resuming sales this year.

Across the bridge an 87-unit Olive Park in Williamsburg that was renting for the past two years will go on the market for sale; sales at the 264-unit Be@Schermerhorn in downtown Brooklyn have also resumed.

If it remains a slow release, it could mean good things for Manhattan’s condo market and for prices, but if everyone tries to jump in at the same time, it could start to feel eerily like last year’s market.

Photo Credit: atomicshark

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