The market for development sites has been essentially paralyzed over the past year.Â Whereas there were numerous land sale transactions prior to the economic downturn that began in September 2008, for most of 2009 the land sales market has been barren.Â Â Sellers were still pricing their land based on historical condo sales, while buyers were underwriting based on rentals.Â The resulting gap between buyers and sellers was large and exacerbated by the fact that there was no financing to buy land anyway. Â So nothing sold.Â The few land sales that took place were to â€śusersâ€ť (such as the Korean Governmentâ€™s acquisition of a site on East 32nd Street in the heart of â€śKorea Townâ€ť for $366/FAR) which didnâ€™t say much about how land values have really moved.
Finally, though, last month there was a real live land saleâ€¦to a developer planning on building condos!Â 41 Bond Street in Noho was purchased last month for $323/FAR.Â The site had reportedly received all approvals and was â€śshovel ready.â€ťÂ Â Most importantly, the buyer was able to assume the debt on the site, plus the mortgagee gave a commitment for the construction loan as well.
So over the past few months the Dow exceeded 10,000, big Wall Street bonuses were announced and, now, a land sale to a condo developer. Â Ah…everythingâ€™s getting back to normal again.Â I think Iâ€™ll sleep well tonight!