Pivot! Developers switch from rentals to condos; a billionaire faces a record bankruptcy... and more

The best national real estate stories from The Real Deal. Jun 08, 2024 [View in Browser]( | [$1 for 1 Month]( [The Real Deal Logo](   [The National Logo](   In today’s newsletter, developers [pivot projects]( from once-hot multifamily to condos. Plus, a billionaire faces a [record bankruptcy](; Jeff Bezos drops [$87 million]( on another Miami estate; Aby Rosen [unloads]( an iconic Upper East Side asset, and more.   Condo demand pushes multifamily developers to pivot The times, they are a’changing. At least, they certainly are in the world of resi development. A few years ago, investors and developers across the country bet big on multifamily as rents skyrocketed. But now the picture is different – rent growth has slowed, interest rates soared, construction costs are up, and inflation and supply chain issues plague the industry. TRD’s Katherine Kallergis reported this week on developers in South Florida who are looking to [change tack](, converting projects that were planned as rentals into condos. Kallergis spoke to groups like PMG, a national development firm that was one of the first to kick off the trend about two years ago. PMG had a project under construction in downtown Miami, which would have been a rental tower called Society Biscayne, and instead shifted the project to a condo-hotel, now called The Elser. That particular conversion is unique because The Elser was already under construction when they made the decision – it’s much easier to convert before shovels are in the ground. But South Florida’s [condo shortage]( makes this sort of conversion attractive, and sources told TRD that lenders are getting more comfortable with them. Farther north, Crescent Heights is planning something similar, converting [850 North Lake Shore Drive]( in Chicago from apartments into condos. Condo-to-apartment conversions have become fairly common in the Windy City, where (unlike in South Florida) the condo market has slumped. But Crescent Heights was able to pick up the asset at a steep discount – $80 million, compared to $140 million when it last traded in 2016. Crescent Heights’ Jason Buchberg told Crain’s that the discount made the conversion financially feasible. Meanwhile in Texas, the longtime master planners at Howard Hughes are [doubling down on condos]( in a bid to find profitability. When Howard Hughes announced the planned Ritz Carlton Residences condo project in Houston’s tony Woodlands area it was seen as a risk – Houston doesn’t have a robust condo market like Miami. But those units are 60% sold, and the company is waiting to finish construction to sell more, anticipating that they could get even higher prices. Of course, the story is a little different in every market. In New York, for example, condos are in demand but the projects keep [developers on a tightrope](. Still, while the multifamily market sours, condos could be a cleaner path forward, at least for some. We’ll keep watching. Of Note: →The panels from TRD’s New York Forum are all online. [Watch them now](. →Headline of the week: “[Le Penthouse goes into Le Bankruptcy.](” Classic. Check out more of this week’s top stories below.   Advertisement   [I'm an image]( [Billionaire developer and film producer Charles Cohen could see the credits roll, with largest debt auction yet]( [I'm an image]( [Price revealed: Jeff Bezos paid $87M for third Indian Creek estate]( [I'm an image]( [Aby Rosen unloads 980 Madison office and land for $560M](   Advertisement   [I'm an image]( [Sponsored Exit Mold & Lead Offers Testing, Remediation, & NYC HPD Compliance]( [I'm an image]( [Homebuyers try to stall brokerages’ settlement with sellers — againÂ]( [I'm an image]( [Co-living firm Common files for bankruptcyÂ]( [I'm an image]( [Is Bank OZK overexposed to real estate?]( [I'm an image]( [Brand Studio Download Now: Unlocking Your Property’s Full Potential with Amazon Key]( [I'm an image]( [Newmark is playing for commercial’s No. 1 spot](     [The Real Deal Logo]( [Facebook]( [Twitter]( [Instagram]( [LinkedIn]( [YouTube]( [Manage Newsletters](link.therealdeal.com/manage/61n/preferences?email={EMAIL}&hash=c3ef811325e0489c79ef984bae8ea606) | [Unsubscribe](list=National Weekly) | [Privacy Policy]( | [Subscribe]( | [Advertise]( The Real Deal 450 West 31st Street, New York, NY 10001 ©2024 TheRealDeal. All rights reserved. [View Online](