North Loop Condo Pipeline Drying Up

by Alex Stenback on May 28, 2008

North_loop_map_2
Finance and Commerce reports on the status of Downtown Minneapolis’ North Loop Condo Pipeline (Pipeline = industry-speak for planned and in-process projects):

The new, under-construction Twins stadium has been touted as a catalyst for new development. But so far, new development has been slow to take off in North Loop.

The previous wave of residential condo development has largely ground to a halt. And amid the bumpy economy, there isn’t much fresh development in the current pipeline around the ballpark, slated to open in the spring of 2010.

From the perspective of a developer, this not only bad news, but a sign of the times. It is simply too costly, too risky, or both, to launch any new projects right now.

And after the onset of the credit crunch last summer, just as for individual homeowners, financing new projects got tough:

right after late August [or] Labor Day, it was literally like a switch had been flipped and that market evaporated,” Minn said.

lenders making loans backed by commercial mortgage-backed securities (CMBS) loans drove much of commercial real estate financing in recent years, until the credit crunch hit last fall.

For the individual homeowners – mostly condo dwellers – in North Loop, this can be taken as a positive sign.  Though there is still some inventory overhang from completed projects with unsold units, and financing a condo has gotten markedly tougher, new supply will soon be limited to re-sales only, and should provide some pricing support and enhance their prospects for appreciation, even if a few years away.

{ 4 comments… read them below or add one }

Ed Kohler May 28, 2008 at 9:02 pm

It sounds like the new stadium will do for the North Loop what the Metrodome did for the market close to that: not much.

Landflip May 30, 2008 at 2:01 pm

I think it would be crazy to sink money into new construction right now. I think I would sit back and see what happens over the next several months.

Landflip May 30, 2008 at 2:01 pm

I think it would be crazy to sink money into new construction right now. I think I would sit back and see what happens over the next several months.

Jennifer Kirby May 31, 2008 at 10:40 pm

We lived in San Diego when they were beginning construction on the new Padres stadium in 2001. Surrounding condo sales did not really take off until about a year before completion. Of course, that was San Diego, so I don’t see the mad house of condo buying happening here like it did in SD. But I would think that maybe in mid 2009, as the structure unfolds and people can physically see it, more people will be interested in buying local condos to cash in on the increase in real estate value, modest as it might be. Only time will tell.

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