Thursday, March 15, 2007
I finally was able to attend one of the meetings of the housing committee of the Downtown St. Louis Partnership yesterday. We joined the partnership going on 2 years ago, and for some reason that commmittee wasn't meeting, or didn't need new members or something strange. It was good to be present to hear what the discussion is about.
There was a banker, a developer, a builder, a commercial realtor, me and my assistant, and the folks from the partnership--a fairly diverse group.
We talked about our good occupancy and sale rate, we talked about the Downtown living Tour, we talked about the special Downtown section of the St. Louis Magazine. What really got the bulk of discussion is the new development coming online this year.
Kevin Farrell, at the partnership said that in the next year, with all the new construction going on, there will be almost 2000 condos available for pre-sale in the downtown area. Wow! Should loft buyer's be concerned about a "glut" as the Post Disgrace would have us believe?
The interesting thing about construction is it's financing.
Construction fincnancing has its own requirements that protect the lender and its investment. Our discussion at the meeting touched on the point that lenders are looking to firm up those requirements even more in the coming months. What is required to really get going on one of these monumental construction projects is solid sales base: something like 30% of the lofts must be under contract in order for the bank to begin disbursements for construction to begin. More benchmarks in sales and occupancy are sometimes thrown in to the process down the road too.
All these bank stipulations protect the banks, but they also protect the neigborhood and the consumers from the "over-building" myth that has been propagated by downtown naysayers since lofts were first introduced into St. Louis.