Real Estate Journal — Fall Preview — September 28 - October 11, 2018 — 5C

M id A tlantic

By William Procida, Procida Funding & Advisors A time for pause – and urgency I nvestment M anagement


ur country’s major cit- ies are being overbuilt with too many high-

Figure A

Figure B

rise residen- tial condos and rentals at prices and absorpt i on r a t e s t ha t can’t be sus- tained, while t h e u r b an and subur- ban affordable market is woe- fully underserved. The U.S. commercial real estate market has a classic oversupply issue driven by too much money chasing the same asset classes in the same place at the same time. It is very similar to skiing beautiful, fresh-powdered ski trails in the morning. In the afternoon the skier is tired, and the slopes are icy, and it may not be a good idea to take that last run. I’ve lived and worked in the real estate industry since 1980, when no one wanted to invest in New York City. The head- lines said that the crime-ridden city was about to go bankrupt and corporations fled to sub- urban campuses, kicking off a housing and retail boom. And at that time, some of today’s hottest markets – Harlem, Long Island City, Brooklyn, Southern Manhattan and Jer- sey City – were non-existent. This meant that most of the housing built in the 1980s and early 1990s started outside of the major cities. Between 1980 and 1994, only 22% of permits issued in New York State were in the five boroughs, while 78% were elsewhere (see Figure A). This might seem hard to believe today but it was a fact. New York was selling Harlem for $1. Imagine that! Today, many of those same properties in Harlem are selling for more than a million dollars.. This building boom contin- ued until 1989, when the bub- ble burst. On Black Monday - October 19, 1987 – the market crashed hard and hundreds of S&Ls failed. This led to the temporary establishment of the Resolution Trust Corporation as the U.S. entered the worst economic downturn since the Great Depression. The downturn also led to a drop in permitting, with lower levels in the suburbs and ane- mic depths in the cities (Figure B). This dead period persisted until 1998, when housing continued on page 22C William Procida


Time Hotel $14,500,000 Late-Stage Construction Nyack, NY

Gulls Cove $68,500,000 Ground-Up Construction Jersey City, NJ


Delta Gas Station $1,105,000 Acquisition/Construction Englewood, NY

Divine Lorraine $34,750,000 Historical Renovation Philadelphia, PA

Pfister Chemical $7,500,000 Environmental Remediation

& Zoning Approval Ridgefield, NJ

For information on Procida Funding Loan Originations , contact Brian Foley at bfoley@procida.com, for Fund Investor Management , contact Ali Betts, at abetts@procida.com, and for anything else contact William ‘Billy’ Procida at bprocida@procida.com. For more information about Procida Funding, call 201.871.1177 or visit www.procida.com .

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