Raleigh construction sites remain in limbo

Posted April 22, 2010

— Construction projects across the country remain in limbo because of the current credit crisis. Banks don't want to lend money if there isn't a demand for new real estate.

There are dozens of projects in that category in Raleigh alone, but real estate experts hope 2010 will mark a turnaround.

Construction site, construction generic Raleigh projects stalled by bad economy

A construction site sits empty near Crabtree Valley Mall. By now, it was supposed to be home to a Westin Hotel and million-dollar condos.

Instead, five years after the plan was approved, the pricey pads are nowhere to be seen. The developer pulled the website, and the sales office at the site has closed.

The site sits in Raleigh City Council member Bonner Gaylord’s district. While he's not sure of the future there, he knows the present situation is all about the economy.

“I hear indirect conversations about it. I see things posted online,” he said. “I do know the financial markets right now are very difficult, and procuring financing is as difficult as it’s ever been.”

The Westin Hotel project isn’t alone. A high-rise project in downtown called “The Edison” is also on hold because of financing. Many other construction projects, both big and small, are likely facing the same problems. City of Raleigh leaders say 89 plans that have been approved since January 2008 haven’t moved forward.

John Butler, president of the new homes division for Prudential York Simpson Underwood, said he thinks people’s purse strings may ease in 2010. Despite interested buyers, he says the Hue Condo Project downtown is in construction delay mode as well.

“We have a number of buyers ready to close if we can get the construction lender to say, ‘Yes, go for it,’” Butler said. “I’m hoping the banks will be on board and say, ‘Look at Raleigh. It’s doing well. We’ll need to support it the best we can.’”

One success story is North Hills where financing was secured before the downturn. A recent expansion included office space, apartments and retail shops. Gaylord is the manager there and said he hopes the boom is contagious.

“We’ve seen some uptick recently, and we’ve heard some anecdotal evidence of that,” he said.

State lawmakers passed a law last year to give developers more time. The law essentially stops the clock on site plans from January 2008 until December 2010. The City of Raleigh is also giving developers more time to get financing in order.


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  • fatchanceimwrong Apr 23, 2010

    veyor: Most local community banks were not involved in the bailouts and have money to lend. We're actively looking to make good, solid loans to credit worthy borrowers who can show the ability to pay it back. Many people think that all banks get free money from the fed and loan it out at high interest rates because we're greedy. Most of the money we loan out comes from depositors, who hold us accountible for how we lend it out. The gov't forced banks and mortgage co's to make home loans through Freddie & Fannie and that cause the collapse of the housing market. The gov't is rarely the answer.

  • Caveman93 Apr 23, 2010

    Ahhhh, can't you smell that? It's the scent of glorious recovery!

  • morgannyy Apr 23, 2010

    The Meek Mayor says we have to hurry up and build the Police Taj Majal before interest rates and construction costs go up!

    Maybe they'll go down, huh?

  • veyor Apr 23, 2010

    I sure will be glad when the banks run out of stimulous money and actually need to loan to make money again.

  • fatchanceimwrong Apr 23, 2010

    WXYZ: So, your line of thinking is that the gov't should put in regulation requiring banks to offer a minimum interest rate on savings? Should they also set the prices for cable tv and satellite tv companies? How about cars? Free market competition sets prices and yields the best prices for consumers. Banks operate just like any retail store. We charge interest on money we lend out, which is determined by the risk of the loan. The money made on money loaned is what pays the interest back to the depositors, since we're lending the money they deposit. So for the gov't to demand we pay a certain interest rate on deposits causes the banks to charge more on money loaned. You sound like alot of people who only hear the liberal media headlines. Banks are a retail business. We have to make money to cover expenses and earn a profit for shareholders. Otherwise we go out of business. Sounds like a nationalized banking system run the gov't is what you're looking for. Don't confuse the W

  • WXYZ Apr 23, 2010

    How to understand the current economic situation...? What are the forces at work that are holding back our economic recovery? As someone once said (paraphrasing): "More government is not the solution! More government is the problem!". Read Ronald Reagan's 1964 speech. His words ring so true and apply so well to our current situation. Read about the values and beliefs which Reagan brought to the White House and about the principles of economics which he tried to teach us and which worked so well. Winston Churchill said: "Those who fail to learn from history are doomed to repeat it". Banks (not the government) should raise interest rates on savings accounts, thereby re-establishing the flow of money into banks from the private sector instead of the government. Inflation is creeping in and the value of the dollar and labor is going down. We must demand higher interest rates, now!

  • tran Apr 23, 2010

    More "green shoots" I guess ...

  • HadEnough Apr 23, 2010

    I ride on the greenway behind the crabtree site and I am convinced that building was a scam from the beginning. They had workers over there pouring some footings but nothing like what would be needed for a 40 story building. Barely sufficient for a house.