Quote:
Originally Posted by you&me
I don't think carrying costs are a meaningful cost for redevelopment projects like this... Say a generous 6 months of rezoning and permitting on a builder mortgage for that property (pre-redevelopment value of $560) would have been ~$15,000. So not having to rezone saves, what, 4 months? ~$10k?
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I think your math is a bit aggressive. Assuming $560k pre-development costs and $15k in interest over 6 months, that implies a 5.36% cost of capital. I'd suggest that number should be higher. I also think it's likely the city will probably still want to collect property taxes during that time.
Finally, to the extent developers are capital-constrained (and many/most are, imo) the longer they have their borrowing capacity tied up in a project the longer it takes for them to be able to start the next project.