The number of new building permits issued in New York City this January and February was down about 40 percent compared to the same period last year, according to the city’s Department of Buildings.
Building permits, which augur future construction, are a strong indicator of how robust the real estate market is, and the drop-off indicates even New York’s strong market is feeling the effects of the subprime mortgage bust and the tremors it has sent through Wall Street.
The city issued 451 new-building permits in January and February, compared to 764 during those months last year and 859 during the period in 2006.
The decline isn’t surprising, said Barry LePatner, whose law firm specializes in advising corporate construction and real estate clients. Given the credit crunch, lenders are rightfully worried about making big construction loans to developers who may not be able to come through with repayments if they can’t sell enough apartments or lease enough stores.
Lenders are requiring “significantly larger” outlays of capital, he said, which is putting a damper on the ambitions of all but the more seasoned and steady builders. It’s a sign that the development boom of the past couple of years has become but an echo.
“No one has a right to believe that that was going to continue forever unless you believe in the tooth fairy,” Mr. LePatner said.