Sub-prime Debt Crisis and the Redevelopment of Berkeley’s Downtown

Charles v. Bagli, Developer Holds Off Creditors, For Now, New York Times, February 16, 2008.
Peter S. Goodman, This is the Sound of a Bubble Bursting, New York Times, December 23, 2007.

Although there is some dispute as to the degree to which the impending debt crisis and fall of the real estate markets will influence the potential development of downtown Berkeley, I think the issue is at least worth further examination and discussion.

The articles cited here demonstrate that the ramifications of the sub-prime crisis on the debt market are having a significant impact on private development efforts, even in large, affluent cities like New York. Specifically, this impact seems to come from the fact that it is now more difficult for even solvent, reliable developers to get debt at a decent rate (such that justifies the investment at cost and allows then to make a profit) than in years past. This is wholly in addition to the related concern of decreased demand.

Although this does not translate directly into a potential paper topic for our class, it does, at least in my mind, stress the importance of acting now and capitalizing on the current abundance of private developers interested in putting their own money into revising downtown, while that interest still exists.