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UNTIL RECENTLY, A call for financing to build new office space in Manhattan would have fallen on deaf ears at the banks burned by the lending debacle that ended the 1980s.
But when the Durst Organization wanted money to build 4 Times Square, a 1.6-million-square-foot office project, at least three banks competed to be the agent bank to lead a $340 million syndicated construction loan. A crowd of other banks flocked to get a piece of the deal, and oversubscribed it.
Renewed interest
Commercial construction lending is back in vogue among American and foreign banks, and New York City is becoming a hot market. Competition is heating up to lend on ground-up multifamily, office, retail and hotel projects.
"There's a lot of money chasing deals in New York," says Mark Edelstein, a partner at Milbank Tweed Hadley & McCloy, the law firm that represented Bank of New York in its successful effort to win the role of agent bank for the 4 Times Square loan.
An upswing in New York's commercial real estate market usually brings banks back to construction lending. But this go-around is markedly different. Chastened by huge losses in the last bust, banks are sharply cautious about which developers they work with...