New York City is among the real estate markets with the highest barriers to entry in the world, which is why it is so appealing to so many in the industry. The hard work can pay off handsomely here. But even though it has been hard to build in New York for decades, some developers say it has never been harder to do it well than it is right now.

"Finding deals is, at least in my career, more difficult at this point in time than it ever has been," Naftali Group Director of Acquisitions David Hochfelder said.

In 2015, New York City hit all-time records for commercial real estate transactions. At the same time, building permits were being filed fast and furious as developers raced to get projects in the pipeline before the 421-a tax abatement expired and while lenders were still willing to lend on aggressive terms.

Just two years later, the script has flipped.

"Right now, it’s just kind of a weird time because fundamentals have come down," Hochfelder said. "There’s not much growth in condo sales or rents, financing is more challenging. Lenders have scaled back from the market. You take all that, coupled with sellers who are still pretty unrealistic, so there’s a bid-ask spread on pricing. It’s challenging."

Forest City Ratner Executive Vice President of Development Susi Yu joined Hochfelder in comparing the current climate to the environment in New York City just before the Great Recession, and put the blame squarely on landowners looking to sell at unreasonable prices.

"I get plenty of deal opportunities on development opportunities, and I haven’t come across any that still pencil out," Yu said. "The landowners still have unrealistic expectations of being able to achieve pricing of two years ago."

While Forest City's actively selling condo project 550 Vanderbilt in its Pacific Park megaproject in Brooklyn continues to sell at asking prices, Yu said the stagnating condo market citywide would give her pause on starting Pacific Park's next residential building as condos.

Even though rents are flat while the city experiences a residential supply glut, she said she feels more confident in a rental project today than she would building for-sale.

"The city is in a perpetual state of housing crisis," she said. "At Pacific Park in our building with market-rate units, even though there's significant competition [with other developers close by] none of us are suffering."

Hochfelder joined Naftali last year after leading RFR Realty's acquisition team, where he was involved in about $2.5B worth of acquisitions, including RFR's pieces of the Jehovah's Witnesses' Dumbo and Brooklyn Heights portfolio. While he led his fair share of acquisitions at the market's peak, his new firm stayed quiet, and is ready to strike when the market turns.

"We stayed put starting in 2015. Our lenders are very happy with us," he said. "There are developers who aren’t bidding on a deal because they’ve got their hands full because they’ve committed to a deal. We can underwrite the same deal as a year and a half ago."

That flexibility could come in handy sooner rather than later. Earlier in 2017, it appeared the market had stabilized to a place where a recession, despite the extended cycle, did not look imminent. The risk factors that foretold of a drop in the market had not reared their head.

Yu said she has begun to see the same warning signs of a market about to turn that she did in 2007.

"There's a lot of expensive money floating up," she said. "When you start to see [mezzanine debt] north of 10% of the capital stack, when that sort of underwriting starts to pervade the market, then there's an imbalance."

Hochfelder, along with Yu's colleague, Forest City Ratner Executive Vice President Bob Sanna, will be panelists on Bisnow's Construction and Development event Aug. 9 at 117 West 46th St.