New York City was hit hard during the COVID-19 pandemic with many escaping the city for larger, more open spaces. But the city that never sleeps is back. New York City real estate, once on shaky ground, is also back on track attracting new and old buyers to the Big Apple – at least on the residential side.
Some Leveraged Lower Housing Rates Earlier This Year
As COVID-19 restrictions lifted, international buyers began snapping up condos at discounted rates (about 15% lower than the asking price). According to one NYC broker, foreign investors returned as soon as COVID-19 measures were eased, lured by price discounts. Natives and those in neighboring states also saw opportunities to own, taking advantage of below-market rates. In fact, New Yorkers accounted for 53% of sales according to real estate brokerage firm Corcoran. Strong interest from buyers in the suburbs turned into sales, and Californians, too, are buying second homes in NYC. In addition, affluent parents are buying or helping to buy apartments for their children, cites an article in The Wall Street Journal.
More than 4,500 Manhattan condo and co-op sales closed from July through September, according to a Douglas Elliman market report. This marked the greatest number of third-quarter sales in more than three decades, the real estate firm said.
NYC Housing Rebounding
While there were housing market discounts to be had earlier this year, they’ve been short-lived as more buyers returned. In other words, if buyers didn’t take advantage of the reduced rates, they are expected to pay top dollar again. Median prices in Manhattan, Brooklyn, and Queens have moved back to where they were pre-pandemic. Expectations are that demand for NYC residential property will continue into next year with prices continuing to see a sales boom.
On the Commercial Office Front
Commercial real estate landlords and developers say leasing activity is strong in Manhattan and workers will return to the office. However, many employers say the city’s high taxes, long commutes and high costs could prolong recovery in the commercial sector. In fact, a new survey of 188 large employers in Manhattan by the Partnership for New York City reports that only 28% of office workers are back at their desks and fewer than half will be back by January. Employers expect that 49% of office workers will return on an average weekday by January, according to the survey. Moreover, more than one third of employers expect their office space needs in NYC will decline over the next five years.
Additionally, a recent report issued from New York State Comptroller Thomas DiNapoli indicates that office vacancy rates in New York City are now at a 30-year high. The value of the city’s commercial real estate has fallen by $28.6 billion.
How well the commercial office real estate market recovers will depend on the continued adoption of remote work. These buildings may convert to residences and other uses if the workforce is not back at full capacity.
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Sources: WSJ, CNBC, Forbes