What Does New York’s Reopening Mean for the Real Estate Market?
The streets of New York City have been filled with a renewed energy in recent weeks. As more and more New Yorkers get vaccinated, restrictions are being loosened, businesses are reopening, and there is a distinct sense of things returning to “normal” soon. For a city that was hit hard by the pandemic, both in terms of COVID-19 itself as well as economically, this recent shift is a long-awaited one.
The city’s real estate market was one of its hard-hit sectors, with reports that an unprecedented number of New Yorkers were fleeing the city in search of more space and less densely populated areas. However, in recent months, reports have shown that many New Yorkers are returning, with one study of post office data predicting that by mid-2021, more people would be moving into the city than would be leaving. The real estate market has followed suit, with the first quarter of 2021 showing the highest number of apartments bought in Manhattan not just since the start of the pandemic, but in the last six years.
To get a better understanding of how the real estate market in New York is doing, we spoke to four top brokers at Brown Harris Stevens, the largest private real estate firm in the northeast. Brokers Joshua Arcus, Sophie Ravet, Ari Harkov, and Roberto Cabrera are consistently named among the top brokers in the country. With decades of experience in the competitive New York real estate arena, they have seen many types of markets. They share their expert insight into the latest in New York City real estate as well as their advice for buyers and sellers.
What is the latest on the NYC market, based on what you have been seeing with clients and on the ground?
Joshua Arcus: Residential sales continue to be extremely hot across all price points, sizes, and neighborhoods. Rentals have picked up a lot, especially on the Upper East Side and now more in Midtown where people who lived (or want to live) close to work are moving.
Plus, the large-scale return of employees to offices, coupled with NYC’s announcement about schools being 100% in-person next year, have commercial landlords seeing some light at the end of the tunnel—even if it’s not until 2022. Commercial retail is on fire, especially for restaurants and eateries that focus on the Monday-Friday crowds of workers. They’re locking in historically low prices in anticipation of being up and running by the time offices are at 75-100% capacity this fall.
Sophie Ravet: Sellers are gaining confidence and buyers don’t want to miss the opportunity to lock down a good price. We are seeing bidding wars and above-ask closings. Both sides feel we have hit the bottom.
Ari Harkov: The NYC market is incredibly active and liquid, meeting or exceeding all-time transaction volume with demand outpacing supply. Prices in most sub-markets are at, slightly below, or slightly above pre-COVID levels and we’ve experienced more or less a full recovery from COVID discounts from a value perspective.
Roberto Cabrera: Inventory pours on the market weekly, sellers are more realistic, and enormous amounts of deal volume have been the result. Increasingly, buyers recognize the value of low interest rates and fair pricing. In my 23-year career, I have not seen this level of volume. Competitive bidding situations are quite common. We are on the verge of seeing price appreciation again.
How will NYC’s reopening affect the real estate industry and market?
Joshua Arcus: Midtown is going to fill back in very quickly as offices go to 100% capacity. Businesses that support office workers (admin staff, deli and restaurant workers, etc.) are all going to come back, too. There’s going to be a mad dash for the last deal available. The rental market will stabilize and the sales market will continue to improve (most likely past where it was in early 2020) as people take advantage of mortgage rates, those who have sold in the suburbs look to move into the city, and foreign buyers return.
Sophie Ravet: NYC’s reopening is supported by New Yorkers getting vaccinated. The fear of living in a densely populated city is slowly dissipating so those who left a year ago are coming back. The news is out and I’m even seeing a lot of buyers from the west coast buying pieds-à-terre in New York. All this is affecting the sale and rental markets.
Ari Harkov: Our market has always been much more reliant on local buyers and tenants than the news media has reported. With that said, there is a meaningful flow of capital into our markets from national and international buyers and our leasing market relies on in-person workers who want to live in the city near their offices. NYC’s reopening can only help the real estate market.
Roberto Cabrera: It is providing certainty and a sense of “normal.” People will increasingly want to join the party.
Where is the market headed? What can we expect in six months and beyond?
Joshua Arcus: Prices are going to rise as inventory dries up. The only thing that could change that would be a lot of new listings coming onto the market, and there’s no immediate signs that’s happening.
Sophie Ravet: There will be strong buying activity and prices will slowly creep up for the first time in several years.
Ari Harkov: As offices reopen, city amenities reopen, tourists and commuters return, vaccination levels increase, federal relief dollars flow to the city and MTA, and more, the outlook is incredibly positive.
Roberto Cabrera: I believe this palpable level of activity will remain strong through summer. Afterward, I see activity remaining robust, but a bit more tempered. Buyers recognize that the best deals are now. They may have missed the bottom, but not the recovery. In several years, those who bought now will have a sense of success, whereas those who did not will be wishing they did.