Happy 2013. It promises to be a lucky year for the New
York City real estate industry.
With the
threatened 2012 Armageddon safety behind us, the metro area market is reawakening
in a quadruplet of sectors - commercial sales, commercial leases, residential
sales, and residential rentals.
Credit the
pent-up demand; the growing housing shortage; a small – but appreciable – rise
in employment; and some exciting new local projects. Whatever the reasons,
there’s an altogether new buzz noted in a spate of recent publications.
To get
specific:
·
Commercial
sales
are so solid that a recent study by Pricewaterhouse Cooper US and the Urban
Land Institute report ranked New York City as the second most exciting real
estate market in the country for this year (after San Francisco). The combined
lure of the city’s technology hub, two new subway lines, and many desirable
neighborhoods are sparking interest – and spurring development in both the city
and the boroughs.
·
Commercial
leases benefit
from the same factors, with the PWC and ULI study predicting that NYC and the
country will enjoy “noticeably better prospects as compared with last year.”
In a dramatic example, just days ago
11 Madison Ave., which
had been offered for $1.5 billion, was
taken off the market by developers who realized that had more to gain by
maintaining their lease with Credit Suisse than by selling the structure. As
described in the current issue of Crains,
the deal show just how valuable prime commercial space has become.
·
Residential
sales are
on the upswing, according to Forbes magazine. The reluctant buyers and sellers of recent
years are re-emerging, to find mortgages that remain at historically low
interest rates. Yes, financing is still tougher to get than before the bust,
but banks are loosening up.
Meanwhile,
the pent-up demand for housing is spurring new construction, certain to create
a bounty of new jobs – further enhancing the economy.
In
this transitional real estate marketplace, cash deals fare the best. But these
shoppers, many of them foreign buyers lured by the relative stability of US
investments, will further ignite the market. Meanwhile, areas impacted by Sandy
now offer uncommon value to buyers brave enough to venture downtown.
·
Residential
rentals may
well be the pot of gold at the end of this rainbow. As Manhattan rents, fueled
by the many New York City residents still avoiding property ownership, may well
increase by five to 10 per cent. That’s high enough to convince many condo and
coop developers to convert back to rentals. Hot neighborhoods from Greenpoint
in Brooklyn to downtown Manhattan will benefit from the new crop of apartments.
Every silver
lining has a dark cloud.
This one has
to do with those rapidly rising rents, which are threatening the affordability
of literally all of Manhattan and many of the boroughs.
But the
flipside is that owning rental property is more attractive than it’s ever been.
Starter apartment are in such short
supply that they’re snapped up quickly, making this perhaps the most auspicious
time ever to acquire a multifamily or mixed-use building. What could be better
than combining home ownership with a healthy investment return.
Thirteen
never looked so good!
