NEW YORK CITY-Much like commercial real estate around town, residential properties closed out 2012 in great health, especially on the new inventory front, according to real estate watcher MNS, which announced the findings on Friday in its fourth quarter report on new development in Manhattan and Brooklyn. The trend is likely to continue, as will soaring recovery in the commercial market, MNS CEO Andrew Barrocas tells GlobeSt.com.
When troubled overseas markets are mixed with a rebounding US economy, especially in New York, buyers can expect to see soaring prices in both residential and commercial real estate, Barrocas says.
“You'll see a price increase in everything from office leasing and investment sales to residential and retail,” he predicts. “There's so much more stability in New York [than other markets]. The job market is getting better, there's a lot of opportunity here in New York and European markets are hurting so there's a lot of people coming to New York. We work with a lot of Fortune 100 companies on relocating their new hires and the number of people we're helping is going up, and it's way above where it's been since the crash of Lehman Brothers.”
Continues Barrocas, “That translates to more expensive retail and land value, rental rates, investment sales, etc. Overall, it's a healthy market.” Granted, he notes, “You won't see the increases of the last year or two. If we were seeing a double-digit increase, we'll see a 30% to 40% decrease in the amount we're going to go up. Prices are still rising, just not as much.”
New development sales in residential properties during 2012's last quarter were up just slightly from the prior quarter, yet actual sales volume increased 36% to $826 million. The median sales price was up 8.9% from $1.075 million to $1,171 million. The median price per square foot had a smaller rise, up 3.2% from $1,062 to $1,096.
In Manhattan, the areas of greatest strength were the Upper West Side and Greenwich Village. Uptown markets in general—meaning the Upper West Side and Upper East Side—showed the most demand. The Upper West Side ranked the highest in the number of sales this past quarter, at 65 transactions. The Village, on the price side, had the largest quarterly upswing, with the price per-square-foot rising to $1,973 per square foot from $1,436. New and existing residents flocked uptown, says Barrocas, another trend he expects to continue.
“We're seeing building that were once rental become condos more and more because it makes sens when you factor in land and construction costs,” he says. “So there's very little rental inventory coming into those areas but there's tremendous demand. In particular, he notes, “There was a lot of interest uptown from people who were downtown when Hurricane Sandy struck and they wanted to move. I think you'll start to see more of that as the aftermath of a storm generally lasts two to three months to sort out.”
Meanwhile, Brooklyn's popularity has created some shifts in the borough, MNS reports. Neighborhoods such as Williamsburg and DUMBO surpassed Manhattan rents, pushing residents into the city. The opening of the Barclays Center and the Atlantic Yards development have brought Brooklyn rents to all-time highs. Some areas, such as Fort Greene and Greenpoint are becoming more popular as renters are finding these areas more economical.
MNS is tracking more than 1,500 units coming to market in 2013. Most of the inventory will be in Downtown Brooklyn and Williamsburg. The inventory pipeline is expected to continue to rise as we see more development and growth in Brooklyn.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
