NEW YORK CITY—New York City brokers' confidence remained positive and robust in the first quarter of 2015 with strong sales prices and market activity, according to the Real Estate Board of New York's latest Broker Confidence Index, released Tuesday.
The Overall Broker Confidence Index was 9.05, a slight decline from 9.22 in the fourth quarter of 2014, but ranking above 8.80 in the third quarter of 2014. The slight dip quarter-over-quarter was attributed to brokers' concern over the potential impact of an interest rate increase expected toward the end of this year—coupled with low inventory.
“Brokers are showing bullish confidence in this healthy market and continue to be positive about the robust sales and leasing activity throughout the city,” says Steven Spinola, REBNY president. “Despite concern about future financing six months from now, they are still very optimistic about the market and show no indications that a rise in interest rates would have any serious adverse impact.”
The Commercial Broker Confidence Index was 9.24, down slightly from 9.60 last quarter and 9.38 in the third quarter of 2014. While commercial brokers expressed high confidence in the sales, finance, and leasing market right now—particularly in the Financial District and Chelsea—they voiced concerns about the market six months from now, noting the growing expectation that the Federal Reserve Bank will begin raising interest rates as the economy continues to improve. Moderate rate increases implemented at a reasonable pace could address their concern about inflation without destabilizing the market.
One commercial broker said, “The market today is in balance with a variety of new product rollover as some tenants move to new product and renewals.”
Another commercial broker noted, “As a local new business owner, I find that even though average retail rent is high in Manhattan, local small business owners are desperately seeking space and trying to open more new businesses.”
The Residential Broker Confidence Index remained flat and virtually unchanged this quarter at 8.86, increasing from 8.85 last quarter and 8.23 in the third quarter of 2014. Residential brokers are very positive about the current sales market and growing popularity of neighborhoods including Riverdale in the Bronx and Crown Heights, Park Slope, Fort Greene, Boerum Hill, and Carroll Gardens in Brooklyn. The lack of inventory continues to be a concern with brokers mentioning particularly low inventory of coops and two bedroom apartments. According to REBNY's brokers over the past year and a half, rising prices due in part to low inventory have driven some buyers out of the market. Similar to commercial brokers, potential rising interest rates have also caused a slight decline in residential brokers' confidence in the market six months from now.
One residential broker said, “The variety of housing stock, from coops to new construction condos and the expansion throughout Upper Manhattan, Hudson Yards, TriBeCa and Brooklyn is truly remarkable. Our population numbers keep growing. It's an exciting time to be a New Yorker!”
REBNY's Broker Confidence Index is a collection of responses from an online survey given to REBNY's residential and commercial brokerage division members.
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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.
