Broker Confidence Headed in Wrong Direction

Banks: “The ongoing transition in our nation’s leadership has contributed to apprehension on decision-making.”

NEW YORK CITY—Political, economic and market concerns pushed brokers’ confidence to decline in the first quarter of this year, according to the Real Estate Board of New York. REBNY’s real estate broker confidence index dipped more than a half point to 7.23 in the first quarter of 2016 from 7.87 in the fourth quarter of 2015. In the outlook for the market six months from now, the Real Estate Broker Confidence Inde x similarly dipped 0.84 points to 6.73 from 7.57 last quarter. Both indexes for the current and future market have experienced a slow and steady decline in broker confidence since the fourth quarter of 2014 when the current index was 9.22 and the index for the market six months from now was 9.23, the highest it’s been since the inception of this survey in 2013. Nevertheless, the residential and commercial brokers’ overall current and future levels of confidence have remained positive. “The ongoing transition in our nation’s leadership has contributed to apprehension surrounding decision-making and uncertainty for the future of the real estate market and economy,” says John H. Banks, III, REBNY President. “While this builds on concerns about future interest rates and inventory, our brokers maintain a positive outlook overall with healthy market demand and the growth of New York City jobs.” The commercial broker confidence index in the first quarter of 2016 drove the decline in the overall Real Estate Broker Confidence Index. It declined to 6.36 from 7.88 last quarter, recording the first time this index has dipped below 7 since REBNY’s inaugural survey in 2013. Similarly, the confidence index for commercial brokers’ expectations for the market six months from now was 5.55, down 1.69 from 7.24 last quarter, the greatest drop in future confidence since the inception of this survey. Uncertainty over the United States presidential election, anticipation of future interest rate increases, and concerns about the global economy, influx of new office space and rising asking rents were among the commercial brokers’ key concerns. Among other comments, one commercial broker offered a positive outlook noting that they expect job growth to continue in New York City, which will result in stronger leasing velocity between the second and fourth quarters of 2016. In comparison, another broker noted that too much new space is coming available at rents that are too high and that too many tenants’ space needs are shrinking. A second broker similarly states, “Added supply is starting to take its toll.” Commenting on the broader New York City real estate market, another commercial broker says, “Until 421A or another like program is adopted, residential development will slow to a crawl.”