NYC Brokers Recover Their Confidence as Market Bottoms

After three consecutive record low quarters, broker confidence recovered in Q4 2020, according to The Real Estate Board of New York.

As of Q4, REBNY’s Quarterly Real Estate Broker Confidence Index was 4.35 out of 10, a 41% increase since its lowest point on record in the previous quarter. That was still a 37% drop year-over-year. In the survey, brokers reflect on their professional dealings and report their outlook on an index of 0 to 10. In Q4 2016, broker confidence was at 6.00.

Brokers feel like the market has bottomed out and is now starting to recover. That was indicated in the future broker confidence index for six months from now. It rose 44% to 5.07, a 44% increase from Q3. In Q4 2016, confidence was at 5.97.

The improvement in sentiment occurred for both residential and commercial brokers. The Residential Broker Confidence Index increased 45% between Q3 and Q4 to 5.81, while the Commercial Broker Confidence Index increased 34% from Q3 to 2.89. In Q4 2016, residential broker confidence was 6.14, and commercial confidence was at 5.85.

Commercial brokers were a lot more pessimistic as their confidence dropped 60% from Q4 2019 to Q4 2020. Residential brokers’ confidence only decreased 10% over the same time frame.

The overall present situation broker confidence declined 51% YOY in Q4. Again, commercial brokers saw the most significant decrease as their present situation confidence index decreased 76% YOY to 1.83. The residential broker present situation confidence index dropped 20% to 4.95.

The future broker confidence level also fell off, dropping 26% YOY to 5.07. In Q4, the commercial broker future confidence index decreased 47% YOY to 3.68. The residential brokers’ future confidence index fell 3% to 6.45.

Broker confidence is rising despite weakening fundamentals in the commercial sector.

In a separate research report, REBNY noted that Manhattan asking retail rents have fallen to record lows. The fall 2020 Manhattan Retail Report showed that retail rents declined in all 17 of the retail corridors in Manhattan since the previous year. The decrease in rents in each submarket ranged from 1% to 25%, with eight retail corridors reporting the lowest asking rents in a decade.

In addition, Manhattan’s office leasing volume in 2020 was the lowest in two decades, with full-year activity down 55.9 percent over the prior year and 13.4 percent quarter-over-quarter, according to research released by Colliers International.