New York's real estate market is about to wake up to a new day.Ariel Property Advisors
Coming out of a year full of public health, social and economic adversity, New York’s real estate market is showing encouraging signs of life in 2021. The initial stages of the vaccine rollout signal a game-changer across the world—and New York City is no exception. Still, while we look forward to brighter days ahead, it’s important to learn from the past year about market risks no one had considered and how real estate professionals can ensure resiliency and responsiveness for whatever comes next.
It’s increasingly said that Covid-19 didn’t change the real estate industry so much as accelerated changes that were already underway—and there is a lot of truth to this. Retail has quickly embraced more convenient consumer strategies and technology, while the office market has been influenced by more flexible and remote workplace strategies. Meanwhile, the industrial and distribution sectors have ramped up quickly to deliver on growing e-commerce needs. These adaptations are helping to ensure the recovery.
Similarly, data shows improving fundamentals and capital is being deployed as investors show increasing eagerness to make moves. 2021 is poised to be a pivotal year for New York City and by this time next year we will be looking at a very different real estate landscape.
Investment Sales Transactions
2020’s lackluster investment sales transactions, lower rent fundamentals in every sector of the market and closures of schools and businesses presented a jarring halt to the city’s economic momentum. Even as the stock market improved, investment sales trading slowed drastically as investors waited for others to move first to provide pricing discovery. This was the case during the fallout from the 2008 financial crisis as well—and the chart below shows New York City real estate investment transaction volume from 2007 to 2020.
If the pattern holds, the worst is behind us. Bolstering this view, the residential rental market has been showing similar trends. Given that the pandemic was extrinsic to any market fundamentals, it’s not unreasonable to expect a speedier recovery than in 2009.
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Historic Investment Sales Transaction Volume and price per square footAriel Property Advisors