President, Brown Harris Stevens Development Marketing. Specialzing in the pre-development planning, marketing and sale of new developments.
New York City’s new development sales market has rebounded fast and furiously, quieting naysayers who lamented that the city was doomed for a slow and painful recovery. In contrast, our firm’s data show that Manhattan’s 2021 new development sales market posted 980 new contracts signed through June 30, 2021, a 34% increase over the same time period in 2019. Further, by our calculation of the current pace — 163 units per month, on average — the Manhattan new development market is poised to absorb approximately 1,960 new development units in 2021.
So, to what can we attribute this impressive rebound from a once-in-a-lifetime event?
• Pent-up demand: As savvy buyers believed the market to have bottomed out, many began their search for a new home or investment property in the third quarter of 2019 and into early 2020. Those buyers did their homework, shopped online and attended virtual tours seeking out the perfect opportunity. Now, as vaccine efficacy became apparent and a new administration took over to implement its distribution, buyers realized that the window of opportunity for slightly lower prices and choice of inventory would be short-lived. They took advantage of this in ready-to-move-in new developments offering concessions such as up to 10 years of free common charges. These perks primed the pump for a quick recovery.
• Covid cabin fever: Looking at the same four walls for a year created a yearning for new beginnings, more space, outdoor space and views. This helped build demand for new development. Buyers began to realize that their current residences did not meet their needs. With historically low interest rates, a healthy supply of new, ready-to-move-in product and demand growing for re-sale residences, upgrading for that extra bedroom, terrace or alcove was critical.
• The suburban housing boom: With many fleeing the city as Covid-19 spread, the suburbs saw a resurgence, allowing empty-nesters in particular to sell their homes at prices far above what they could have sold for in the past five years. Many of those empty nesters chose to take advantage of the incentives and price adjustments in the Manhattan market. They scooped up trophy penthouses, pieds-a-terre and two- to three-bedroom condos.
• Back to school: With most Manhattan universities announcing the return to in-person classes, many parents have chosen to assist their college-age children in buying a new home by investing in Manhattan real estate rather than renting an apartment. Many of those parents expect to one day move into the city themselves, and thus their children can attend school while their equity grows. When their child moves on, the parents could plan to occupy the apartment either on a permanent or part-time basis.
Together, these four touchpoints helped make the first half of 2021 a record time for the Manhattan new development market. Low interest rates, high demand for homes convenient to work as employees begin to occupy their offices again and new jobs being added at a record pace have also led to this incredible reboot.
As we move into the second half of 2021, we can expect demand to continue to be high as the foreign investor market is showing signs of heating up and as the market begins to reach equilibrium between seller and buyer. New York City has long proven to bounce back beyond expectations after significant events, and the same is holding true through Covid-19.