And rent growth remains unabated for now, having rebounded from the negative figures recorded less than two years ago. The average Manhattan rate was up 3.5 percent year-over-year through August, 20 basis points above the U.S. figure, according to Yardi Matrix data. This is the first time in more than three years that the borough has outperformed the nation for rent growth. At $4,272 as of August, the average Manhattan rent was nearly three times the $1,472 U.S. figure and con- tinued to sport consistent premiums over neighboring Brooklyn ($2,940), Queens ($2,586) and Long Island ($2,165). Manhattan’s Lifestyle segment led growth, with rates up 4.4 percent year-over-year, to $4,706. Mean- while, working-class Renter-by-Necessity rates rose 1.1 percent, reaching $3,405. The list of submarkets driving growth included the Financial District (8.0 percent), Lincoln Square (7.2 percent), Hell’s Kitchen (6.6 percent) and Chelsea (4.8 percent). Meanwhile, rents were still dropping or were flat in submarkets such as Lennox Hill (-2.8 percent), Gramercy Park (-1.1 percent) and Flatiron (0.0 percent). Considering the relative balance between supply and demand, though, as well as the metro’s affordability is- sues and shock waves propagated by the new regulations, Yardi Matrix expects rent growth across New York City to moderate, returning below the U.S. average by year-end.
first eight months of 2019. This companies to 3,890 units that came online last year and accounted for 1.2 per- cent of the borough’s rental stock (which was less than half the average development-to-existing stock ratio for U.S. metros of 2.6 percent). Since the beginning of 2015, more than 16,500 apartments have come online in Man-
hattan, the majority of them in upscale communities. Overall, Yardi Matrix expects developers to add some 7,600 units to New York City’s stock in 2019. The Financial District (1,558 units) is leading devel- opment, followed by East Harlem (1,099 units), Harlem (990 units), Murray Hill (959 units) and Lincoln Square (949). The first three submarkets comprise nearly half of the borough’s total pipeline. While Lower Manhattan’s shift toward more residential projects is not exactly breaking news, Harlem’s recent resurgence is opening many new investment opportunities. The borough had almost 2,000 apartments underway north of Central Park as of September, many of them within or very close to designated Opportunity Zones in Harlem. In the context of decelerating development, occupan- cy in stabilized assets remained flat over 12 months, at 98.5 percent as of July, with the previous 12 months having recorded a 10-basis-point uptick.
DEVELOPMENT PIPELINE (as of August 2019)
SOURCE: YARDI MATRIX
PLANNED
PROSPECTIVE
UNDER CONSTRUCTION
MANHATTAN COMPLETIONS (as of August 2019)
SUPPLY Manhattan had 8,231 units underway in 44 projects as of August, with 1,394 units already completed in the
TRANSACTIONS Meanwhile, the multifamily transaction volume dropped across the city, partially due to investors’ pre- caution following the latest statewide rent regulations. Fifteen assets of 50 or more units traded in Manhattan this year through August, for a total of nearly $1.2 bil- lion. This comes on the heels of last year’s 34 transac- tions totaling $3.3 billion, a far cry from the $8.4 billion cycle peak recorded in 2015. With the market already sluggish in the first half of the year, the new statewide rent regulations caught many in the industry off guard, which in turn deepened the significant drop in transac- tion activity, as investors are reeling and recalibrating their strategies and balance sheets. The average per-unit price in Manhattan reached $909,635 in the year’s first eight months, nearly seven times the U.S. figure and marking a significant gain over 2018’s overall average of $641,542. Prices could soon drop as a result of the rent control laws, though. With investors taking a step back and valuations dropping, owners looking to sell are feeling increasing market pressure. •
SOURCE: YARDI MATRIX
MANHATTAN SALES VOLUME AND NUMBER OF PROPERTIES SOLD (as of August 2019)
6,000
SOURCE: YARDI MATRIX
VOLUME IN MILLIONS
NUMBER OF PROPERTIES
$10,000
100
4,000
$8,000
80
$6,000
60
2,000
$4,000
40
$2,000
20
0
$0
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
78 | think realty housing news report :: december 2019
thinkrealty . com | 79
Made with FlippingBook Online newsletter