Over the past 2 months we've blogged about the Industrial Market as a bright spot, difficult changes coming for the commercial real estate market and mixed news for the residential market depending upon property type.
The fact is that no one, no matter how much wisdom they possess, has the answer to what the future has in store for New York real estate.
The 3 scenarios of the current market and potential outcomes are the following:
The worst case scenario is that major companies will downsize and fire thousands of workers. These thousands of workers will face evictions from their apartments.
Many retailers, big and small will not survive the economic fallout from this pandemic and will close their doors. J Crew, Neiman Marcus and J.C. Penney have filed for bankruptcy, Pier 1 Imports is out of business and brands are planning to close hundreds of stores.
Hotels remain empty and shopping malls are closing as lenders reach forbearance fatigue and refuse to extend any more relief.
A huge 2nd wave of the pandemic in the Fall would put to rest the current feeling that this will be ok and everything falls apart.
The fear that Americans feel now about the future creates a severe confidence problem. Once consumers lose confidence, we could be looking at a weak economy until 2022 or worse.
Projects like the Hudson Yards Mall was a developer’s dream, but not now.
Office buildings have seen tenants not paying rents and even companies like Google and Facebook have employees working from home and how long will that last? The trend may be massive downsizing or eliminating office space completely for example MasterCard and Morgan Stanley have told employees to work remotely.
Companies may decide to leave New York completely to go elsewhere for cheaper real estate, good livability rates and a good talent pool like Charlotte N.C.
Co Working companies have leased up to 14.7M square feet of office space and are now looking to give back some space. Many landlords who made the decision to rent to these tenants will get hurt.
Sales of Multifamily rent stabilized buildings has already taken a hit with the new rent reforms passed by the state last year. Landlords will continue to negotiate with their tenants and lenders as the State tries to sort out policy solutions and expenses keep going up. If you can't raise revenue this makes Multifamily rent stabilized buildings the wrong sector to invest in.
A less severe market scenario still has yet to be revealed since phase 1 reopening of NYC has just begun. It's still too early to see the level of impact on the office market for example.
Some experts say that as much as 20% of retail stores will not be able to reopen.
The Construction industry is also facing big delays and big problems as projects get canceled or pushed back indefinitely.
The best case scenario for New York real estate is the fundamental attractiveness of New York hasn't changed. We have recovered from a major crisis before like Superstorm Sandy and others. The uniqueness of New York is its people, it's cultural life, the diversity of the economy and the incredible energy and vitality that pulses through its streets. None of that has changed, just temporarily suspended. New York will rebound!
If you are interested in selling your property or you know someone who is planning to sell their Brooklyn or New York property, whether a single family residential property, an apartment building, a commercial property, mixed use, multi family, coop or condo, vacant land or a development opportunity, call us. You will be very happy that you did.
We always bring our clients the top market price for their property and provide exceptional personalized service from initial consultation to closing.
Accord Real Estate Group
Your Brooklyn Real Estate Brokers and Agents