Real estate billionaire Sam Zell said the surge of residential real estate supply in New York City is starting to wane, but demand remains relatively high.
The Equity Residential founder and chairman told Bloomberg that people are still attracted to what he calls “24/7” cities, like New York City. He added that rent prices in the city are “flattening out” — rather than falling — and the company has focused on six core markets on the coasts.
“The surge in supply is starting to slow down as banks and investors become concerned about the impact of supply and demand,” he told Bloomberg.
In a fourth-quarter earnings call earlier this month, executives at Equity told investors the company expects revenues in New York City to fall by 1.8 percentage points in 2017. COO David Santee blamed the drop in rents on the financial services industry contracting and job growth in tech sectors stalling. The company has budgeted $4 million for concessions in New York this year.
“I think generally speaking we have been sellers in the past four or five years. But we have been sellers with a strategic objective. We wanted, in the case of Equity Residential, to concentrate on 24/7 cities,” Zell told Bloomberg. “That’s a strategy that makes sense and fits into where we see the demographics and job creation evolving.”