Real estate prices fell more in Manhattan than anywhere else in 2020

Industrial, multifamily and secondary market properties saw strongest price growth

National Insights /
Jan.January 26, 2021 08:00 AM
Clockwise from top left: Seattle, Boston and New York City (Photo Illustration by Kevin Rebong for The Real Deal)

Clockwise from top left: Seattle, Boston and New York City (Photo Illustration by Kevin Rebong for The Real Deal)

Real estate prices in the U.S. have risen at a steady pace since the last recession, and even a pandemic didn’t slow things down much in 2020, according to a new report. But your mileage may vary depending on the asset class you’re interested in.

Real Capital Analytics’ US National All-Property Index ended 2020 up 7.3 percent year-over-year, with a late surge following a mid-year slowdown. Growth was particularly strong for industrial and multifamily properties, which rose by 8.8 and 8.3 percent, respectively. Office prices rose by just 1.5 percent, and retail prices fell 4.3 percent

“In looking at the performance by property subtypes in 2020, it is clear the pandemic that hit the U.S. in early March had a sweeping negative effect on deal volume, with each subsector posting year-over-year declines,” RCA’s latest report states. “Pricing, on the other hand, has shown more variance, with some sectors faring much better than others.”

The spread between prices in the six major metros identified by RCA (New York, Los Angeles, Chicago, Washington, D.C., Boston, and San Francisco) and the rest of the country increased to its largest point in nearly a decade. While the price index in the six major metros increased by 3.7 percent, the growth rate for all other markets was more than double that, at 7.8 percent.

Growth in non-major metros has slightly outpaced that of major cities over the past cycle. The price index for the former rose 113 percent over the past decade, while that of the latter increased by 108 percent.

On both the commercial and multifamily fronts, Manhattan prices suffered the most, according to RCA’s data. New York’s outer boroughs also saw slight declines, while its suburbs experienced positive growth.

Through the first three quarters of 2020, Manhattan was also the most liquid property market in the U.S., and third worldwide behind only Paris and Berlin, according to a separate RCA report. The borough’s liquidity nevertheless hit a 10-year low, and was down 5.1 percent year-over-year at the end of Q3.

Meanwhile, despite some optimism due to the roll out of Covid-19 vaccinations, property prices could still take a beating if current financial pressures lead to more distressed asset sales, which so far account for just 1 percent of total volume.

“Nobody wants to take a loss on what is expected to be a temporary dislocation to income from the Covid-19 economic disruptions. … To the extent that they can, borrowers and lenders will continue to paper over problems in line with this optimism,” RCA senior vice president Jim Costello wrote in a report this month.

“Still, even with anticipation of a temporary dislocation, some investors and lenders will not be able to hold on even with the finish line for the pandemic in sight,” he added.





    Related Articles

    arrow_forward_ios
    Mack Real Estate CEO Richard Mack and one of his new hotels at 51 Nassau Street. (Getty, ING)
    Mack Real Estate takes over 7 distressed Manhattan hotels
    Mack Real Estate takes over 7 distressed Manhattan hotels
    1440 Broadway and CIM Group’s Shaul Kuba (Google Maps, Getty)
    CIM closes on $400M refi for 1440 Broadway
    CIM closes on $400M refi for 1440 Broadway
    Theaters in some cities are opening with restrictions. (Getty, Photo Illustration by Alison Bushor for The Real Deal)
    Coming attraction: Movie theaters reopen in New York, San Fran
    Coming attraction: Movie theaters reopen in New York, San Fran
    Innovo Property Group's Andrew Chung with 23-30 Borden Avenue in Long Island City (Google Maps)
    Innovo lands $155M construction loan for LIC warehouse
    Innovo lands $155M construction loan for LIC warehouse
    Restaurants and bars accounted for a majority of the gains in February (iStock)
    Leisure, hospitality big winners in February job gains
    Leisure, hospitality big winners in February job gains
    The company currently operates 761 stores, and intends to open 100 new stores this fiscal year. (iStock)
    Retailer Burlington plans to double store count
    Retailer Burlington plans to double store count
    (Getty, Photo Illustration by The Real Deal)
    Retail had its reckoning. Will subleases flood the market?
    Retail had its reckoning. Will subleases flood the market?
    Ascena owns Ann Taylor, Lane Bryant, Lou & Grey and Cacique. (Getty)
    Ascena restructuring approved post-bankruptcy
    Ascena restructuring approved post-bankruptcy
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...