Residential market report

From a sales uptick in the Financial District to renters remaining in place elsewhere, a look at the biggest trends

Aug.August 01, 2019 10:00 AM

Sellers face facts in FiDi

The Financial District’s sales market is seeing an uptick amid bigger price discounts. Sales were up 33 percent in the second quarter, per Platinum Properties’ second-quarter report, compared to the previous quarter. The past three months were also up 17 percent when compared to the same period last year.

Platinum’s managing partner, Teresa Stephenson, said the drive behind the increased numbers wasn’t the rush to close before new taxes went into effect. Instead, it was the fact that the average price per square foot dropped more than 4 percent year-over-year, to $1,231. Average discounts in the neighborhood also doubled when compared to the second quarter of 2018.

“I think the biggest effect on the sales market right now is that people think it still hasn’t bottomed out,” said Stephenson, explaining that prospective buyers are instead choosing to rent and mull over their “many options.” (The Real Deal reported last summer that there are more condos in the pipeline for FiDi and the nearby South Street Seaport area than any other neighborhood in Manhattan, which has sent sales prices tumbling.)

Meanwhile, at the tip of Manhattan in Battery Park City, sales are slower, even amid hefty price cuts. Units sold dropped 17 percent year-over-year, Platinum’s report for the neighborhood found. Average prices declined to $1.55 million, nearly 12 percent when compared to the first quarter of this year. That’s a less than 2 percent haircut from average prices in Battery Park City as of the second quarter of 2018.

“I think people are just waiting it out,” Stephenson said. “The sellers have just not dropped their prices yet.” Average discounts actually decreased during the second quarter by 31 percent when compared to the deeper cuts to start the year. Still, discounts in Battery Park City have nearly doubled when compared to the same time in 2018. — Erin Hudson

Renters staying put in NYC

Peak “camping” season in the city’s rental market is in full swing. Despite historic rent law changes, “overall, June was a positive month for [Manhattan] landlords,” said Miller Samuel CEO Jonathan Miller, an appraiser and author of Douglas Elliman’s most recent monthly rental report for Manhattan.

Summer is typically known as the busiest time of year for rental transactions, but new leases were down 15 percent compared to May, and 9.6 percent year-over-year in Manhattan. In June, landlord concessions dropped 0.4 percent year-over-year, while median rents (which includes concessions) climbed 4.7 percent, to $3,471, according to Elliman. At the same time, inventory fell just over 5 percent compared to the previous year. The vacancy rate held steady at about 1.6 percent.

Miller called the strengthening Manhattan rental market an “uninterrupted trend” for the past six months, but pointed to the borough’s choppy sales market and recent tax changes as key factors. Because of Manhattan’s sluggish sales market, Miller sees prospective buyers “camping out” — renting until they find the right deal.

Meanwhile, landlords offering incentives to renters in Queens and Brooklyn are increasingly in the minority as prices rise and a growing number of tenants renew leases rather than move elsewhere. Concessions fell for the sixth consecutive month in Brooklyn, while in Northwest Queens, it was the fourth month running that tenant perks declined.

Both boroughs also saw rents increase, per Elliman data analyzed by Miller Samuel. The median rental price, including concessions, rose 5.9 percent year-over-year in Brooklyn, to $2,914. In Queens, the median rental price inched up 1.6 percent compared to the previous year — though the borough saw a 4.1 percent decrease in price when compared to May.

The level of leasing activity in the two outer boroughs also decreased. Brooklyn saw a 25.4 percent drop in new leases in June, compared to May, and a 16.6 percent drop year-over-year. In Queens, transactions fell 29.3 percent from May to June, and 11.3 percent when compared to levels from June 2018. In Queens, active inventory fell 5.3 percent compared to May. In Brooklyn, however, supply grew by 4 percent from the prior month. — Erin Hudson and Sylvia Varnham O’Regan

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