From 2008 to 2010, real estate developers and property managers saw significant changes as market forces adjusted and the Great Recession caused great upheaval.
Today, in a post-pandemic world, there is again significant volatility. However, the Great Recession and post-pandemic eras are very different and developers should approach their investment strategy in a new way, according to M Patrick Carroll, founder of CARROLL, one of the country’s leading real estate investment companies.
Carroll firmly believes there is an opportunity for investors in the New York City real estate market. The interconnected network of commercial and residential submarkets offers chances for institutional investors as well as buyers and sellers.
While nearly all areas of the real estate sector were negatively impacted by the pandemic, there are trends that rebounds are here or on the way.
The second quarter of 2020 saw the steepest decline in Manhattan apartment sales in 30 years, according to a recent CNBC report. However, a year later tells a different story, with a 150 percent gain in year-over-year sales, a median selling price of $1.9 million, and a 12 percent increase in average sale prices.
In 2020, many renters and buyers were fleeing the city, forcing landlords to offer rent reductions as large as 20 percent to attract and retain renters or offering months’ worth of rental concessions.
Despite the recent surge caused largely by the COVID-19 Delta variant, employers are still calling employees back to in-person office work or at least hybrid work arrangements.
Soho and Tribeca are among the downtown markets where commercial real estate appears to be on the rebound, with office property sales and leases in major retail spaces driving an increase.
Buyers, sellers, and investors need to watch for opportunities at multiple turns. For example, some major corporate property owners are looking to reduce their footprint as they offer workers the opportunity for hybrid work arrangements, with a few days in the office and other days at home.
Some of those sellers are looking for space in other geographical areas that offer more advantageous tax structures and can handle a largely remote workforce.
Navigating the NYC Market for Real Estate Investors
Real estate expert M Patrick Carroll advises would-be investors looking at New York City to work with a seasoned real estate investment professional with a track record of market expertise.
The sheer size of the marketplace can be daunting. In addition, single families have often owned the same property for several generations, making marketability difficult. Rent control and local politics make New York a challenging market for investors.
Despite that complexity, there is a real opportunity in New York, Carroll noted. The market is likely to continue to show growth and become stronger in the next six months.
Businesses and homeowners continue to grapple with the impacts of the pandemic and economic downturn. Many businesses went under as commerce dried up and loans went unpaid. Thousands of homeowners have struggled to make mortgage payments, forcing their homes into foreclosure. There is a very real human toll that must be acknowledged, M Patrick Carroll noted, but these distressed assets provide an excellent opportunity. It’s a heady time to be involved in real estate, but for the shrewd buyer or seller, there are profits to be made.