NYC Real Estate Market Experiencing Rapid Growth as Residential and Commercial Trends Shift

At the recent EisnerAmper Real Estate Private Equity Summit a panel entitled “This One or the Other: Valued-Added Opportunities in New York vs. Traditional Core Investments” explored the value-added fund market. EisnerAmper’s Aaron Kaiser moderated the group, which included Luke Anderson of Franklin Templeton Investments, Thomas Bermingham of USAA Real Estate, Nicholas Bienstock of Savanna, Robert Deckey of George Comfort & Sons, James Nelson of Massey Knakal, and Jameson Weber of Hightower.

The group was in agreement that the New York City real estate market is rapidly growing. This year will have record sales in NYC, surpassing the 2007 levels. The floodgates have opened and capital investments have been pouring into Manhattan, Brooklyn, and Long Island City.  Foreign investors are flowing into New York City. There is a global presence and worldwide communication can lead to massive capital inflow and numerous bids in the marketplace.

Further talking points include:  New York City is ranked #3 as the best place to work and #7 for luxury apartments. People want to live and stay in the city.  Suburban markets are not growing as rapidly; current trends indicate people want to experience the city atmosphere. Commuting patterns are starting to shift as more people are coming in from the boroughs instead of the suburbs. There are fewer rental apartments available now compared to the 2006 market. There is a surplus of luxury apartments available. The focus is on attracting top talent from younger generations to come to New York. The booming technology market is attracting an influx from the West Coast. 

Technology is also a driving factor in the price increases in Manhattan.  Retail values are skyrocketing as the price of square footage dramatically increases. Brooklyn is growing rapidly with square footage well below replacement cost.  Tenants such as Revlon, Mastercard, IBM, Google, and Twitter are moving from Midtown to Downtown, Chelsea, Soho, and the Financial District. Since 2001, roughly $30 billion has been invested in the Financial District.

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