NYC apartment market bogged down by development “hangover”
Coming units below historical average rate: Corcoran
New York City’s apartment market has been feeling the pressure of high demand, but a new development report from Corcoran shows the squeeze will continue to outpace supply for the foreseeable future.
New York is expected to add 33,000 housing units through 2024, 6,000 units less than the historic average, according to Corcoran’s 2022 Pipeline Report.
Ryan Schleis, senior vice president of research and analytics at Corcoran Sunshine, said the tick down in development is like “this hangover from the tough market we had in 2019 and 2020.”
The report was based on planned development and projects under construction, which account for two-thirds of incoming units. Seventy percent of new supply will be rentals.
The city’s secondary markets will have more to offer in the coming years, according to the report.
About 16,000 units are projected for Brooklyn, more than any other borough due to recent re-zoning in those areas that have provided developers with new sites. Downtown Manhattan, where supply is tightest and new development is constrained by a lack of new sites, will add just under 4,000 units.
In core Manhattan, which excludes neighborhoods north of the Upper East and West sides, the average yearly supply of rental units is projected to fall to 1,792 from 2,545. For-sale supply will fall to 1,518 units per year from 1,992. About 37 percent of new for-sale units in Manhattan will be for the luxury market, with as many as 800 luxury units coming online in Midtown.
Upper Manhattan, western Queens and northwest and central Brooklyn will receive more than 23,000 units, 5,604 of which will be for sale.
In addition to rising construction costs and supply issues that have hampered construction in recent years, changes to New York’s rent laws have greatly undercut rental-to-condo conversions.
The 2019 Housing Stability & Tenant Protection Act stipulated that a majority of tenants had to agree to a conversion, up from 15 percent. In the year after the law’s passage, just five condo conversion plans were submitted to the Attorney General’s office, the lowest level since the 1960s.
“The development industry is like a big cruise ship that’s difficult to turn around, even though the market is much stronger it’s not like we can produce tons of units immediately,” Schleis said.